ASSESSMENT STUDY GUIDE COMPLETE
QUESTIONS AND ANSWERS
◉ when to retire stock. Answer: when you have a good cash position
and you have some money left over to purchase stock back from the
market
◉ when to give out dividends. Answer: it's for when you have cash
leftover in capital investment to give to your
shareholder.
◉ when to retire long-term debt. Answer: it's for when you want to
pay your debt early (This usually decreases your interests expense)
◉ Buy/Sell Capacity Strategy. Answer: You want to keep 2 nd Shift
Production % between 20% and 50%
If you have less than 20%; you have to sell capacity
If you more than 50% you have to buy capacity
,After you make you decisions on production, check how much
capital investment you have; If you have capital investment leftover,
try to spend it in Automation or Capacity
If you are spending more than you should, try to sell capacity or not
invest as much.
◉ production schedule formula. Answer: ((Units Sales Forecasted) *
(1.2) ) - Inventory on Hand)
◉ forecasting strategy. Answer: From the Market Share page in the
Capstone Courier, take your last year's market
share and multiple it by the next year demand of each segment.
To calculate Next Year Demand, you take current demand and
multiple it by the
growth rate
Multiple your Market Share by Next Year's Demand
◉ Finding the profit margin. Answer: Look at "ROS" under the
Selected Financial Statistics
◉ A +/- ROS is directly correlated to. Answer: a +/- ROA
, ex) negative ROS means you will have a negative ROA
◉ more on ROA. Answer: Return on assets is an efficiency ratio. The
ratio answers the question, "How good is the company at producing
wealth with our assets?"
It compares the profits generated by the company with the asset
base.
◉ To calculate ROA,. Answer: divide profit by assets. ROA is also the
product of multiplying the ROS by the AT (asset turnover).
◉ Which three segments are the new products most likely compete
in the following year year?. Answer: high end
performance size
◉ The industry best practice is for leverage to be in the range of.
Answer: 1.8 to 2.8.
1.8 breakdown: 56% equity, 44% debt
2.8 breakdown: 36% equity, 64% debt