Impressed by SNC's success with developing private-label products, Fountain of Youth Spas, a California-based network of exclusive day spas, has approached SNC with its own private-label product-line request. Fountain of Youth Spas would like SNC to develop a high-end, organic, age-defying nutraceutical line that spa beauticians could offer to well-heeled clientele.

Overall sales would increase by 5% in 2016-and by a cumulative 4% in 2017 and 3% in 2018.

This project would definitely increase SNC's overall margin by 2% but would also increase both DSO and DSI.

What would you like to do about this opportunity?

Accept or Decline

2016 2017 2018 Post 2018 Incremental Summary Income Statement ($ in thousands) Change in Sales $800 $1,472 $1,996 $1,996 Change in Cost of Sales $410 $1,023 $1,502 $1,502 Change in EBIT $390 $449 $494 $494 Incremental Balance Sheet ($ in thousands) Change in Accounts Receivable $379 $587 $749 $749 Change in Inventories $269 $427 $550 $550 Change in Accounts Payable $45 $111 $163 $163