Essay Case Study

726 WordsApr 26, 20133 Pages
April 8, 2013 Case: Chester & Wayne Budgeting in a business is important for so many reasons. Business leaders often deal with large amounts of money, and some employees or outsiders might see the organization's revenue as nearly limitless. Regardless of the business cash on hand, though, careful budgeting plays a critical role in any organization's success. Chester & Wayne is a large regional food distribution company and the CEO of the company has asked for some assistance in preparing a budget for their cash flow. With the information provided by CEO, Mr. Wayne, the budget will be carefully planned. “By having a firm plan in place you can easily see, over the year, in which months you are making a profit and you can…show more content…
Wayne thinks that the gross margin may shrink to 27.5 percent because of higher purchase prices. He is concerned about what impact this will have on borrowings. Because share prices move frequently, and company is exposed to the risk that the shares might fall in value. If margins decrease it a chance that they could possible impact them receiving loans. Being that there was an increase in sales there could mean a decline in customer or bringing in more customers. Since there is a decline in the margins and an increase in sales Mr. Wayne is worried about stocks which is normal. “Stock out" has no dollar value, it usually represents inventory that is owned by the company but physically not in their warehouse. He acknowledge the fact that there will be stock out and in this case this could help or harm the company. “Researchers found that customers experienced less negative emotion when the online retailer acknowledged the stock-out. Compared to simply acknowledging stock-outs or giving a backorder option, financial compensation such as discounts on next purchase was more effective in mitigating the negative impact of stock-outs on patronage intention (Marineau, 2011). For a supplier or retailer, stock-outs

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