Fin 571 Week 6 Ind Working Capital Simulation

1391 Words Mar 24th, 2015 6 Pages
Working Capital Simulation
Ismael Hernandez
University of Phoenix
1/4/ 2015

Sunflower Nutraceuticals is a privately owned company that is a wide distributor providing numerous dietary supplements for customers, distributors, and retailers (University of Phoenix, 2013). After starting the business in 2006 as an internet based company, SNC expanded operations into retail outlets as well as introducing some new private labeled products. Although SNC has the potential to grow into one of the major nutraceutical distributors in the industry, the company still struggles to break even. On more than one occasion SNC has been forced to exceed the company’s credit line of $1,000,000 to finance payroll and other
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The company was offered an opportunity to partner with Golden Years Nutraceuticals enabling them to reach a larger, more varied consumer base. From 2016-2018, this partnership reduced SNC’s DSO figures because of more rapid collection on web based sales. SNC also saw an approximate 10% increase in their sales from 2016-2018. This was an ideal opportunity for SNC because it will allow them to increase their sales with having little negative impact on working capital balances.
III. Develop a Private Label Product –Fountain of Youth Spas want SNC to develop their own private label product. In doing this, SNC can expand their nutraceutical products line and increase their sales and consumer base. Sales for 2016 through 218 will increase by approximately 5%, 4%, and 3%. Additionally, it will increase EBIT margin by 2% while increasing SNC’s DSO’s and DSI. This will allow SNC to increase their EBIT while slightly raising their accounts receivable figures. “Selling the private label product to Fountain of Youth Spas increased SNC's EBIT margin, only modestly resulting in increased accounts receivable and inventory balances” (University of Phoenix, 2013, Synopsis).
Phase 3 of SNC’s Simulation (Years 2019-2021)
During phase three of SNC’s simulation, there were three opportunities for SNC to consider. Those opportunities include:
I. Acquire a High-Risk Customer – Midwest Miracles is a potential

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