Exhibit 1 Table compares changes in key financial KPIs between 2008 and 2009, as follows Exhibit 1 Select Income Statement and Balance Sheet Values ($MM) Income Statement Accounts 2008 2009 Net sales 65 0 86 3 Expenses Cost of goods sold 29 0 38 9 Sales, general and administrative 10 1 14 0 Research and development 13 5 17 0 Depreciation 2 9 3 1 Other expenses 0 6 1 0 Operating expenses 56 1 74 0 Interest expense 2 4 3 0 Taxes 2 0 2 9 Net earnings 4 5 6 5 Balance Sheet Accounts 2008 2009 Assets Cash 3 2 3 4 Receivables 3 0 4 0 Inventory 4 9 8 7 Prepaid expenses 4 8 6 1 Current assets 15 9 22 2 Plant property and equipment 28 5 32 9 Other long term assets 2 7 4 3 Total long term assets 31 2 37 2 Total assets 47 1 59 4 Liabilities Equity Short term debt 2 7 3 2 Accounts payable 2 3 3 0 Accrued liabilities 0 4 0 5 Current liabilities 5 4 6 7 Long term debt 17 2 21 7 Owners equity 24 5 31 0 Total capitalization 41 7 52 7 Total liabilities equity 47 1 59 4 Months of inventory 2 028 2 690 Cost of goods sold sales 0 446 0 451 Long term debt total capital 0 412 0 412 Data gathered from table used to answer problem below 1) Inventory growth rate COGS average inventory 38 9 6 8 5 72 average inventory opening inventory Closing inventory 2 4 9 8 7 2 6 8 2) Sales growth CY sales Py sales py sales 100 38 9 29 29 100 34 1 3) Net Working capital Current liabilties current assets 6 7 22 2 (15 5) 4) Days working capital Avg working capital sales revenue 365 15 5 86 3 365 65 5 days 5) DIO average inventory COGS 365 6 8 38 9 365 63 8 days 6) DSO avg account recievable sales 365 14 8 days 7) DPO avg account payable cogs 365 2 075 38 9 365 19 4 days 8) CCC DSO DIO DPO 14 8 63 8 19 4 59 2 Using the supporting data, provide an analysis of the current situation at SG Identify the key symptoms and provide clear problem statements to identify the root causes that result in the symptoms and poor performance Please use the course strategic framework tools, concepts, and Operations Rules for your analysis

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 10, 2024

Exhibit 1: Table compares changes in key financial KPIs between 2008 and 2009, as follows: Exhibit 1: Select Income Statement and Balance Sheet Values ($MM)

Exhibit 1: Table compares changes in key financial KPIs between 2008 and 2009, as follows:

Exhibit 1: Select Income Statement and Balance Sheet Values ($MM)

Income Statement Accounts	2008	2009
Net sales	65.0	86.3
Expenses
Cost of goods sold	29.0	38.9
Sales, general and administrative	10.1	14.0
Research and development	13.5	17.0
Depreciation	2.9	3.1
Other expenses	0.6	1.0
Operating expenses	56.1	74.0
Interest expense	2.4	3.0
Taxes	2.0	2.9
Net earnings	4.5	6.5

Balance Sheet Accounts	2008	2009
Assets
Cash	3.2	3.4
Receivables	3.0	4.0
Inventory	4.9	8.7
Prepaid expenses	4.8	6.1
Current assets	15.9	22.2
Plant property and equipment	28.5	32.9
Other long term assets	2.7	4.3
Total long term assets	31.2	37.2
Total assets	47.1	59.4
Liabilities & Equity
Short term debt	2.7	3.2
Accounts payable	2.3	3.0
Accrued liabilities	0.4	0.5
Current liabilities	5.4	6.7
Long term debt	17.2	21.7
Owners equity	24.5	31.0
Total capitalization	41.7	52.7
Total liabilities & equity	47.1	59.4

Months of inventory	2.028	2.690
Cost of goods sold / sales	0.446	0.451
Long term debt / total capital	0.412	0.412

Data gathered from table used to answer problem below:

1) Inventory growth rate = COGS/average inventory= 38.9/6.8= 5.72

average inventory = opening inventory + Closing inventory/2 = 4.9+8.7/2 = 6.8

2) Sales growth = CY sales - Py sales/py sales *100 = 38.9 - 29/29 * 100 = 34.1%

3) Net Working capital = Current liabilties - current assets = 6.7 - 22.2 = (15.5)

4) Days working capital = Avg working capital/sales revenue * 365 = 15.5/86.3*365 = 65.5 days

5) DIO= average inventory/COGS*365 = 6.8/38.9*365= 63.8 days

6) DSO= avg account recievable/sales*365 = 14.8 days

7) DPO= avg account payable/cogs * 365 = 2.075/38.9 * 365 = 19.4 days

8) CCC = DSO+DIO-DPO= 14.8+63.8-19.4= 59.2

Using the supporting data, provide an analysis of the current situation at SG. Identify the key symptoms and provide clear problem statements to identify the root causes that result in the symptoms and poor performance. Please use the course strategic framework tools, concepts, and Operations Rules for your analysis.