Working Capital Simulation: Managing Growth

1506 Words Oct 25th, 2014 7 Pages
Working Capital Simulation: Managing Growth
FIN/571
October 13, 2014
William Stokes

Working Capital Simulation: Managing Growth
The Corporate Finance course has helped me, as a student, gain intelligence to make informed decisions upon analyzing the details for Sunflower Nutraceuticals (SNC). These decisions will influence the company’s overall growth annually. In addition to various details of the SNC Company I have also made various decisions in each of the phases of SNC’s simulation which has an estimated values to figure out the results. This paper also explains how SNC’s decisions are influenced with regards to the working capital followed with the final step of evaluating the general affects associated with the limited
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This decision increased SNC’s EBIT by approximately 200,000. Although SNC’s sales and EBIT figures increased, their net working capital and profit margins will remain at current figures. Additionally, acquiring Atlantic Wellness as a client will help increase SNC’s sales significantly but will sacrifice portions of inventory and accounts receivable. Because of their current cash position SNC must keep a minimum of $3 on hand to meet their company’s operational needs therefore sacrificing portions of inventory and accounts receivable may not be a good idea. However, there is a positive for SNC. The risk of inventory and accounts receivable can be equalized by negotiating a profitable deal with merchant Ayurveda Natural. II. Leverage Supplier Discount – SNC accepts the Atlantic Wellness contract allowing them to increase company sales. In addition to the contract with Atlantic Wellness, SNC also considers the acceptance of Ayurveda Naturals with the contract offer which is favorable to SNC because payment terms reflect a net gain. III. Tightening Receivable Accounts – Super Sports Centers accounts for 20% of SNC’s sales figures. However, Super Sports Centers takes the approximately 200 days to pay their accounts with SNC which is well above the normal 90-day average. To resolve this issue, SNC

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