Part I of this case, presented in Chapter $3,$ discussed the situation of D$$Leon

Inc., a regional snack foods producer, after an expansion program. D$$Leon had increased plant capacity and

undertaken a major marketing campaign in an attempt to $$go national.$$ Thus far, sales have not been up to the

forecasted level, costs have been higher than were projected, and a large loss occurred in $2008$ rather than the

expected profit. As a result, its managers, directors, and investors are concerned about the firm$$s survival.

Donna Jamison was brought in as assistant to Fred Campo, D$$Leon$$s chairman, who had the task of getting

the company back into a sound financial position. D$$Leon$$s $2007$ and $2008$ balance sheets and income statements,

together with projections for $2009,$ are given in Tables IC $4-1$ and IC $4-2.$ In addition, Table IC $4-3$ gives the

company$$s $2007$ and $2008$ financial ratios, together with industry average data. The $2009$ projected financial

statement data represent Jamison$$s and Campo$$s best guess for $2009$ results, assuming that some new financing is

arranged to get the company $$over the hump.$$

Jamison examined monthly data for $2008($not given in the case$),$ and she detected an improving pattern

during the year. Monthly sales were rising, costs were falling, and large losses in the early months had turned to a

small profit by December. Thus, the annual data look somewhat worse than final monthly data. Also, it appears

to be taking longer for the advertising program to get the message out, for the new sales offices to generate sales,

and for the new manufacturing facilities to operate efficiently. In other words, the lags between spending money

and deriving benefits were longer than D$$Leon$$s managers had anticipated. For these reasons, Jamison and

Campo see hope for the company$$provided it can survive in the short run.

Jamison must prepare an analysis of where the company is now, what it must do to regain its financial

health, and what actions should be taken. Your assignment is to help her answer the following questions. Provide

clear explanations, not yes or no answers