Bus626 Week 3 Discussion Forum 2 Responses Guided ✓ Solved

CLEANED Bus626 Week 3 Discussion Forum 2responsesguided Responserespond To

CLEANED: Bus626 Week 3 Discussion Forum 2responsesguided Responserespond To

Respond to at least two of your fellow students’ or instructor posts in a substantive manner. Provide information or concepts they may not have considered, with a minimum of 100 words per response. Be respectful of differing opinions and support your positions with information from the week's readings. Post earlier in the week for more meaningful discourse, monitor until Day 7, and respond to replies to your initial posts.

Sample Paper For Above instruction

Response to Andrew Magistri’s Post

Andrew Magistri’s analysis of Six Flags’ financial ratios offers a comprehensive view of the company's asset management and liquidity position. Calculating the average life of PPE at 2.21 years indicates relatively recent asset investments, reflecting ongoing capital expenditure to sustain operations in a highly infrastructure-dependent industry. His asset turnover ratio of 0.52 reveals the low efficiency in utilizing assets to generate sales, which is typical for amusement parks with high fixed costs and capital investments. Notably, the accounts receivable turnover of 9.69 days suggests effective cash collection, but further improvements could be achieved through aggressive credit policies, potentially increasing liquidity.

In my view, understanding how these ratios impact strategic decisions is crucial. For instance, the relatively short average asset life underscores the need for continuous investment in upgrades to enhance customer experience and revenue. Additionally, the low asset turnover ratio may prompt management to analyze ways to optimize asset utilization, such as improving operational efficiencies or diversifying offerings to maximize returns on existing assets. Comparing these metrics with industry benchmarks could provide further insights into operational improvements or investment priorities, enabling Six Flags to bolster its financial health and competitive positioning.

Response to Lisa Schreiner’s Post

Lisa Schreiner provides an insightful examination of Starbucks’ PPE and internal controls, emphasizing the importance of asset management and cash control. Her calculation of a PPE average life of 11.76 years for Starbucks’ leasehold improvements aligns with typical depreciation timelines for such assets, highlighting the company’s long-term capital investments. Her discussion of a high asset turnover ratio of 1.22 indicates efficient utilization of fixed assets to generate revenue, which is vital for sustaining competitive advantage in the retail coffee industry.

I agree that effective internal controls, including segregation of duties and safeguarding assets, are essential in maintaining financial integrity. Her mention of Starbucks’ cash and cash equivalents balance suggests a healthy liquidity position, yet the operating cash flow of $5 million against liabilities of $6.2 million indicates potential liquidity management issues. Managers should consider strategies to enhance operating cash flow, such as optimizing inventory or reducing expenses, to ensure sustainability. Moreover, Starbucks’ ability to replace aging assets proactively will support ongoing operational efficiency and capacity for growth.

References

  • Babcock-Hyde, J. (2017). Internal controls checklist. CPA Practice Advisor.
  • Porter, G., & Norton, C. (2018). Using financial accounting information: The alternative to debits and credits (10th ed.).
  • Six Flags (2020). Annual Report.
  • Starbucks (2020). 2019 Annual Report.
  • Gerdau (2016). Financial Statements and Management’s Discussion & Analysis.
  • Klein, A. (2002). The Sarbanes-Oxley Act: Effects on small and mid-sized businesses. The CPA Journal.
  • Jensen, M. C. (1986). Agency costs of freeCash flow, corporate finance, and takeovers. The American Economic Review.
  • Chen, H., & Leung, P. (2017). The impact of internal controls on financial reporting quality. Accounting Horizons.
  • Lopez, J. (2019). Asset management in amusement parks: Challenges and strategies. International Journal of Financial Studies.
  • Yip, R. (2021). Cash management strategies for multinational corporations. Journal of Corporate Finance.

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