Important products is called the superwidget

Assignment Help Financial Management

Reference no: EM132029090

You are the VP of operations and you have been interrupted from your vacation with some startling news. One of your company’s important products is called "The Superwidget". The US Government, and the national governments of many NATO countries, Japan, Australia, Argentina and Brazil each buy thousands of these Superwidgets a year.

Several companies manufacture a similar competing product and competition for Superwidgets is fierce, based on technical innovation, price, and delivery criteria. The Superwidget is manufactured from components, software, and firmware from numerous companies plus some internal fabrication of parts and subassemblies in your own plants. The final Superwidget usually sells for between $800 and $1200 per unit, based on some special features, warranty, and service. Your company has manufacturing facilities for the Superwidget in the US, Germany, Australia, and Brazil. These manufacturing facilities service specific areas of the world and there is no overlap.

Your company buys a particular subwidget for about $100/unit. This subwidget is a critical component of your Superwidget. You source the subwidget from only one supplier in the US through an exclusive supply contract. Your key competitors have similar exclusive arrangements for their subwidgets from other suppliers.

The phone call to your vacation spot is very disturbing. You have just been informed that deliveries of the subwidget will be late for the next 3 to 4 months. After your staff completed an analysis, it determined that your company does not have sufficient stock of subwidgets to cover the required deliveries for the next 4 to 6 months.

You recognize that you have a huge problem that will affect many aspects of the company’s operations.

Lett's assume that the senior management has concluded that tripling the buffer stock of subwidgets to a minimum of 9 months is one aspect of an appropriate response to the situation. The CFO recognizes that the following issues need to be addressed:

space capacity

cashflow and credit

additional manpower

potential for a decrease in Superwidget price

potential for potential reduction in demand

technological disruption and obsolescence

Which financial ratios are important to bring into the analysis of these potential conditions? Which financial ratios will help the CFO analyze the situation and determine the best courses of action?

Reference no: EM132029090

Questions Cloud

What will be the depreciation expense for the machine : If ABC uses the straight-line method of depreciation, what will be the depreciation expense for the machine in 2015

Discuss the different communication principles : In Chapter Two of your textbook, the author discusses four different communication principles. Choose one principle and briefly explain it in your own words.

What was net income for the year : Assuming that the company declared and paid a $3,100 dividend during the year, what was net income (loss) for the year

Discuss about the monopolistic competition : Having gone through the first 6 weeks of this course I thought that Monopolistic markets and Competitive markets were two separate things .

Important products is called the superwidget : One of your company’s important products is called "The Superwidget".

Discussing the leadership development plan : Interview/Annotated Bibliography Comparison. Compare your findings from your annotated bibliography to your findings from your interview.

Conduct a swot analysis to generate a list of perceived : Conduct a SWOT analysis to generate a list of perceived strengths, weaknesses, opportunities, and threats for the hospital.

How much depreciation expense should the company claim : The company uses the sum-of-the-years'-digits method of depreciation. How much depreciation expense should the company claim for year 2013

What was the estimated issue price of these bonds : What was the estimated issue price of these bonds on January 1, 2018? What the bond issue price will be if interest is paid semiannually

User Account

All Pages