George Castanza has just been appointed the new CEO of Mandalay Industries ("Mandalay"), a privately-held manufacturer of Latex products. Mr Castanza was appointed to the role of CEO as Mandalay's owners have seen the company fall behind its competition, and are looking for improved returns. In his former role, Mr Castanza successfully implemented Economic Value Added ("EVA") and is keen to drive improvements. A logical first step for Mr. Castanza is to analyse the EVA trajectory of Mandalay, so that appropriate strategies can be formulated and implemented in order to drive improved performance in the years to come. Limited financial and other information has been given to you, as follows: Mandalay Industries Limited Financial Data for the Year Ending, and/or as of 30 June 2020 Total Assets 8,437,000 NOTE: Current Assets of 3,325,000 Current Liabilities 3,500,000 Sales 14,500,000 Cost of Goods Sold 8,700,000 Interest Expense (before tax) 450,000 Non-interest operating expenses 5,500,000 Other information: . During the year, Mandalay made only interest payments (pre-tax bank rate of 10%) and did not make any principal repayments, nor did it borrow any additional funds. This debt is Mandalay's only non-Current Liability. Mandalay has a corporate tax rate of 30% The Latex Association of Australia suggests an equity return of 12% is appropriate in the current economic environment Required: (a) Analyse the financial data provided and provide a brief synopsis of the current situation for Mandalay Industries. Justify the use of your chosen measurement tool(s) (10 marks) (b) What is integral to be in place in a performance management system in order to increase the odds of its implementation being successful? List 3 key assumptions and elaborate on each as part of your response. (5 marks) (C) Based on your answers in (a) and (b), list three (3) recommendations you would make to Mr. Castanza in improving the fortunes of Mandalay Industries over the next 24 months. (5 marks) George Castanza has just been appointed the new CEO of Mandalay Industries ("Mandalay"), a privately-held manufacturer of Latex products. Mr Castanza was appointed to the role of CEO as Mandalay's owners have seen the company fall behind its competition, and are looking for improved returns. In his former role, Mr Castanza successfully implemented Economic Value Added ("EVA") and is keen to drive improvements. A logical first step for Mr. Castanza is to analyse the EVA trajectory of Mandalay, so that appropriate strategies can be formulated and implemented in order to drive improved performance in the years to come. Limited financial and other information has been given to you, as follows: Mandalay Industries Limited Financial Data for the Year Ending, and/or as of 30 June 2020 Total Assets 8,437,000 NOTE: Current Assets of 3,325,000 Current Liabilities 3,500,000 Sales 14,500,000 Cost of Goods Sold 8,700,000 Interest Expense (before tax) 450,000 Non-interest operating expenses 5,500,000 Other information: . During the year, Mandalay made only interest payments (pre-tax bank rate of 10%) and did not make any principal repayments, nor did it borrow any additional funds. This debt is Mandalay's only non-Current Liability. Mandalay has a corporate tax rate of 30% The Latex Association of Australia suggests an equity return of 12% is appropriate in the current economic environment Required: (a) Analyse the financial data provided and provide a brief synopsis of the current situation for Mandalay Industries. Justify the use of your chosen measurement tool(s) (10 marks) (b) What is integral to be in place in a performance management system in order to increase the odds of its implementation being successful? List 3 key assumptions and elaborate on each as part of your response. (5 marks) (C) Based on your answers in (a) and (b), list three (3) recommendations you would make to Mr. Castanza in improving the fortunes of Mandalay Industries over the next 24 months
