목차 1.Case Summary 2.Question 1 3.Question 2
본문 Pepe Jeans
Pepe presented a range of jeans styles that offered a betterfitthan traditional 5- pocket Wsettern jeans. Agents take orders fromretailerfor six-month deliver. After Pepe receives an order, theretailer has only one week in which to cancel.
Current situation Pepe Jeans’ current situation: Unit Price = £ 45, Sale = £ 200M, Cost of sale = 40% = £80M, Operating Expense = 28% = £56M, Profit before taxes = 32% = £64M, Future expenses: Investment in new equipment = £1M, Operation cost per year = £500,000 Renovation cost = £300,000
Focus
Flexible system would lead to an increase in the sales of about 10% Current Sales - £200,000,000 10% of £200,000,000 would be £20,000,000
Question 1 Acting as an outside consultant, what would you recommend that Pepe do? Given the data in the case, perform a financial analysis to evaluate the alternatives that you have identified. (Assume that the new inventory could be valued at six weeks’ worth of the yearly cost of sales. Use a 30 percent inventory carrying cost rate.) Calulate a payback period for each alternative.
Decrease of lead would lead to an increase in costs by 30%
Currently the yearly cost of sales is 40% of sales of £200,000,000 that is £80,000,000(0.4x £200,000,000)
If the cost goes up by 30% it would mean 30% of £80,000,000M that is £24,000,000
It return for this increase in cost the company could make an approximate Increase in thePBT of£6,400,000 that would still mean (24,000,000 – 6,400,000) = £17,600,000 Additional burden on the company
The advantage in this alternative is that the company does not have to make any inital investment but has to incur this additional burden every year. Since no investment is made, no payback period is calculated.
본문내용
Case Study : Pepe Jeans
Pepe Jeans Pepe presented a range of jeans styles that offered a better fit than traditional 5- pocket Wsettern jeans. Agents take orders from retailer for six-month deliver. After Pepe receives an order, the retailer has only one week in which to cancel. Current situation Pepe Jeans’ current situation: Unit Price =45,Sale =200M,Cost of sale = 40% = 80M, Operatin |
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