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Sales Operating income Invested capital $8,100,000 648,000 9,000,000 In an effort to make something out of nothing and to salvage the current year's performance, Washburn was contemplating implementation of some or all of the following four strategies: a. Write off and discard $102,000 of obsolete inventory. The company will take a loss on the disposal. b. Accelerate the collection of $132,000 of overdue customer accounts receivable. c. Stop advertising through year-end and drastically reduce outlays for repairs and maintenance. These actions are expected to save the division $237,000 of expenses and will conserve cash resources. d. Acquire two competitors that are expected to have the following financial characteristics: Anderson Manufacturing Palm Beach Enterprises Projected Sales $4,740,000 6,990,000 Projected Operating Expenses $3,330,000 6,350,000 Projected Invested Capital $11,750, 000 8,000,000 -a. Determine the ROI of the investment in Anderson Manufacturing and do the same for the investment in Palm Beach Enterp -b. If Washburn wants to maximize ROI, what should the company do?

Sales Operating income Invested capital $8,100,000 648,000 9,000,000 In an effort to make something out of nothing and to salvage the current year's performance, Washburn was contemplating implementation of some or all of the following four strategies: a. Write off and discard $102,000 of obsolete inventory. The company will take a loss on the disposal. b. Accelerate the collection of $132,000 of overdue customer accounts receivable. c. Stop advertising through year-end and drastically reduce outlays for repairs and maintenance. These actions are expected to save the division $237,000 of expenses and will conserve cash resources. d. Acquire two competitors that are expected to have the following financial characteristics: Anderson Manufacturing Palm Beach Enterprises Projected Sales $4,740,000 6,990,000 Projected Operating Expenses $3,330,000 6,350,000 Projected Invested Capital $11,750, 000 8,000,000 -a. Determine the ROI of the investment in Anderson Manufacturing and do the same for the investment in Palm Beach Enterp -b. If Washburn wants to maximize ROI, what should the company do?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sales $8,100,000 Operating income Invested capital 648,000 9,000,000 In an effort to make something out of nothing and to salvage the current year's performance, Washburn was contemplating implementation of some or all of the following four strategies: a. Write off and discard $1002,000 of obsolete inventory. The company will take a loss on the disposal. b. Accelerate the collection of $132,000 of overdue customer accounts receivable. c. Stop advertising through year-end and drastically reduce outlays for repairs and maintenance. These actions are expected to save the division $237,000 of expenses and will conserve cash resources. d. Acquire two competitors that are expected to have the following financial characteristics: Projected Sales Anderson Manufacturing Palm Beach Enterprises Projected Operating Expenses $3,330,000 6,350,000 Projected Invested Capital $11,750,000 8,000, 000 $4,740,000 6,990,000 4-a. Determine the ROI of the investment in Anderson Manufacturing and do the same for the investment in Palm Beach Enterprises. 4-b. If Washburn wants to maximize ROI, what should the company do? < Prev of 14 Next >
Transcribed Image Text:Sales $8,100,000 Operating income Invested capital 648,000 9,000,000 In an effort to make something out of nothing and to salvage the current year's performance, Washburn was contemplating implementation of some or all of the following four strategies: a. Write off and discard $1002,000 of obsolete inventory. The company will take a loss on the disposal. b. Accelerate the collection of $132,000 of overdue customer accounts receivable. c. Stop advertising through year-end and drastically reduce outlays for repairs and maintenance. These actions are expected to save the division $237,000 of expenses and will conserve cash resources. d. Acquire two competitors that are expected to have the following financial characteristics: Projected Sales Anderson Manufacturing Palm Beach Enterprises Projected Operating Expenses $3,330,000 6,350,000 Projected Invested Capital $11,750,000 8,000, 000 $4,740,000 6,990,000 4-a. Determine the ROI of the investment in Anderson Manufacturing and do the same for the investment in Palm Beach Enterprises. 4-b. If Washburn wants to maximize ROI, what should the company do? < Prev of 14 Next >
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