Directions:

Use the case method to apply concepts, share ideas, and improve communication skills toward solving a complex business problem.

You must read the case (Ratios and Financial Planning at Tuxedo Air Inc. on p.107) carefully. Various assigned readings in this course lean toward value investing. Concepts related to financial statements and long-term financial planning (chapter 3) and valuation and future cash flows (chapter 7) will help you analyze the cases.

Preparing the Case Analysis:

Step 1. Define the problem (15% of assignment grade)

• Be sure to identify the problem and not the symptom of a problem. For example, a decline in sales is a symptom of a problem; you must identify the actual cause of the decline in sales.

Step 2. Formulate alternative solutions to the problem (20% of assignment grade)

• It may be helpful to brainstorm as many solutions as you can and then narrow your list down to three or four solutions you feel are the strongest.

Step 3. Evaluate and compare the alternative solutions (35% of assignment grade)

• To evaluate alternative solutions you should consider their strengths (e.g., increased productivity) and their weaknesses (e.g., increased cost).

Step 4. Recommend and justify an effective solution (30% of assignment grade)

• Be sure to record the reasons why the chosen solution is most effective. In your analysis you must provide a recommendation that is supported by your analysis.