A Detailed Explanation Of Abc Company

1201 Words5 Pages
In this report, I will provide a detailed explanation to ABC Company, Chief Executive Officer that outlines whether or not the innovative project of utilizing shingle scrap materials to build a cedar dollhouse can be afforded. As the controller of this firm, I will employ various monitoring methods ranging from the companies statement of cash flows which includes operating activities, investing activities and financing activities. I will also observe the net-present-value method to provide an analysis of investments and the desired rate of return. In this compendious communication details about the estimated cost will be provided, what would be needed to break even on the dollhouse and what level of return this product is expected to…show more content…
Executing and establishing systems of appropriate par levels would be beneficial at this point and will increase cash inflow. Another area that we should amend is accounts payable; we should contact the vendors and establish a Net 45 or later date versus a Net 30 or what we are currently using until we can get a better handle on the outgoing of cash. Observing the current liquidity of the company I would not recommend the project be financed, because we are currently sitting in a negative adding a new project without establishing new processes for the company could be detrimental. There are many factors that we must consider for the project, according the EPA, laboratory test must be conducted and the accrued costs ranges from $15 to $25 and takes up to 24 hours to complete testing for asbestos. These are extra costs based on a guarantee or a non-guarantee that the dollhouses will sell and not be idle in inventory with our current economic condition. If one does decide to proceed with the project now or latter and needs additional funding I would suggest corporate debt over equity. Looking at our current dividend payout we cannot afford to pay out anymore and remain afloat. Corporate debt is a better option to repay the fixed amount owed to the lenders over a period of time, the amount owed is accrued monthly, and we will be have a better grasp on all outflow without involving investors. Secondly, the product cost is $15.00 for the expansion production under
Open Document