Reference no: EM131106414
Payton Furniture Corp. is nationally recognized for making high-quality products. Management is concerned that the company is not fully exploiting its brand power. Payton's production managers are also concerned because their plants are not operating at near full capacity. Management is currently considering a proposal to offer a new line of affordable furniture.
Those in favor of the proposal (including the vice president of production) believe that, by offering these new products, the company could attract a clientele that it is not currently servicing. It could also operate its plants at full capacity, thus taking better advantage of its assets.
The vice president of marketing, however, believes that the lower-priced (and lower-margin) product would have a negative impact on the sales of existing products. The vice president believes that $10,000,000 of the sales of the new product will be from customers that would have purchased the more expensive product but switched to the lower-margin product because it was available. (This is often referred to as cannibalization of existing sales.) Top management feels, however, that even with cannibalization, the company's sales will increase and the company will be better off.
The following data are available:
|
(In Thousands)
|
Current Results
|
Proposed Results without Cannibalization
|
Proposed Results with Cannibalization
|
|
Sales Revenue
|
$45,000
|
$60,000
|
$50,000
|
|
Net Income
|
$12,000
|
$13,000
|
$12,000
|
|
Average total assets
|
$100,000
|
$100,000
|
$100,000
|
Instructions:
Compute Payton's return on assets, profit margin, and asset turnover, both with and without the new product line.
Discuss the implications that your findings in part (A) have on Payton's decision.
Are there any other options that Payton should consider? What impact would each of these have on the above ratios?
Show your work and use MS Excel or Word for your submission. The written portion of your assignment should be 4-6 pages in length with document and citation formatting conformity with the CSU-Global Guide to Writing and APA Requirements.
|
Indicate how each of the following accounts
: Indicate how each of the following accounts should be classified in the stockholders' equity section.
|
|
Describe the tangent space at the identity matrix
: What is the dimension of O(n)? Describe the tangent space of O(n) at the identity matrix as a subspace of M(n)
|
|
Ordering cameras with uncertain demand at machey
: In the first (R,Q) model in Example 12.7, the one with a shortage cost, we let both Q and the multiple k be changing cells. However, we stated that the optimal Q depends mainly on the fixed ordering cost, the holding cost, and the expected annual ..
|
|
Approximation to the epoch wise bptt algorithm
: Specifically, we may let the network go through h' additional steps before performing the next BPTT computation, where h'
|
|
Compute paytons return on assets
: Compute Payton's return on assets, profit margin, and asset turnover, both with and without the new product line - Discuss the implications that your findings in part (A) have on Payton's decision
|
|
Relationship between economic growth and productivity
: What is the relationship between economic growth and productivity? What is the major source of growth in labor productivity?
|
|
What levels of the organization are involved
: Are they effective or ineffective? What is good or bad about the goals and the associated process? What might be done differently? Why would the change be an improvement?
|
|
Lead time with a given mean and standard deviation
: Change the model in the file Ordering Cameras 2.xlsx slightly to allow a random lead time with a given mean and standard deviation.
|
|
What are your forecasts of the company''s year end inventory
: Given the estimated sales forecast and the estimated relationship between inventories and sales, what are your forecasts of the company's year-end inventory level and its inventory turnover ratio?
|