Wgu Financial Task 5
JET Task 5
A1. Key Points Banks are concerned with Custom Snowboards liabilities and assets. They are interested in assets as this is what Customer Snowboards will use to generate funds to repay the loan. Banks are interested in liabilities as this is what Custom Snowboards currently owes other creditors. Custom Snowboard, Inc. showed a small decrease of 3.40% in net sales from Year 13 to Year 14. This slight reduction can be attributed to the decline in the current economic situation. Even though sales have dropped, anticipated sales for years 15, 16, and 17 are expected to recover at a slight incline of 2 – 3.7% per year. Operating Expenses were reduced from $782,800 for Year 13 to $756, 200 for Year 14. This was in …show more content…
The historical trend analysis shows that every other year, there is a decrease in net sales. In Year 12, Net Sales were $6,601,000. Net Sales rose .5% in Year 13, declined 3.4% in Year 14, rose 3% in Year 15, declined 1% in Year 16, and rose 1.7% in Year 17, with $6,647,452 in Net Sales. This rollercoaster effect may be impacted by the quality of snowboards. There are several things to consider such as evaluating if the increase in sales are the same consumers upgrading their snowboards or is the increase of sales due to weather patterns? To minimize this impact and continue with future growth, additional product offering may need to be …show more content…
This value must be over 0 in order to add value to the company. This project fails to meet the determined threshold. The Internal Rate of Return is 8.9%. This also fails to meet the cost of capital or hurdle rate, of 10.8%. The option of building would take a considerable amount of capital. The build option would be the most expensive and most risky. The build option would include purchasing land, developing blue prints, building a building, and hiring contractors. This option also includes market entry in which European Snowfun will be a competitor. Leasing would include purchasing or leasing an existing building. The Present Value of Outflows of leasing is $653,355 which is higher than the Present Value of Outflows for Purchasing, $597,723. Leasing a building has many disadvantages. The rent may increase as the market fluctuates. The ownership of the building can change hands. Most importantly, the lease contract may prevent a business from expanding or modifying the current floor
A1. Key Points Banks are concerned with Custom Snowboards liabilities and assets. They are interested in assets as this is what Customer Snowboards will use to generate funds to repay the loan. Banks are interested in liabilities as this is what Custom Snowboards currently owes other creditors. Custom Snowboard, Inc. showed a small decrease of 3.40% in net sales from Year 13 to Year 14. This slight reduction can be attributed to the decline in the current economic situation. Even though sales have dropped, anticipated sales for years 15, 16, and 17 are expected to recover at a slight incline of 2 – 3.7% per year. Operating Expenses were reduced from $782,800 for Year 13 to $756, 200 for Year 14. This was in …show more content…
The historical trend analysis shows that every other year, there is a decrease in net sales. In Year 12, Net Sales were $6,601,000. Net Sales rose .5% in Year 13, declined 3.4% in Year 14, rose 3% in Year 15, declined 1% in Year 16, and rose 1.7% in Year 17, with $6,647,452 in Net Sales. This rollercoaster effect may be impacted by the quality of snowboards. There are several things to consider such as evaluating if the increase in sales are the same consumers upgrading their snowboards or is the increase of sales due to weather patterns? To minimize this impact and continue with future growth, additional product offering may need to be …show more content…
This value must be over 0 in order to add value to the company. This project fails to meet the determined threshold. The Internal Rate of Return is 8.9%. This also fails to meet the cost of capital or hurdle rate, of 10.8%. The option of building would take a considerable amount of capital. The build option would be the most expensive and most risky. The build option would include purchasing land, developing blue prints, building a building, and hiring contractors. This option also includes market entry in which European Snowfun will be a competitor. Leasing would include purchasing or leasing an existing building. The Present Value of Outflows of leasing is $653,355 which is higher than the Present Value of Outflows for Purchasing, $597,723. Leasing a building has many disadvantages. The rent may increase as the market fluctuates. The ownership of the building can change hands. Most importantly, the lease contract may prevent a business from expanding or modifying the current floor