YOU ARE THE VICE PRESIDENT OF OPERATIONS OF A CLOTHING MANUFACTURER. YOUR OPERATIONS HAVE BEEN DECLINING IN PRODUCTIVITY AND YOU WANT TO BUY TWO VERY EXPENSIVE PIECES OF EQUIPMENT ($1,000,000 EACH) TO SPEED UP MANUFACTURING- YOU WILL ALSO NEED TO RETRAIN EMPLOYEES.

USING THE RMA INDUSTRY RATIOS FOR THIS INDUSTRY (either male or female clothing) YOU NEED TO MAKE UP THE FINANCIAL STATEMENTS OF THIS COMPANY AND GIVE IT A NAME AND IDENTIFY FINANCIAL RATIOS (make sure your balance sheet balances and that your depreciation expense on your income statement and accumulated depreciation on the balance sheet make sense!)

LIQUIDITY RATIOS- QUICK, CURRENT, INVENTORY TURN, AVG COLLECTION PERIOD

LEVERAGE RATIOS- DEBT TO WORTH, TIMES INTEREST EARNED, DEGREE OF OPERATING LEVERAGE, DEGREE OF FINANCIAL LEVERAGE AND DEGREE OF COMBINED LEVERAGE

PROFITABILITY RATIOS - ROA AND ROE

MARKETABILITY RATIO- PRICE EARNINGS RATIO

YOU NEED TO PUT TOGETHER A PRO FORMA CASH BUDGET THAT PROJECTS THE CHANGES IN CASH THAT WILL BE GENERATED FROM THE TWO NEW MACHINES(12 POINTS)

THEN FIGURE THE INTERNAL RATE OF RETURN OF THIS PROJECT AND THE NET PRESENT VALUE (5 POINTS)

THEN FIGURE THE COMPANIES COST OF CAPITAL FROM YOUR FINANCIAL STATEMENTS. HOW WILL YOU RAISE THE CAPITAL(DEBT/EQUITY/MIX) (5 POINTS)

THE COMPANY CAN NOT BE OVER $10 MILLION IN ASSETS AND ALL NUMBERS. THEY NEED TO MAKE SENSE - WHAT SIZE COMPANY(TOTAL SALES) WOULD BE ABLE TO RAISE $2,000,000 IN CAPITAL.

THE ENTIRE FINANCIAL ANALYSIS MUST BE DONE ON A SPREADSHEET PACKAGE (Excel is preferred). THEN, YOU MUST WRITE A SHORT PAPER THAT IS ATTACHED TO THIS PROJECT EXPLAINING:

1) HOW YOU DECIDED THE SIZE OF THE COMPANY? AND HOW DID YOU DECIDE TO BE AT THE TOP, BOTTOM OR MIDDLE IN THE RMA FINANCIAL RATIOS?

2) WHAT ASSUMPTIONS DID YOU MAKE ABOUT THE CHANGES IN CASH?

) HOW DID YOU DECIDE YOUR CAPITAL STUCTURE MIX?

4) WOULD YOU ACCEPT OR REJECT THE PROJECT? IF THE COST OF CAPITAL INCREASED DUE TO AN INCREASE IN DEBT FINANCING OR THE DIVIDEND ON YOUR STOCK - HOW WOULD THIS CHANGE YOUR DECISION?

THIS PAPER NEEDS TO BE WRITTEN IN MLA FORMA WITH AN OPENING STATEMENT THAT INCLUDES A THESIS STATEMENT, BODY AND CONCLUSION. PLEASE SEE THE RUBRIC FOR HOW IT WILL BE GRADED.

2329 Mens and Boys clothing	2335 Womens Juniors dresses
ASSETS Cash & Equivalents Trade Receivables (net) Inventory All Other Current Total Current Fixed Assets (net) Intangibles (net) All Other Non-Current Total	11.3 25.2 35.7 2.9 75.0 17.5 2.3 5.2 100.0	15.7 28.6 37.5 5.7 87.5 5.0 .7 6.9 100.0
LIABILITIES Notes Payable-Short Term Cur. Mat.-L/T/D Trade Payables Income Taxes Payable All Other Current Total Current Long Term Debt Deferred Taxes All Other Non-Current Net Worth Total Liabilities & Net Worth	13.4 2.6 13.3 .2 9.0 38.6 9.1 .4 7.3 44.6 100.0	13.3 1.1 19.9 .2 11.5 46.0 5.0 .0 2.8 46.5 100.0
INCOME DATA Net Sales Gross Profit Operating Expenses Operating Profit All Other Expenses (net) Profit Before Taxes	100.0 28.2 25.9 2.3 1.1 1.2	100.0 38.1 31.0 7.1 .2 6.9
RATIOS Current	4.3 1.8 1.3	2.7 1.9 1.3
Quick	1.8 .9 .5	1.2 1.0 .6
Sales/Receivables	13.3 8.4 5.9	18.8 8.6 6.3
Cost of Sales/Inventory	6.3 4.4	8.4 5.7

	2.6	2.2
Cost of Sales/Payables	26.2 15.6 8.6	13.0 8.6 7.8
Sales/Working Capital	3.6 6.3 13.4	3.7 7.0 15.3
EBIT/Interest	7.3 2.2 1.1	7.7 2.4 -.0
Fixed/Worth	.2 .4 .7	.0 .1 .2
Debt/Worth	.3 1.3 3.3	.6 1.1 2.5
% Profit Before Taxes/Tangible Net Worth	28.4 8.2 .7	60.9 24.1 5.5
% Profit Before Taxes/Total Assets	11.6 3.6 -.3	23.6 12.9 .3
Sales/Net Fixed Assets	33.7 13.7 8.6	231.2 99.4 22.7
Sales/Total Assets	2.9 2.0 1.5	3.8 2.8 2.0
% Depr., Dep., Amort./Sales	.7 1.4 2.5	.1 .3 .6