...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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...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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...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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...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 more than 1,200 words that analyzes your...
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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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...Working Capital Simulation: Managing Growth FIN/571 June 15, 2015 Professor William Mellett Taking this Corporate Finance course has helped me gain the knowledge to view this simulation and provide a summary of why I made the decisions I did. If this was real-life and I was the CEO of Sunflower Nutraceuticals (SNC) I would need to be able to perform this analysis of the company. The analysis of the simulation and the decisions made will to increase SNC’s working capital and maximize SNC’s growth. According to Investopedia (2015), working capital ensures a company, like SNC, has sufficient cash flow in order to meet its short-term obligations and operating expenses. This paper will describe the decisions made in each phase in regards to SNC’s working capital and show the final results. Sunflower Nutraceuticals Background Sunflower Nutraceuticals (SNC) was founded in 2006 and is a privately owned nutraceuticals distributor of dietary supplements, herbs for women, minerals, and vitamins for all age groups. SNC customers include retail (mainly women), distributors and retailers. In 2006, SNC extended their business into retail outlets and introduced several of their own private-label brands, including a women’s sports drinks, metabolism-boosting powers, and vitamin’s for teenage girls. SNC has the potential to grow into a leading distributor but they are breaking even, have flat annual sales growth, have struggled to meet payroll obligations, and have exceeded their...
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...Lawrence Sports Simulation Working capital management and the capital conversion cycle are keys to success in companies. According to Emery, Finnerty & Stowe (2007), this term is defined as “the management of working capital management of assets and liabilities.” Having an excellent working capital management policy can help the company to be more effective in improving profits and reducing risk most commonly associated with capital investment. Lawrence Sports is a manufacturer and distributor of sports equipment. Following will include an analysis of the issues this corporation is currently facing. A list of recommendations to the company along with an analysis of the cash conversion cycle, the working capital management policies and cash management techniques to reduce the risk associated with capital investment, trade of products in other countries and currency exchange impact will be evaluated. Dependency Reduction Recommendation The Lawrence Sport simulation does emphasize the importance of all the business partners to the cash conversation cycle of the organization. For that reason, keeping a strong business bond between all partners is very much in need. Lawrence Sports has been having issues with cash flow because of late payments from vendors and sometimes a result of no payments. Lawrence Sports should work on improving its cash flow by establishing a system of regularity which can be done by adding competition on both sides of the transaction- the sales as well...
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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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...Impact of Profitablity on Growth: consumer packaged goods (CPG) INTRODUCTION Economic recovery remains vulnerable on all fronts a top-performing company analysis Getting on the global map Introduction Sales and income growth can be expected to influence rate of return and market value measures in both simulated and actual industries. It is unclear if growth in one year will affect profitability and market value measures in a succeeding year in simulated and actual environments. Asset growth, which can be used as a proxy for plant and equipment expenditures, and research intensity, may also affect sales and income growth in a base year or succeeding year, indirectly affecting profitability and market value. These direct and indirect effects may be different in simulated and actual industries, but if students are to learn from simulations there should be a reasonable correspondence between variable effects in simulated environments and real world industries. Recently, value based planning and performance measurement has been receiving more attention in business literature and in actual practice, since it provides a framework for using firm value as a strategic performance measures and focuses on profitability and growth as determinants of firm value (Varaiya, Kerwin, and Weeks, 1987). Many analysts and company executives believe that shareholder value (e.g., stock appreciation + dividends) is a better measure of long term corporate performance than accounting...
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...funding options, capital growth, and capital insufficiency, many hospitals are faced with making and planning financial decision in order to succeed. The Elijah Heart Center analysis simulation shows how to direct finance so that the Elijah Heart Center will have the ability to make good use of the organization funds. Creating a good financial decision for Elijah Heart Center involves analyzing the financial problems that Elijah Heart Center faces while deciding on which course of action should be taken. They must be able to identify and analyze any potential financial problems in order to make financial decisions in take another course of action. In this paper I will show how analysis simulation can help Elijah Heart Center make good use of funds to the best of the organizations ability. The Elijah Heart Center is a Cardiac Care Hospital that is dealing with a significant amount of loss in their accounting issues. The finance Department has reported that the revenue is increasing at a rapid rate with the rising rate of new patients, but the profits are falling. A financial consultant was hired to analyze the financial indicator and make recommendation and options on how to changes the financial loss that it is experiencing During this simulation review options were introduced to me on cost cutting method to improve cash flow and loan options to support the problem of cash flow. The simulation provided me with information to work on the capital shortage issues...
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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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...Tasks Read the WileyPLUS Student Support Review the Week 1 Study Guide. Familiarize yourself with the textbook used in this course. Visit the Student Finance Lab Learning Community. Objectives/Competencies Foundations of Finance 1.1Differentiate between financial statements. 1.2Differentiate between legal and tax structures for businesses. 1.3Identify the axioms of finance. Learning Activities Required Reading WileyPLUS Assignment: Fundamentals of Corporate Finance, Ch. 1 48 Reading WileyPLUS Assignment: Fundamentals of Corporate Finance, Ch. 2 25 Reading WileyPLUS Assignment: Fundamentals of Corporate Finance, Ch. 3 27 Website WileyPLUS Gradebook: Week 1 Gradebook ERR Week 1 Electronic Reserve Videos Recommended Reading Fundamentals of Corporate Finance, 2e Interactive/Tutorial WileyPLUS Assignment: Week 1 Vocabulary Activity 14 Interactive/Tutorial WileyPLUS Assignment: Week 1 Interactive Tutorials Activity Interactive/Tutorial WileyPLUS Read, Study & Practice: Week 1 Practice Interactive/Tutorial WileyPLUS Assignment: Week 1 Excel Resources Activity Video WileyPLUS Assignment: Week 1 Videos Activity 21 Assignments ASSIGNMENT STATUS FRIENDLY NAME TITLE DUE DATE POINTS UNREAD COMMENTS Participation Week 1 Participation Quiz WileyPLUS Assignment: Week 1 Practice Quiz Paper Business Structures Week2. Financial Statement Analysis. Jan 20 - Jan 26Week2 Financial Statement Analysis Jan 20 - Jan 26 12...
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...Lawrence Sports Simulation Lawrence Sports experienced difficult times in March and April when their biggest consumer could not pay for its products. Because of this, the cash conversion cycle was examined as well as the working capital management presently used. Additional views were studied to determine the best course of action for the company. Although multiple factors play a role in determining the best working capital management policy, Team D will offer recommendations and how each philosophy would be beneficial for Lawrence Sports. Cash Conversion Cycle Emery, Finnerty, and Stowe (2007) summarized that “the cash conversion cycle is the length of time between when a firm pays its accounts payable and when it collects on its accounts receivable and is equal to the inventory conversion period plus the receivables collection period minus the payables deferral period” (p. 659). The initial start for the cash implementation plan would be to create and demonstrate a vendor program, such as a payable deferral period program and create longer cash conversion cycles for floating payment programs for payments going to the banks. Next pre-arrange the short term borrowing program by using short term marketable securities. The Lawrence Sports Company financial departments need to begin following strict money formulas before any transactions pertaining to the market are made. Then it would be smart to hold cash balances for pertinent needs. This will allow and open doors for...
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...Excellence in Financial Management Course 3: Capital Budgeting Analysis Prepared by: Matt H. Evans, CPA, CMA, CFM This course provides a concise overview of capital budgeting analysis. This course is recommended for 2 hours of Continuing Professional Education. In order to receive credit, you will need to pass a multiple choice exam which is administered over the internet at www.exinfm.com/training A companion toll free course can be accessed by dialing 1-877-689-4097, option 3, ID 752. Chapter 1 The Overall Process Capital Expenditures Whenever we make an expenditure that generates a cash flow benefit for more than one year, this is a capital expenditure. Examples include the purchase of new equipment, expansion of production facilities, buying another company, acquiring new technologies, launching a research & development program, etc., etc., etc. Capital expenditures often involve large cash outlays with major implications on the future values of the company. Additionally, once we commit to making a capital expenditure it is sometimes difficult to backout. Therefore, we need to carefully analyze and evaluate proposed capital expenditures. The Three Stages of Capital Budgeting Analysis Capital Budgeting Analysis is a process of evaluating how we invest in capital assets; i.e. assets that provide cash flow benefits for more than one year. We are trying to answer the following question: Will the future benefits of this project be large enough...
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