...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 access of financial mix. Sunflower Nutraceuticals (SNC) Background 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 operational needs. SNC has a somewhat restrictive...
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...As eager entrepreneurs, we all think that when making sound business decisions we would make the “right” one. In the working capital simulation, we were able to analyze what investments should be made regarding growth and cash-flow improvement opportunities. In addition to financial details of Sunflower Nutraceuticals Company (SNC), we examined the outcome of each decision during three phases within a nine year period. This paper will describe what decisions had the best outcome in regards to the SNC’s working capital. Sunflower Nutraceuticals Background Jane Cheng CEO founded sunflower Nutraceuticals in 2006 in Miami, Florida. SNC is a privately held company that provides dietary supplements such as vitamins, minerals, and herbs for women and other products for all age groups. Over the years, Cheng expanded into new retail outlets and private brands such as women’s sports drinks, teenage vitamins and metabolism boosting medication. Over the past few years, more than one Cheng was unsure how she was going to pay all the overhead and the line of credit was overdrawn several times. Currently, the business is breaking even with sales growth of total revenue being $10 million. The facility’s credit limit, $3.2 million, is based on the percentage of accounts receivable and inventory. The credit line is set at 8%, and SNC uses 12% cost of capital to evaluate possible investment opportunities. In 2010, the nutraceutical market was estimated to be worth $126.6 billion, and it is...
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...Working Capital - Managing Growth FIN/571 07/07/2014 JOHN KUSHNER WORKING CAPITAL- MANAGING GROWTH Introduction Working capital management plays an essential role in keeping a business running and producing wealth for its shareholders. While analyzing the entire data details of Sunflower Nutraceuticals (SNC) Company, we can identify which decisions will increase the company working capital and maximize the company growth. We can also examine how changes take place in each phase of the simulation and finally evaluate in the final step the general affects associated with the limited access of financial mix. SNC background SNC is a privately owned distributor of vital dietary supplements such as herbs for women, vitamins, and minerals for all the consumers (mainly women), distributors and retailers. Created in 2006, SNC was able to extend their business and opened various retail outlets making a name for the company in the industry by introducing their own brands of sport drinks, vitamins for teenagers, metabolism- boosting powders, and other products. The company has a great potential for growth, but it is still struggling to break even and several times had to exceed the company’s credit line to finance the payroll and other operational expenses. Due to restrictive financial options, they are only able to use a small percentage to evaluate and invest in business expansion which could boost great opportunities. We will analyze the changes in sales, EBIT, company value...
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...down payment. She does not want to spend much time in managing her investments and has a medium-low risk level. Her goal on investment is seeking for growth for down payments on a house if she decides to pay 25 percent down payment. However, if she decides to pay less than 25 percent down payment, her investment goal is seeking for income. Different investment goal differentiates investment choices. The purpose of this case study is to recommend possible investment choices for Jane and the criteria used to evaluate those investment choices. Introduction Jane has inherited $30,000 from her grandmother and plans to invest this money for a future down payment on a house. Her plan is to buy a house outside of Toronto area in the next three to four years. She has a lost risk level of four out of ten as she does not want to lose the money she got from her grandmother. Moreover, she would like to obtain tax relief on her investment. At the same time, she only wants to spend about one hour per month in managing her investment. She has an adequate emergency fund on hand; therefore, she does not need to access these funds. Her travel expenses will be paid by her income. Investment Goals The primary investment goal is to obtain a future down payment on a house outside of Toronto in the next three to four years. She has a medium-low risk level of four out of ten. Moreover, she only wants to spend one hour per month in managing her investment. For the purpose of this assignment,...
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...Capital Structure “The capital structure is how a firm finances its overall operations and growth by using different sources of funds…When people refer to capital structure they are most likely referring to a firm's debt-to-equity ratio, which provides insight into how risky a company is” (Capital Structure). After evaluating the changes in different capital structures for years nine through thirteen, it is obvious that the best capital structure overall is 50% Preferred and 50% Common Stock. This choice optimizes the returns for shareholders overall. The only option that comes closest is 20% 9% Bonds and Common Stock. The first year, the 20% option yields a higher return on Earnings per Common Stock share. The second year, the two options yield the same return. After this, however, the 50% option yields .001% more the third year, .002% more the fourth year, and .003% more the fifth year. According to this trend, this option will exceed all other capital structure options by a fairly large sum in future years. The other options are not advisable because while all options do show growth, none show more Earnings per Common Stock share than the 50% option shows. This is also the option that shows the most even split between investments. All other capital structures have uneven splits between investments, which may prove a weakness should the larger of the two investors fail. For example, in the 20% option that was the secondary choice, the alternative capital sources were split...
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...Managing Growth Simulation FIN/571 Managing Growth Simulation Introduction The complete course has reveled us the great idea to influence our trends and intelligence while analyzing the entire details of Sunflower Nutraceuticals (SNC) company followed with all the decisions of the company which tends to increase their working capital and maximizing the overall organizational growth potentially with respect to time, as we have figured out the data and change in numbers below which reflects the growth annually. Moreover in addition to various details of the SNC firm we have also examined various decisions which took place in each of the phase of SNC’s simulation which has an estimated values to figure out the results, secondly the paper also describes how SNC’s decisions are influenced with respect to their working capital followed with the final step of evaluating the general affects associated with the limited access of financial mix. Sunflower Nutraceuticals (SNC) Background No wonder SNC is a privately owned Nutraceuticals company , more over one can say it is a wide distributor which provides all the vital dietary supplements such as herbs for women’s, vitamins, and minerals for all the consumers (mainly women’s), distributors and retailers. (Harvard Business School Publishing, 2012). Once the business was initiated after 2006, SNC expanded their operations and came up with various retail outlets in the nutraceutical...
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...A++PAPER;http://www.homeworkproviders.com/shop/fin-571-week-6/ FIN 571 WEEK 6 Week 6: Managing Financial Growth Resources: Harvard Business Publishing: Working Capital Simulation: Managing Growth Assignment Ch. 1 – 21 of Fundamentals of Corporate Finance WileyPLUS Assignments All additional resources from each week Review the following scenario: Acting as the CEO of a small company, you will apply the principles of capital budgeting to invest in growth and cash flow improvement opportunities in three phases over 10 simulated years. Each opportunity has a unique financial profile and you must analyze the effects on working capital. Examples of opportunities include taking on new customers, capitalizing on supplier discounts, and reducing inventory. You must understand how the income statement, balance sheet, and statement of cash flows are interconnected and be able to analyze forecasted financial information to consider possible effects of each opportunity on the firm’s financial position. The company operates on thin margins with a constrained cash position and limited available credit. You must optimize use of internal and external credit as you balance the desire for growth with the need for maintaining liquidity. Sign-in to the simulation and review each of the following: Welcome Statement How to Play Terminology Primer More Details (this includes information to help you understand how to play the simulation) Write a paper of no...
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...FINANCE CAPITAL BUDGETING SIMULATION WORKSHEET Part I – Loan Analysis |Group Members: | | |Loan Decision: | | |Loan Amount: | | |Interest Rate: | | INSTRUCTIONS: Congratulations! Your team is the newest addition to the loan committee at Barsema Hall Investment Bank (BHIB). The CEO of the New Heritage Doll Company has come to BHIB for a potential commercial loan to support future capital expenditures for their production, retail, and licensing divisions over the next five years. Your team has been charged with evaluating their financials and deciding whether to extend the loan, the maximum amount BHIB will lend, and at what interest rate. Review the foreground reading and company financials posted on Blackboard in the ‘Simulation’ section. You may also use other third party resources (i.e. Google searches, etc) if you feel it is helpful, but the materials provided on Blackboard take precedence in the case of conflicting information. Complete the executive summary, qualitative...
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...of the Government in 1976 as a joint venture between the Government of Bangladesh and sponsors in the private sector with the objective of working as a finance company within the country and setting up joint venture banks/financial institutions aboard. In 1983 when the Government allowed banks in the private sector, IFIC was converted into a full-fledged commercial bank. The Government of the People’s Republic of Bangladesh now holds 32.75% of the share capital of the Bank. Directors and Sponsors having vast experience in the field of trade and commerce own 8.62% of the share capital and the rest is held by the general public. Mission: Our Mission is to provide service to our clients with the help of a skilled and dedicated workforce whose creative talents, innovative actions and competitive edge make our position unique in giving quality service to all institutions and individuals that we care for. We are committed to the welfare and economic prosperity of the people and the community, for we derive from them our inspiration and drive for onward progress to prosperity. We want to be the leader among banks in Bangladesh and make our indelible mark as an active partner in regional banking operating beyond the national boundary. In an intensely competitive and complex financial and business environment, we particularly focus on growth and profitability of all concerned. Milestones in the development of IFIC BANK 1976 - Established as an Investment & Finance Company...
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...Working Capital Simulation Any Name Introduction The purpose of this paper is to analyze the Sunflower Nutraceutics (SNC) opportunities for investment, which will result in growth and increase/better cash flow for a forecast years of 10 years from the present year. Each stimulation should provide information/data that allows for opportunity and effects of the company’s working capital (future). The paper will analyze each phase of SNC’s simulation regarding working capital and its ability to have adequate cash flow for meeting debt (long and short) and operating expenses. Sunflower Nutraceutics (SNC) efforts to manage its working capital are a continuous process. SNC needs new business ventures to found from other capital invests in the business. SNC has to continue to generate working capital to pay its bills, take advantage of profit generating opportunities, expand on present and future growth of its business and compete in its market. Company Background Sunflower Nutraceuticals (SNC) is a privately owned nutraceuticals distributor, Miami, Florida. SNC distribute dietary supplements, vitamins, minerals and herbs for women of all ages. SNC has expanded its business into several new retail outlets and launched several private-label brands, which include an electrolyte sports drinks, metabolism-boosting powders for women and a vitamin line for teenage girls. SNC is breaking even, with relatively flat annual sales growth on total revenues of $10 million...
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...At Palamon we are passionate about the companies we partner. Louis G. Elson Managing Partner Fabio Massimo Giuseppetti Jonathan Heathcote Holger Kleingarn Daan A. Knottenbelt Daniel Mytnik Partners Valerio Boccardi Jean Bonnavion Julian Carreras Ricardo Caupers Owen Wilson Principals Michael Beetz Pascal J. Noth Olivia Roberts Associate Principals Anthony Luzzatto Gardner Managing Director of Structured Finance Annette E. Wilson Managing Director of Investor Relations & Marketing Gary Pritchard Chief Financial Officer Board of Advisors A. Michael Hoffman Chairman Peter Currie Prof Robert M. Johnson Dr Hans-Joachim Körber Joaquin Moya-Angeler Simon M. Olswang Lorenzo Pellicioli Harland A. Riker, Jr. Ron Sandler CBE Stanley S. Shuman Dr Tom Sommerlatte Geoff Unwin Dr Richard Wolman Economic Advisor Lord Eatwell of Stratton St. Margaret Contents Introduction Philosophy Palamon Style Investment Process A European Perspective Types of Investment Portfolio Composition Indicative Investments The Team Board of Advisors Economic Advisor 1 2 4 6 8 10 12 14 26 40 45 Palamon Capital Partners Introduction Palamon Capital Partners is a private equity partnership. We invest throughout Europe in service-orientated businesses with high growth potential. With €1.1 billion of funds under management, we are backed by some of the biggest investment institutions in the world. We back like-minded entrepreneurs with whom we share a vision to create sector-leading, high-value...
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...SELECTION CRITERIA: In selecting what option to select the team came up with the following criteria: 1.) Selected option should lead to a reduction in working capital requirement and reduce short term debt in the process. 2.) Selected option should reduce the Cash Conversion Cycle. 3.) Selected option should free up locked capital in receivables and inventories. 4.) Selected option should lead to a zero working capital policy in the long run. SELECTED OPTIONS: We decided to tighten accounts receivable and drop poorly selling products because they yielded a percentage decrease in working capital requirement larger than their percentage drop in sales. Also these 2 options fit all the selection criteria we stated above. The initial selection criteria for the first phase was to manage the thin margins of SNC that seemed like the biggest limitation towards growth. The selected option, therefore, should lead to an overall reduction in the working capital requirement while reducing the short term debt in the process. Additionally, the cash conversion cycle had to be reduced in order to better manage cash that gets tied up in inventories. Freeing up locked capital in receivables and inventories became a big priority for my strategy moving ahead. Given the four options, the best ones suited to my initial goals for the company were options 2, 3, & 4. Tightening accounts receivable would lead to a decrease in sales but improve the DSO (days sales outstanding) significantly. This was...
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...Dividend Policy Over the years, the Company has consistently followed a policy of paying high dividends, keeping in mind the cashgenerating capacities, the expected capital needs of the business and strategic considerations. For 2009-10, the board has recommended a dividend of 1,500 percent higher than 1,000 percent declared in previous year and has maintained a payout ratio of 31.3 percent vis-a-vis 36.5 percent in the previous year. Further, board has also declared 4,000 percent interim dividend on the occasion of 25th year. Table Working Capital Management & Liquidity Ratios Table 2:1: Key Indicators Of Profitability 2009-10 Inventory Period Operating Cycle Cash Cycle Current Ratio Acid Test Ratio 10.6 13.3 -17.0 0.45 0.26 2008-09 11.0 16.9 -13.1 0.51 0.30 Working Capital management Hero Honda has always sought to efficiently use the various components of working capital cycle. The Company has been able to effectively control the receivable and inventories enabling it to continue to operate on negative working capital. Notes On Working Capital The average of inventory, receivables and payables has been taken for calculations of inventory period, operating and cash cycle. RISKS AND OUTLOOK Global uncertainty: While India's growth path remains clear and secure, there could some ripples on liquidity in India. The debt-related troubles within the Eurozone could slow down the pace of global economic recovery. Commodity prices: Even though the surge in commodity...
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...Case 7 Megahertz Communications Established in 1982, U.K.-based Megahertz Communications quickly became one of Great Britain’s leading independent broadcasting system builders. The company’s core skill is in the design, manufacture, and installation of TV and radio broadcast systems, including broadcast and news-gathering vehicles with satellite links. In 1998, Megahertz’s managing director, Ashley Coles, set up a subsidiary company, Megahertz International, to sell products to the Middle East, Africa, and Eastern Europe. While the EU market for media and broadcasting is both mature and well served by large established companies, the Middle East, Africa, and Eastern Europe are growth markets with significant long-term potential for media and broadcasting. At the time, they were not well served by other companies, and all three regions lacked an adequate supply of local broadcast engineers. Megahertz International’s export strategy was simple. The company aimed to provide a turnkey solution to emerging broadcast and media entities in Africa, the Middle East, and Eastern Europe, offering to custom design, manufacture, install, and test broadcasting systems. to gain access to customers, Megahertz hired salespeople with significant experience in these regions and opened a foreign sales office in Italy. Megahertz also exhibited at a number of exhibitions that focused on the targeted regions, sent mailings and e-mail messages to local broadcasters, and set up a Web page...
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...Managing Growth Simulation Mutaher Hussain FIN 571 December 14, 2014 Susanne Elliott Introduction The simulation has uncovered the position of financial data and intelligence to observe the works of the Sunflower Nutracuetical, or SNC Company. The simulation chronologically goes through the common theories that have to be made influencing the working capital and organizational development. The data and numbers in the simulation support the perception of the yearly growth. At all individual phases of the SNC simulation, a conclusion is made which is then explored for its projected influences on the working capital, and in the finale a comprehensive summary of the effects of all the phase assertions on the entire establishment is documented. SNC Background SNC is a privately maintained firm that generates and trades dietary and herbal supplements, particularly vitamins and minerals (Harvard Business School Publishing, 2012). The market for the merchandises of SNC commonly consist of women and older individuals. The corporate was started in 2006, and constantly since has increased its operations into innovative product markets, engineering and marketing its SNC-branded energy and sports drinks, vitamin powder, metabolism-enhancing...
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