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1. What is the inherent flaw in CPI?s business model that creates a cash flow management challenge? 2. Calculate the financial statement impact to CPI
- 1. What is the inherent flaw in CPI?s business model that creates a cash flow management challenge?
- 2. Calculate the financial statement impact to CPI if the project team is able to improve the billing process and achieve its goal of issuing invoices within one day of shipment? You need to determine the sources of savings and quantify the amounts. You also need to determine if the savings are one-time events or annual recurring savings. (HINT: Keep separate the balance sheet savings from the savings affecting only the income statement).
- 3. Goldman Sachs stated that printing companies normally sell for a multiple of 15x earnings. CPI plans to issue 10 million shares. If the billing project realizes the savings you estimate, what will be the offering price when the CPI completes its IPO. (Note: the corporate tax rate is 35%).
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