Question
PLEASE Show how you got answers!!!! QUESTIONS!! What challenges did you encounter in these steps of the simulation? What working capital options did you consider
PLEASE Show how you got answers!!!!
QUESTIONS!!
What challenges did you encounter in these steps of the simulation?
What working capital options did you consider in making cash flow decisions and/or cash forecasting?
How do cash flow decisions in prior phases affect current cash flow?
How did your choices lead to different outcomes achieved for SNCs revenue and firm value?
What are the effects of credit restrictions
Drop Poorly Selling Products
Although reducing the number of SKUs that SNC carries in its product offering did have a negative impact on sales volume, the amount of cash tied up in inventory decreased significantly as a result of streamlining the SKU count
Tighten Accounts Receivable
Although sales declined as a result of SNC's decision to drop Super Sports Centers, the company's accounts receivable picture improved dramatically, freeing up cash.
Acquire a New Customer
Taking on Atlantic Wellness as a new customer increased sales significantly but resulted in higher accounts receivable and inventory balances
Develop a Private-Label Product
Selling the private label product to Fountain of Youth Spas increased SNC's EBIT margin, only modestly resulting in increased accounts receivable and inventory balances.
Pursue Big-Box Distribution
Taking on Mega- Mart Inc. as a customer resulted in impressive top-line growth but the company's EBIT margin declined.
Renegotiate Supplier Credit Terms
SNC's ability to renegotiate payment terms with Dynasty Enterprises resulted in a significantly lower accounts payable balance and improved margin.
Acquire a High-Risk Customer
Taking on Midwest Miracles as a new customer meaningfully increased sales volume, but had a dramatic impact on the company's accounts receivable balance. Given recent rumors regarding Midwest Miracles' potential Chapter 11 filing, SNC now has to consider writing off a portion of the outstanding balance.
(data in thousands of dollars) | 2010 | 2011 | 2012 |
---|---|---|---|
Minimum Cash Requirement | $300 | $300 | $300 |
Cash & Equivalents (Shortfall)* | $0 | $0 | $0 |
Accounts Receivable | $3,123 | $3,096 | $3,014 |
Inventories | $2,357 | $2,348 | $2,305 |
Other CA | $0 | $0 | $0 |
Total Current Assets | $5,781 | $5,744 | $5,619 |
Net PP&E | $40 | $40 | $40 |
Other FA | $0 | $0 | $0 |
Total Assets | $5,821 | $5,784 | $5,659 |
Accounts Payable | $1,021 | $1,055 | $1,050 |
Acrued Expenses | $0 | $0 | $0 |
Total Current Liabilities | $1,021 | $1,055 | $1,050 |
Amount Borrowed from Credit Line | $3,332 | $3,200 | $2,844 |
Total Liabilities | $4,353 | $4,255 | $3,894 |
Common Stock | $200 | $200 | $200 |
Retained Earnings | $1,267 | $1,329 | $1,565 |
Total Stockholder's Equity | $1,467 | $1,529 | $1,765 |
Total Liabilities & Equity | $5,821 | $5,784 | $5,659 |
(data in thousands of dollars) | 2012 | 2013 | 2014 | 2015 |
---|---|---|---|---|
Minimum Cash Requirement | $300 | $300 | $300 | $300 |
Cash & Equivalents (Shortfall)* | $0 | $0 | $0 | $0 |
Accounts Receivable | $3,014 | $2,822 | $2,822 | $2,822 |
Inventories | $2,305 | $2,444 | $2,444 | $2,444 |
Other CA | $0 | $0 | $0 | $0 |
Total Current Assets | $5,619 | $5,566 | $5,566 | $5,566 |
Net PP&E | $40 | $40 | $40 | $40 |
Other FA | $0 | $0 | $0 | $0 |
Total Assets | $5,659 | $5,606 | $5,606 | $5,606 |
Accounts Payable | $1,050 | $1,155 | $1,155 | $1,155 |
Acrued Expenses | $0 | $0 | $0 | $0 |
Total Current Liabilities | $1,050 | $1,155 | $1,155 | $1,155 |
Amount Borrowed from Credit Line | $2,844 | $2,393 | $2,079 | $1,750 |
Total Liabilities | $3,894 | $3,548 | $3,235 | $2,906 |
Common Stock | $200 | $200 | $200 | $200 |
Retained Earnings | $1,565 | $1,857 | $2,171 | $2,500 |
Total Stockholder's Equity | $1,765 | $2,057 | $2,371 | $2,700 |
Total Liabilities & Equity | $5,659 | $5,606 | $5,606 | $5,606 |
(data in thousands of dollars) | 2015 | 2016 | 2017 | 2018 |
---|---|---|---|---|
Minimum Cash Requirement | $300 | $300 | $300 | $300 |
Cash & Equivalents (Shortfall)* | $0 | $0 | $0 | $0 |
Accounts Receivable | $2,822 | $3,650 | $4,031 | $4,310 |
Inventories | $2,444 | $3,254 | $3,666 | $3,917 |
Other CA | $0 | $0 | $0 | $0 |
Total Current Assets | $5,566 | $7,205 | $7,998 | $8,528 |
Net PP&E | $40 | $40 | $40 | $40 |
Other FA | $0 | $0 | $0 | $0 |
Total Assets | $5,606 | $7,245 | $8,038 | $8,568 |
Accounts Payable | $1,155 | $1,484 | $1,676 | $1,793 |
Acrued Expenses | $0 | $0 | $0 | $0 |
Total Current Liabilities | $1,155 | $1,484 | $1,676 | $1,793 |
Amount Borrowed from Credit Line | $1,750 | $2,490 | $2,482 | $2,241 |
Total Liabilities | $2,906 | $3,974 | $4,158 | $4,034 |
Common Stock | $200 | $200 | $200 | $200 |
Retained Earnings | $2,500 | $3,071 | $3,679 | $4,334 |
Total Stockholder's Equity | $2,700 | $3,271 | $3,879 | $4,534 |
Total Liabilities & Equity | $5,606 | $7,245 | $8,038 | $8,568 |
(data in thousands of dollars) | 2018 | 2019 | 2020 | 2021 |
---|---|---|---|---|
Minimum Cash Requirement | $300 | $300 | $300 | $300 |
Cash & Equivalents (Shortfall)* | $0 | -$2,252 | -$1,092 | $0 |
Accounts Receivable | $4,310 | $6,832 | $6,832 | $6,832 |
Inventories | $3,917 | $4,967 | $4,967 | $4,967 |
Other CA | $0 | $0 | $0 | $0 |
Total Current Assets | $8,528 | $9,847 | $11,007 | $12,099 |
Net PP&E | $40 | $40 | $40 | $40 |
Other FA | $0 | $0 | $0 | $0 |
Total Assets | $8,568 | $9,887 | $11,047 | $12,139 |
Accounts Payable | $1,793 | $947 | $947 | $947 |
Acrued Expenses | $0 | $0 | $0 | $0 |
Total Current Liabilities | $1,793 | $947 | $947 | $947 |
Amount Borrowed from Credit Line | $2,241 | $3,200 | $3,200 | $3,132 |
Total Liabilities | $4,034 | $4,147 | $4,147 | $4,079 |
Common Stock | $200 | $200 | $200 | $200 |
Retained Earnings | $4,334 | $5,540 | $6,700 | $7,860 |
Total Stockholder's Equity | $4,534 | $5,740 | $6,900 | $8,060 |
Total Liabilities & Equity | $8,568 | $9,887 | $11,047 | $12,139 |
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