Calculate the new efn with this assumption

Assignment Help Accounting Basics

Reference no: EM133828606

Assignment: Accounting

Based on the content covered and Chapters 3 and 4 of the Ross, et al. (2022) text, students learned about financial statement analysis and long-term financial planning and growth. Students should address the following:

Review "Mini Case: Planning for Growth at S&S Air" in your textbook on page 129, also found at the end of Chapter 4 in your textbook. Then, answer the following questions:

A. Calculate the internal growth rate and sustainable growth rate for S&S Air. What do these numbers mean? How do you know?

B. S&S Air is planning for a growth rate of 12% next year. Calculate the EFN for the company assuming the company is operating at full capacity. Can the company's sales increase at this growth rate? Explain your reasoning.

C. Most assets can be increased as a percentage of sales. For instance, cash can be increased by any amount. However, fixed assets must be increased in specific amounts because it is impossible, as a practical matter, to buy part of a new plant or machine. In this case, a company has a "staircase" or "lumpy" fixed cost structure. Assume S&S Air is currently producing at 100% capacity. As a result, to increase production, the company must set up an entirely new line at a cost of $5,000,000. Calculate the new EFN with this assumption. What does this imply about capacity utilization for the company next year?

D. Consider how long term planning and growth is affected by location in the world. Discuss how you would advise S&S Air about planning and growth in your own country and expansion into other countries?

Reference no: EM133828606

Questions Cloud

Reflect on the prompt from keller : Reflect on the prompt from Keller and Alsdorfs' book in light of this article - You should reference one peer-reviewed source and your Keller and Alsdorf text

Draft questions related to medical privacy and telehealth : Address the following requirements in the survey: Draft at least 10 survey questions. Draft questions related to medical privacy and telehealth services.

Assess the employee performance of two people : Assess the employee performance of two people in an organization or someone you know personally. You may search online for examples if you do not have one

Identify one proxy variable that would be unfair : Identify one proxy variable that would be unfair (and therefore not useful) for admissions decisions, and explain why this is unfair and not useful.

Calculate the new efn with this assumption : Calculate the new EFN with this assumption. What does this imply about capacity utilization for the company next year?

Discuss why you believe they are important : Choose 2 main points from the video. Discuss why you believe they are important. Explain what an organization, such as Apple, can learn from analyzing numbers

Preparing schools and the education system : Replies to the posts of others of at least 150 words each. Each reply must incorporate at least one scholarly research article in current APA format

What opportunities-threats do you see for hospitality firms : What opportunities and threats do you see for hospitality firms that may wish to establish businesses in Africa?

Discuss the project management approach : The Approach or Framework This part will discuss the project management approach you think is best.

User Account

All Pages