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  • Horniman Horticulture Case

    Diunggah oleh

    3happy3
    1K tayangan6 halaman
    The document contains input data on projected sales, costs, credit terms, and financial metrics for a company under its current and proposed credit policies. It then shows the generated financial statements and cash flow impacts of changing to the proposed policy, including a reduction in days sales outstanding from 45.81 to 29.93 days and an improvement to the cash conversion cycle of $82,000. This results in higher after-tax profit of $413,170 compared to $331,090 under the current policy.

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    Horniman Horticulture Case Solution Excel Model for Horniman Case Workbook model

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    The document contains input data on projected sales, costs, credit terms, and financial metrics for a company under its current and proposed credit policies. It then shows the generated financial statements and cash flow impacts of changing to the proposed policy, including a reduction in days sales outstanding from 45.81 to 29.93 days and an improvement to the cash conversion cycle of $82,000. This results in higher after-tax profit of $413,170 compared to $331,090 under the current policy.

    Hak Cipta:

    © All Rights Reserved
    Unduh sebagai XLSX, PDF, TXT atau baca online dari Scribd
    Tandai sebagai konten tidak pantas
    1K tayangan6 halaman

    Horniman Horticulture Case

    Diunggah oleh

    3happy3
    The document contains input data on projected sales, costs, credit terms, and financial metrics for a company under its current and proposed credit policies. It then shows the generated financial statements and cash flow impacts of changing to the proposed policy, including a reduction in days sales outstanding from 45.81 to 29.93 days and an improvement to the cash conversion cycle of $82,000. This results in higher after-tax profit of $413,170 compared to $331,090 under the current policy.

    Hak Cipta:

    © All Rights Reserved
    Unduh sebagai XLSX, PDF, TXT atau baca online dari Scribd
    Tandai sebagai konten tidak pantas
    dari 6

    Input Data: (in thousands) Original projected sales % change Sales Variable cost ratio Tax rate Credit

    Variables Credit Sales % discount offered % credit cust with valid discount DSO valid discount % credit cust with nonvalid discount DSO nonvalid discount DSO nondiscount takers Bad Debt/Sales Potential Credit Variables Financing Cost Current Policy Proposed Policy $ 1,048.80 $ 1,048.80 0% 30% $ 1,048.80 $ 1,363.44 48% 50% 35% 35% 1/10 net 30 90% 0% 0% 10 0% 51 3% 90% 1.0% 30% 10 5% 20 45 3%

    6.50%

    6.50%

    Generated Data: Sales Discount Amount DSO all sales A/R Cost A/R Bad Debt $ $ $ $ $ 1,048.80 45.81 131.63 4.57 31.46 $ $ $ $ $ 1,363.44 3.68 29.93 85.99 3.33 40.90

    DSO All Sales: Current Policy: Customers Taking Valid discount Customers Taking Nonvalid discount Customers Not Taking discount Proposed Policy: Customers Taking Valid discount Customers Taking Nonvalid discount Customers Not Taking discount

    DSO 10 51

    % Customers % Cr. Sales 0% 90% 0% 90% 100% 90%

    10 20 45

    30% 5% 65%

    90% 90% 90%

    Output Data: Current Policy: Cost Discount Cost A/R Bad Debt Net Profit Proposed Policy: Cost Discount Cost A/R Bad Debt Net Profit CCC = AAI + ACP - APP $ $ 4.57 $ 31.46 $ 331.09 AAI = ACP = APP = CCC =

    2005

    $ 3.68 $ 3.33 $ 40.90 $ 413.17

    Projected 2006 228.61 AAI = 228.61 45.81 ACP = 29.93 3.63 APP = 30.00 270.80 228.54

    Proposed Income Statements: Gross Sales Discounts taken Net Sales Costs of Goods Sold Net Income pre credit Credit-related costs: A/R carrying cost Bad Debt Losses Net before Tax Taxes (35%) After-tax profit Current $ 1,048.80 $ $ 1,048.80 $ 503.40 $ 545.40 $ $ $ $ $ 4.57 31.46 509.37 178.28 331.09 New Policy $ 1,363.44 $ 3.68 $ 1,359.76 $ 679.88 $ 679.88 $ $ $ $ $ 3.33 40.90 635.65 222.48 413.17

    DSO all Sales 45.81 45.81 2.70 0.90 26.33 29.93

    Benefit Provided from Improving the Cash Conversion Cycle Original Sales $ 1,048.80 COGS $ 503.40 AAI 228.61 ACP 45.81 APP 3.63 CCC 270.80 Inventory $ 656.90 Receivables $ 131.63

    Payables Net operating working capital (NOWC) Improvement to FCF

    $ $

    5.00 783.53

    AP is going to be 41.38 (2005 fig)

    Conversion Cycle Improved $ 1,048.80 $ 503.40 228.61 29.93 30.00 228.54 $ 656.90 $ 85.99

    $ $ $

    41.38 701.51 82.02

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