Reference no: EM131876298
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.
How many shares of becks common stock were outstanding
: Beck purchased 75,000 shares of its common stock and held it in Treasury. At December 31, 2011, how many shares of Beck's common stock were outstanding?
|
Write a script that compares two directories
: Write a script that compares two directories bar1 and bar2 and copies or overwrites to bar1 from bar2 every file that is not present in bar1.
|
What goals drive a quantitative research design
: What goals drive a quantitative research design? Compare and contrast quantitative survey and experimental designs for research.
|
What amount of deferred tax asset should west report
: West determined that no valuation allowance was needed. What amount of deferred tax asset should West report in its December 31, 2010 balance sheet
|
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
|
How the research project would be conducted
: Recommend one other type of research project that might have helped Fisher Price increase the profitability of their Rescue Heroes line.
|
Write a script that takes a filename as argument
: Write a script that takes a filename as argument and then compresses and decompresses the file with each of the programs compress, gzip, bzip2, and zip.
|
Write a script that monitors the creation of pdf files
: Write a script that monitors the creation of .pdf or .PDF files in the current directory. Every minute it should display a list of those filenames created.
|
Write script that behaves in interactive mode
: Write script that behaves in both interactive and noninteractive mode. When no argument are supply, it picks up each C program from current directory directory.
|