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Financial Analysis New Warehouse Proposals

Financial Analysis New Warehouse Proposals. by Paula Flatley ACC 350-0603B-10. North Warehouse. West Warehouse. New Warehouse Proposals. Two possible locations Investment feasible in only one location Building must be constructed Production facility to be added in 5 years.

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Financial Analysis New Warehouse Proposals

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  1. Financial Analysis New Warehouse Proposals by Paula Flatley ACC 350-0603B-10

  2. North Warehouse West Warehouse New Warehouse Proposals Two possible locations Investment feasible in only one location Building must be constructed Production facility to be added in 5 years Which location will provide the best return on investment?

  3. Initial Facts (CTU Online, 2006)

  4. North Warehouse West Warehouse Interim Calculations (CTU Online, 2006)

  5. Projected Net Income • North Warehouse (CTU Online, 2006)

  6. Projected Net Income • West Warehouse (Atkinson, Kaplan & Young, 2006) (CTU Online, 2006)

  7. North Warehouse West Warehouse Operating Cash Flow (CTU Online, 2006) (Wikipedia, 2006)

  8. North Warehouse West Warehouse Cash Flow from Assets (CTU Online, 2006)

  9. North Warehouse West Warehouse Net Present Value A positive NPV is an acceptable proposal. (CTU Online, 2006) (Riskylife.com, 2006)

  10. Conclusions • Although the North Warehouse proposal may represent less of a loss, neither proposal is acceptable. • Claire’s Antiques should consider alternatives. • Conversion of investment loan to lease payments may reduce taxes. • Investigate purchasing or leasing an existing warehouse. • Develop a new proposal for a location between North and West to serve customers in both areas. • Initiate JIT production to eliminate the need for a warehouse. (Atkinson, Kaplan & Young, 2006)

  11. Recommendations • Initiate Just-In-Time production to eliminate the need for a warehouse. • Develop a plan for a future additional JIT production plant between North and West areas to serve customers in both areas.

  12. Thank You! Questions? Comments?

  13. References Atkinson, A., Kaplan, R., & Young, M. (2004) Management accounting. 4th ed. Upper Saddle River, NJ: Pearson Prentice Hall. CTU Online. (2006) ACC 350-0603B-10, Managerial accounting practices, live chat sessions and course materials. Riskylife.com (2006) PVIF factor table by Dr. Arthur Hau (May 15, 2001). Retrieved September 20, 2006 from http://www.riskylife.com/freetools/pvtable.html Wikipedia. (2006) Operating cash flow. Retrieved September 18, 2006 from http://en.wikipedia.org/wiki/Operating_cash_flow

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