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: 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 Anderson Manufacturing Palm Beach Enterprises -a. What effect would strategy (a) have had on the Reliable's Sporting Goods Division's ROI had it been implemented somet uring the past nine months? -b. What effect would strategy (b) have had on the Reliable's Sporting Goods Division's ROI had it been implemented somet luring the past nine months?
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: 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 Anderson Manufacturing Palm Beach Enterprises -a. What effect would strategy (a) have had on the Reliable's Sporting Goods Division's ROI had it been implemented somet uring the past nine months? -b. What effect would strategy (b) have had on the Reliable's Sporting Goods Division's ROI had it been implemented somet luring the past nine months?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:
18
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
Anderson Manufacturing
Palm Beach Enterprises
2-a. What effect would strategy (a) have had on the Reliable's Sporting Goods Division's ROI had it been implemented sometime
during the past nine months?
2-b. What effect would strategy (b) have had on the Reliable's Sporting Goods Division's ROI had it been implemented sometime
during the past nine months?
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