...Mercury Athletic Footwear: Valuing the Opportunity Team 10 / Mergers and Acquisitions West Coast Fashions, Inc (WCF) was a large business, which dealt with men’s and women’s apparel. One of their segments was Mercury Athletic Footwear. WCF wanted to dispose off this segment. They just wanted to divest because they wanted to focus more on their core business and move it up to the elite class. John Liedtke was the Business Development Head at that time in Active Gear Inc. He had a clear idea that acquiring Mercury will shoot up AGI’s revenues for sure. It would also ensure an expansion of the key business. In order to get a clearer picture on the acquisition, he needed to compare and analyze the company’s financials well. By this he could gauge the pros and cons of this acquisition. Are the strategic reasons behind the Merger good enough? Explain As a team, we had different views on this question. Some reasons make us think that it may be beneficial for AGI to grab the opportunity but some make us think that it might not be as promising as it seems. Let us see why we feel it is a good idea for AGI to acquire Mercury. | |Active Gear Inc. |Mercury Athletic Footwear | |Revenue |$470,285mn |$431,121mn | |% Revenue Product wise |42% Athletic 58% Casual ...
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...people, with a consultant nutritionist and delivered right into one’s doorstep is a good strategy to answer this demand. Ms. Jones has this new concept of grocery marketing and plans to pioneer in this novelty business- delivering to the household doorsteps of young professionals of high disposable income and willing to pay for services packages of groceries for a menu of pre-planned recipes for a weekly meal. The nutritional requirements of the packages are considered, premium quality ingredients and the most efficient method for preparing the over-all meal included. Like all new businesses on birth, niche in the business and its future growth studied; operational aspects planned – organization, capital equipments, sales projection, required financial capital- the projected operations for the first 3 years – escalations of requirements in every operational aspect matching the projected growth considered. Go-To Market: • Menu Planning and Grocery Delivery • A complete package of groceries and recipes for a week’s meals delivered to customers Target...
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...Q2: Financial projections based on forecasts of revenue and operating income for each of Mercury’s four main segments. Liedtke’s base case assumed that: * He assumed that Mercury’s historical corporate overhead-to-revenue ratio would conform to historical averages. * Women’s casual footwear will wound down in the first year of an acquisition. As he doubted that WCF would be willing to sell Mercury without it. * He didn’t prepare projections for debt or equity accounts. * To estimate a discount rate, Liedtke analyzed to assume the same degree of leverage for Mercury with AGI, which he estimated to be 20%. (Debt divided by the market value of AGI’s invested capital). * He expected this degree of leverage to pint a cost of debt for 6.0%, 40% tax rate, equal to AGI’s marginal tax rate. Mercury’s EBIT margin for 2006 was 9.8%. Lietdke’s 2007 projected EBIT reflects a conservative increase in EBIT of 9% compared to the average industry growth rate of 10%. According to the forecast for 2007 to 2011, the company is forecasted to show gradual and stable growth of consolidated income from $479.3 million to $597.7 million. This growth rate was estimated by assuming that men’s athletic sales will be declining from 15% in 2007 to 5% in 2011. Similar trends are assumed for women’s athletic which the growth rate is forecasted to decrease from 12% in 2007 to 5% in 2011. Men’s casual footwear, on the other hand, is expected to slowly increase its revenue growth rates...
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...In terms of the budget, a variable budget means that there is no determined dollar amount to allot for certain items in the budget. It is the examination of the deviation of an actual observation from the standard. Of course, in this scenario I don't have to opportunity to have a budget that remains constant, instead I am faced with a flexible budget as it relates to payroll. If I were to receive my monthly budget report and it has imbalanced findings because it is off budget, it would be bit concerning for me. The goal of a financial manager is to provide accurate budgets based on their reporting. Part of my duties include the financial success of the department. Presenting anything that falls short of the projections made by my department even as its coupled with some good news demands a moment of pause to reflect on the mistakes related to the projected budget. I would have to investigate the reasons behind the fluctuation of the inaccurate projection. Each reason would have provide insight and or justify the change. It would be easy to adopt the vein of thought that if the bad news is coupled with some good news or...
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...beverage service industry. The flagship location in suburban Anytown (Medlock Bridge) will gross in excess of $2 million in sales in its first year of operation. First year operations will produce a net profit of $445,000. This will be generated from an investment of $625,000 in initial capital. Since 10 months of operations have already been completed the confidence level for final first year numbers is extremely high. The first 10 months of start-up costs, sales revenues, and operating expenses are actual. Expansion plans are already underway. Owner funding and internally generated cash flow will enable additional stores to open. Sales projections for the next four years are based upon current planned store openings. Site surveys have been completed and prime locations have been targeted for store expansion. The sales figures and projections presented here are based upon an additional four store locations at the most premium sites available in the Anytown Metro market area as well as a prime resort location in Destin, Florida. Management has recognized the rapid growth potential made possible by the quick success and fast return-on-investment from the first location. Payback of total invested capital on the first location will be realized in less than 18 months of operation. Cash flow becomes positive from operations immediately and profits are substantial in the first year. Objectives Take Five has the objective of opening additional stores in Anytown Metro at Ashford-Dunwoody...
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...Science Technology Company -1985 ------------------- Model Answer: Science And Technology Co. Case Bill Watson as President of Science Technology Company (STC) should ask the Chief Financial Officer, Harry Finson, to fine tune and rehash the 5 year financing plan Harry prepared. This is to address the following issues and concerns: A. Projected thirty percent (30%) increase in annual sales Historically in a strong ATE market, STC was able to increase its sales on a compound annual growth rate of 12% only. In 1983, the company posted its highest sales increased thus far (20%). Preceding year (1984) however was below average at 10%. Industry wise, sales forecast is better and is expected to grow by 26% in the next four years. The 30% increase in annual sales projection prepared by the company’s division managers and Harry therefore is over stretched and very optimistic. A financial plan anchored on this simple projection without any detailed basis would be very risky for STC. It is suggested that projected sales growth is somewhere between historically what STC had achieved to industry growth forecast i.e. 12+ to 26%. B. Competition and the Industry While STC is optimistic about the long term prospects for the ATE industry, competition was intensifying over the past years. Citing VLSI test market as an example, in 1977 when STC decided to enter this new field, there were only two firms competing in the market with a combined 80% market share. STC spent...
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...West Coast Fashions, Inc (WCF) was a large business, which dealt with men’s and women’s apparel. One of their segments was Mercury Athletic Footwear. WCF wanted to dispose off this segment. They just wanted to divest because they wanted to focus more on their core business and move it up to the elite class. John Liedtke was the Business Development Head at that time in Active Gear Inc. He had a clear idea that acquiring Mercury will shoot up AGI’s revenues for sure. It would also ensure an expansion of the key business. In order to get a clearer picture on the acquisition, he needed to compare and analyze the company’s financials well. By this he could gauge the pros and cons of this acquisition. Are the strategic reasons behind the Merger good enough? Explain As a team, we had different views on this question. Some reasons make us think that it may be beneficial for AGI to grab the opportunity but some make us think that it might not be as promising as it seems. Let us see why we feel it is a good idea for AGI to acquire Mercury. Active Gear Inc. Mercury Athletic Footwear Revenue $470,285mn $431,121mn % Revenue Product wise 42% Athletic 58% Casual 79% Athletic 21% Casual Operating Income $60.4mn $42,299mn Revenue growth 2% to 6% 12.5% Active Gear was one of the most successful firms in terms of profitability, in the footwear industry. Mercury looked like a good opportunity for an attractive investment because they almost have the same revenues, while being smaller...
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...Mrs. Cayla Duncan Rios COMM145-501 22 February 2015 Old Bag Speech Evaluation Link: -http://www.youtube.com/watch?v=Zut0um94R60 I was given the task to evaluate and old back speech given on YouTube where the presenter began her presentation very enthusiastically making me interested in what she had to say and had very good body language projection. Her description of the reasoning for choosing her bag was very well put together and very detailed. She gave a good introduction on bags which lead to her over reasons of why she choose her specified bag and wanted to let audience no the emotional connection behind her choice which I got fully. She projected her voice clearly and introduced each topic flawlessly and in detailed. The organization of how she made each segment of her presentation was well put together. In her presentation on her item of the past she gave a good description and presented an item that completely complimented each other and as the audience listening to her speech I could completely relate to what she had to say without having gone through it myself. She had the same flow of connections in her second item as she did in the first one. At this point her voice was still projected excellently and her body language was still projected perfectly keeping me interested throughout the presentation. She then followed up her presentation on the final items was done in the same manner. She made sure that the audience cud relate to what she was saying...
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...I believe that Daniels is responsible for reporting the error to Peter. From the ethical reasoning perspective, I would attempt to identify the harms and benefits of whether informing my superior about potential error versus not informing them. The consequences of not reporting his mistake to Peter in projecting sales would be severe, not only for Daniels but also for entire Lynchberg Manufacturing. First, if the demand does not increase beyond the projected level later, Daniel would lose his job, and both Daniels and the company are going to involve themselves in a possible lawsuit. Besides that, regulators might investigate the failure of preparing an effective budget which probably lead to declines in net income. More important, both Daniel and the company are taking the risk of losing their reputations, which would cause the investors and creditors to lose the confidence in Lynchberg Manufacturing thus significantly affect its financing capability. Also, other stakeholders affected by his silence include employees in the accounting department who might underestimate the cost of each product, the management who might make unreasonable business decisions, suppliers who might face a dramatic sales return in raw material, and creditors who figure out the inaccurate debt repayment ratio. The primary benefit for Daniels is the acceptance from his boss and his job security in the short run. On the contrary, the consequence of reporting his mistake to Peter would cause Daniel...
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...A. Determine the feasibility of one of the proposed service lines. 1. Evaluate the demand for the new service line in the market area defined in the case study. Trinity Community Hospital is in need of a new orthopedic center. The need for an orthopedic unit is expect to increase to 46%, and spine procedures are expected to increase 30%. Outpatient spine and joint procedures are expected to go up by 350%. The five year projection plan for orthopedic unit is as follows: each orthopedic surgical gross charges is projected to be $25,000, physical therapy has a gross charge of $275 per unit. Collections are projected to be around 35%, and the ratio of cost to charges is 31% (Western Governors University, n.d.). The current research indicates the current area is in need of an orthopedic center. The other two hospitals that are close to Trinity represent the biggest competition and have a good orthopedic program. The other hospitals are private, and this increases the demand for Trinity developing a good orthopedic program. Trinity is centrally located within the community, and the population is expected to grow four percent a year, the need for a good orthopedic unit at Trinity will continue to grow. Trinity has performed a needs assessment, and determined Trinity could provide orthopedic services many people within the community. The current resources that Trinity has are not enough to keep up with the rising demand, and would benefit Trinity to develop an orthopedic unit...
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...copy any of their work. A hint of plagiarism will land you an “F” grade in the course. Both groups that are implicated in such a situation will get an F. E. Presentations are to be uploaded on a single computer. At one time only one group will be allowed inside the class. The other groups will stay outside and wait for the their turn. Following are the questions that your presentation will answer however you have to cover the entire spectrum of the case; so it will not be limited by these questions. 1. How would you describe HPL and its position within the private label personal care industry? 2. Using assumptions made by Executive VP of Manufacturing, Robert Gates, estimate the project’s FCFs. Are Gates’ projections realistic? If not, what changes might you incorporate? 3. Using CFO Sheila Dowling’s projected WACC schedule, what discount rate would you choose? What flaws, if any, might be inherent in using the WACC as the discount rate? 4. Estimate the project’s NPV. Would you recommend that Tucker Hansson proceed with the investment? 5. Use the excel sheet provided; develop scenarios and alternate scenarios and make all supplementary calculations...
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...and interacting with the projections on the table in front of us. Our order? Placed by the swipe of a finger. This is the future of restaurants. These types of table first introduce London’s “inamo” restaurant called E-Table, the interactive ordering system is designed to give patrons “more control over their dining experience”. A projector, which is installed in the ceiling above each table, projects an interactive menu on the tabletop. Using a touch mouse pad, patrons can navigate the menu, place orders, choose a virtual tablecloth, and project images of each meal on their plates to help them decide which one to get. The system isn’t only for placing orders – patrons can also use it to play video games, call a taxi, or watch the chef prepare their meals via a live webcam! E-Table also offers a lot of perks to the restaurant owners, like reduced staff costs, an increase in customer spending, and a more efficient way to deal with customers. How it works: The E-Table system uses overhead projection to deliver a menu and other digital images to a restaurant table-top. Projected images do overlay food dishes in restaurants but the system can be designed as clients want. In fact the restaurants have a clear display no projection over the plate. There are two touch panels built in to each table, which allow guests to browse the menu, place orders, and interact with the system. This hardware requires custom maid software to operate. Projection technology means surfaces...
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...have uninterrupted production schedule. They are not interested in implementation of Just-in-time inventory methods to reduce the overall cost. ▪ The current control and reporting system does not provide enough good quality data to guide management decision process. For example, no record for work in process is kept in the company. ▪ The accounts department is making the budget without getting any information from functional units. This way the budgets are not realistic and reflect only an accounting necessity rather than a decision making and control tool. ▪ The cash management system of the company is not good and company is facing the cash management problems. Validity and Reasonableness of Letsgo’s Sales Projections: Table-1: Actual and Projected Sales Growth | |Sales |% Increase | |1992 |13,765 | | |1993 |14,880 |8.10% | |1994 |15,991 |7.47%...
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...other aspects of their work are now getting increasing attention following their retrospective at the Scottish National Gallery of Modern Art in Edinburgh last year. A highlight of the exhibition was a video room devoted to a selection of Boyle projections from the 1960s, which are being shown in London for the first time since 1969. In the late 1950s Mark Boyle and Joan Hills set out to make an objective examination of reality that would not exclude anything as a potential subject. Whilst the development of the earth studies was one part of this project, Boyle and Hills also worked in other media including events, performance, film, photography and projection. They began experimenting with basic projections in 1962 and gradually developed a number of ideas and techniques for projection pieces which they initially put on for friends around the kitchen table. These would include projecting found sweet wrappers and coloured dyes or fizzy drinks such as Coca Cola and Tizer; melting ice, boiling water and burning slides with the heat of the projector. Boyle Family, Black and White projection Their first major event to include projections was Suddenly Last Supper (1964), which also included random collage films. Subsequently their projection pieces crystallized into three major works: Son et Lumière for Earth, Air, Fire and Water (1966), which presented physical and chemical reactions including evaporation, corrosion, combustion and effervescence; Son et Lumière for Insects, Reptiles...
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