More than $60 billion was spent on pets in the United States in the most recent year. Most of the revenue was albcated in two areas, with food and supplies making up 64 percent of the total, and care and housing making up another 24 percent. The industry's retailers are divided into two categories, specialty stores and large retail chain stores. Recent growth in overall industry revenue has averaged 5 percent ammually, while growth in the sale of premium pet food and services exceeds 10 percent per annum The owners of Pawstore want to maintain control and prevent a possible takeover from publicly held competitors. Given the NPV presented in the analysis, the most appropriate approach to the expansion plan is to O A) finance by issuing common stock O B) finance by issuing debt OC) abandon the expansion plan OD) finance by reissuing treasury stock Pawstore is a privately held specialy retailer of pet food, supplies, and services. The company is planning to launch a major expansion beginning in the current fiscal year. Pawstore's revenue from merchandise is dominated by national brands of dog and cat food, representing 92 percent of its net sales for the most recent fiscal year. Pawstore aspires to enter the specialty superstore category in geographic locations not yet occupied by large competitors. The company will meet its goals for growth by building and opening new stores rather than by acquiring small operators. The plan includes a significant shift into a range of huxury services, including pet spas and hotels, combined with the introduction of a line of gourmet, human-grade pet food. Preliminary financial analysis includes the following. Which of the following conditions would most likely enhance the prospects for Pawstore's use of equity to finance this project? OA) The company anticipates an increase in ts corporate tax rate. OB) The standard deviation of the project's cash flow projections has recently decreased. OC) The company's interest coverage ratio has recently increased. OD) The price/eamings ratios of its publicly traded peers have recently increased. Which of the following will most influence the maintenance and evolution of Pawstore's organizational culture? OA) The financial health of the company OB) The vision and values of the CEO OC) The manner in which empbyees are hired OD The needs and desires of consumers . Before moving ahead with its plan, Pawstore paid a market-research firm $500,000 for analysis and projections; the resuls of the research prompted management's decision to proceed. Pawstore's CFO conducted a rigorous statistical analysis that produced a net present value (NPV) of $3.6 million for the expansion, based on expected positive cash flows. Pawstore can finance most of the $40 million expansion cost with either a debt offering or a private placement of equity. Pawstore can best maintain the quality of its proposed products through which of the following? OA) Randomly inspecting products during the production process OB) Carefully monitoring any parts of its products that outsourced OC) Ensuring that quality criteria are established during planning stages OD) Implementing a robust post-production inspection process The CEO realizes that the expansion will have an effect on Pawstore's organizational culture, its vision that every pet is a quality pet," and its marketing strategy. More than $60 billion was spent on pets in the United States in the most recent year. Most of the revenue was albcated in two areas, with food and supplies making up 64 percent of the total, and care and housing making up another 24 percent. The industry's retailers are divided into two categories, specialty stores and large retail chain stores. Recent growth in overal industry revenue has averaged 5 percent annually, while growth in the sale of premium pet food and services exceeds 10 percent per annum. Pawstore can best maintain the quality of its proposed products through which of the following? OA) Randomly inspecting products during the production process OB) Carefully monitoring any parts of its products that are outsourced OC) Ensuring that quality criteria are established during planning stages OD) Implementing a robust post-production inspection process Pawstore's entrance into the specialty superstore category can be best descrbed as O A) market penetration O B) market skimming OC) product specialization OD) diversification Pawstore is a privately held specialty retailer of pet food, supplies, and services. The company is planning to launch a major expansion beginning in the current fiscal year. Pawstore's revenue from merchandise is dominated by national brands of dog and cat food, representing 92 percent of its net sales for the most recent fiscal year. Pawstore aspires to enter the specialty superstore category in geographic locations not yet occupied by large competitors. The company will meet its goals for growth by building and opening new stores rather than by acquiring small operators. The plan includes a significant shift into a range of hexury services, including pet spas and hotels, combined with the introduction of a line of gourmet, human-grade pet food. Preliminary financial analysis includes the following. The introduction of gourmet, human-grade pet food to Pawstore's offerings is considered which type of new product development? O A) An improvement to an existing product OB) A new-to-the-world innovation OC) An addition to an existing product line OD) An augmented product What would be the effect of issuing long-term debt or common equity on Pawstore's eamings per share (EPS)? Before moving ahead with its plan, Pawstore paid a market-research form $500,000 for analysis and projections, the resuls of the research prompted management's decision to proceed. Pawstore's CFO conducted a rigorous statistical analysis that produced a net present value (NPV) of $3.6 million for the expansion, based on expected positive cash flows. Pawstore can finance most of the $40 million expansion cost with either a debt offering or a private placement of equity. Effect of Issuance of Long-Term Debt on EPS Effect of Issuance Common Equty on EPS O A) No effect O B) Decrease OC) Decrease OD No effect Decrease Decrease No effect No effect The CEO realizes that the expansion will have an effect on Pawstore's organizational culture, its vision that every pet is a quality pet," and its marketing strategy
