The purpose of this memo is to assess the profitability of the Ferguson Foods opportunity and explain how the deal would impact Desert Valley’s financial statements.
The Ferguson Foods opportunity is profitable in all years from 2016 to 2020 however:
- Contribution margins are steadily decreasing each year as increases in the costs of production (Direct materials, direct labour, transportation costs, and duties/taxes) are outpacing price increases. By 2020, the contribution margin is less than half of what Desert Valley is receiving from its current customer base.
- After Ferguson’s expansion into Oregon and California in 2017, the year-over-year growth rate of sales decreases substantially.
- Sales have been better than expected which is causing Desert Valley to operate at 89% of its production capacity. The brewery is generating a 31% contribution margin on these
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Fluctuations in foreign exchange rates may have an adverse impact on profitability and cause cash flow to be somewhat unpredictable for budget planning purposes.
- If Ferguson chooses to purchase more product than projected then they can do so at a 15% discount to the standard price at the time. Based on the current price of $34.50, Ferguson would be able to purchase more product at $29.33 per case which is much cheaper than the $31.00 to $33.00 range that they would be paying otherwise. Selling product at this price would yield contribution margins of 11% to 2% which is substantially less than what the brewery is currently generating from its current customers.
- The Ferguson Foods contract would be an easy way for Desert Valley to gain access to the US market. Their customers are in the same target market as Desert Valley so this is a natural fit. That being said, the locations are very spread out across different states which will make it difficult for Desert Valley’s brand awareness efforts to gain
The biggest threat for the company can be the currency fluctuation, that means not stability in their profits , so as a result of fluctuation there can be the rising of interest rates and an increase of the company’s income.
DesertSpec, LLC is a home inspection company that is located in Palm Desert, California. This home inspection company is serving the Coachella Valley region including the Indian Wells, La Quinta, Palm Desert, Palm Springs, and Rancho Mirage. DesertSpec, LLC is a locally owned and operated home inspection establishment. This home inspection company thoroughly inspects the foundation, basement, and under-floor areas, exterior, roof covering, attic areas and roof framing, plumbing, electrical, and more. DesertSpec, LLC also carries out the property inspection of the building systems such as the heating and cooling, fireplaces and chimneys, and building interiors. The home inspector and business owner, Carl Phillips, is certified with both the
Cost include lease expense. Lease expense will be $450,178.56 assuming sales increase by 4 times . With this decision, we can expect that the sales would increase by $$1,652,451.84 assuming cost per bottle reduce when production capacity increases. Total profit from this arrangement would amount to $558,492,96 which exceeded the decision criteria.
The major problem in food deserts is the access to a healthier and nutritious foods. To simply resolve this, we just need to enable the access for the people. One way to accomplish this is by encourage retailers to open a shop at this food deserts area. By enabling more access to a supermarket or retail stores, we can greatly reduce this problem. It is even mentioned in The Columbus Dispatch newspaper where in one of the interview with the locals, they mentioned that the establishment of a supermarket within a walking distance is an option that the residence see as a new option rather than driving miles away just to get the groceries done.
They experienced a substantial growth in 2013. They had the gross profit margin of 25.35 percent in 2012 and 26.66 percent in 2013, which is a 5.2 percent increases. (Gamble, Peteraf, & Thompson, 2015, p. 368, Exhibit 1). They expected additional growth to the company in over the year. Thus, they targeted to achieve $50 billion sales by 2018 fiscal year and 12 percent profit margins by 2015 fiscal year. (Gamble, Peteraf, & Thompson, 2015, p. 371). However, the increases in profit were not last forever. They had the gross profit margin of 24.83 percent in 2014, which was the declines of 6.87 percent compared to the previous year. (Gamble, Peteraf, & Thompson, 2015, p. 368, Exhibit 1). According to Cancino (2015), “We could be facing the largest single-year scale decline in the company’s history with income at barely half of its 2013 peak” (as cited in Chicago
> Responsible for overseeing ADA operations for the 2016 Desert Trip Music Festival. Which involved managing ADA services, campsites, parking, transportation, restrooms, and viewing platforms throughout the 80 acre festival grounds and making sure all ADA operations were in compliance with ADA laws. Also working with law enforcement to prevent ADA fraud, Desert Trip had more ADA fraud arrests than alcohol and drug arrests. In addition Desert Trip had the largest ADA operation ever in AEG's history assisting over 6,000 ADA patrons and also for the first time brought together legendary rock legends such as The Rolling Stones, Bob Dylan, Neil Young, Paul McCartney, and Roger
The status of a company's contribution margin is exceedingly important for the functioning of that particular business. Not only does the contribution margin allow managers and workers to understand where the company stands financially, but it is further essential in decision-making within the company and the company's reporting. Essentially, the contribution margin within a company is the difference between the selling price minus all variable costs, or the marginal profit per unit sale that a company sees (Tsui, 2011, p.1).
Ashland Burglar Alarms Inc. sells a single product. The product has a selling price of $50 per unit and variable expenses of 80% of sales. If the company 's fixed expenses total $150,000 per year, then it will have a break-even point in sales dollars of:
Another item to correct is the Production costs and expenses, currently running at 50% of the revenue. The management has expressed concerns with outdated packaging equipment and the use of the more expensive second and third shift to catch up with production. An investment here would probably turn profitable in the context of healthy sale numbers.
Cece’s Famous BBQ sauce company’s intentions are to operate where Marginal Revenue (MR) is higher than Marginal Cost (MC) which will translate into greater revenues and reduced costs per
the possibility of a loss because of changes in the value of a foreign currency
The project focuses on McDonald’s financial health, strategies, business decisions, performance, growth, projections and opportunities. Company focuses on 5 p’s approach that is people, products, place, price and promotion to increase sales and profitability and getting better by time and not just bigger. Company is looking for a long-term growth and is ready to invest even if it does not yield profit in initial years.
“Fluctuations in foreign currency exchange rates could have a material adverse effect on our financial results.” Since the company is worldwide, “the company earn revenue, pay expenses and incurred liabilities” (Item 1A pag 13) using foreign currencies. This factor can be affected because the presentation of the financial statements are presented in U.S. dollars and the exchange rates can increase or decrease the value of the U.S. dollar. And consequently, affect “net operating revenues, operating income and the value of balance sheet” (Item 1A pag 13).
International business is vastly growing into a common trend, which initiates accounting issues related to financial reporting among parent companies and its subsidiaries. International business is profitable, but includes its risks such as foreign exchange exposure. Foreign currency exchange exposure relates to the risks involved in translating different foreign currencies. Multinational corporations are affected by foreign exchange exposure by the constant fluctuation of foreign exchange rates. International business are faced by different types of foreign exchange exposure, accounting issues that relate to gains or losses from foreign currency and alternatives of foreign currency translation methods to mitigate the risks.
The financial condition and operation results of AngloGold Ashanti might be adversely affected by Foreign exchange fluctuation.