Coast4Life Essay

667 Words Sep 22nd, 2013 3 Pages
To :Coast4life Inc
From: Pat Brown, CMA
Subject: Coast4life Cruises

Introduction: Coast4life Inc with the expected downturn situation due to recent terrorist attack on a cruise ship in 2012 and on airline industry would prepare to remain profitable by finding ways to cut cost or generate additional revenue. Target is to recommend the best among the four alternative suggested aiming at 16% after tax return and tax rate of 38%.
Identification of Issues and related alternatives:
• Debt to Equity Ratio of 1.23 more than 1 reveals that more than half of assets are financed by debt.
• $3.6 million required for repairs of hull before 2013.
• Gross profit of 60% has not increased much over past three years it will affect
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• Potential public relations.
• Training required for unskilled workers to meet Coast4 life standards.

Alternative 4: Web-Based booking
Pros
• Savings on commissions to agents by 10%
• Advantages for customers to book online
• Helps in maintaining database for Customer behavior
• Incremental cash flow of 11 million in 2013 id web based booking increases (Appendix 5)

Cons
• Setup cost and software $50000 and accounting module of $25000.
• Maintenance of the web server
• Training cost required for staffs to get hands on Accounting Software

Recommendations
• Customer mix improvement should focus on targeting repeat customers and category between 40-60 that generates more revenue and profits
• Low cost crew from outside the country would alter service quality that contradicts the company mission and would affect customer loyalty
• We based booking help co focus on its core business and would offer an opportunity to restore

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