1. If Janet asks for your advice, how would you summarise her main options? What analyses would help her?

2. Based on the information available, what recommendations would you make?

3. What other information would you need to make a reasoned decision?

Janet Simmons used to work from home and did a lot of printing from her computer. Over the years, the price of high-quality printers fell, but the replacement ink cartridges always seemed expensive. Ten years ago she formed OnlineInkCartridges.com to buy low-cost generic cartridges from China and sell them through the company website. Seven years ago, she added a recycling unit to refill customers’ old cartridges.

At first the business made a steady loss, but now sales are climbing steadily by around 10% a year. The last financial year showed a gross profit of €80,000, giving a margin of 7% and a return on investment of almost 5%.