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1. Analyze Aspen Ski Company, using ratio analysi...

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1. Analyze Aspen Ski Company, using ratio analysis. Compute the ratios above for Aspen and compare them to the industry data that is given. Discuss the weak points, strong points, and what you think should be done to improve the company?s performance 2. In your analysis, calculate the overall break-even point in sales dollars and the cash break-even point. Also compute the degree of operating leverage, degree of financial leverage, and degree of combined leverage. 3. Use the information in parts a and b to discuss the risk associated with this company. Given the risk, decide whether a bank should loan funds to Aspen Ski. Aspen Ski Company is trying to plan the funds needed for 2009. The management anticipates an increase in sales of 20 percent, which can be absorbed without increasing fixed assets. 4. What would be Aspen?s needs for external funds based on the current balance sheet? Compute RNF (required new funds). Notes payable (current) are not part of the liability calculation. 5. What would be the required new funds if the company brings its ratios into line with the industry average during 2009? Specifically examine receivables turn- over, inventory turnover, and the profit margin. Use the new values to recompute the factors in RNF (assume liabilities stay the same). 6. Do not calculate, only comment on these questions. How would required new funds change if the company: a. Were at full capacity? b. Raised the dividend payout ratio? c. Suffered a decreased growth in sales? d. Faced an accelerated inflation rate? (as cited in Block, Hirt, & Danielsen, 2009, p. 149)

 

Paper#3987 | Written in 18-Jul-2015

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