Chapter 12 Problem 1: Sales Forecasts For The Prior Three Ye

Ch 12problem 1sales Forecasts For The Prior Three Years Sales For

For the prior three years, sales for Nathional Beverage Company have been $21,962, $23,104, and $24,088. The company uses the prior two years' average growth rate to predict the coming year's sales. What were the sales growth rates for 2016 and 2017? What is the expected sales growth rate using a two-year average for 2018? What is the sales forecast for 2018?

For the prior three years, sales for California Cement Company have been $20,011, $21,167, and $22,923. The company uses the prior two years' average growth rate to predict the coming year's sales. What were the sales growth rates for 2016 and 2017? What is the expected sales growth rate using a two-year average for 2018? What is the sales forecast for 2018?

12/31/2017 and 12/31/2018 Selected Balance Sheet Accounts of Rian Company:

• Accounts receivable: $38,000 (2017), $46,000 (2018), change: $(8,000)
• Inventory: $55,000 (2017), $59,000 (2018), change: $(4,000)
• Accounts payable: $27,000 (2017), $25,000 (2018), change: $2,000

Selected income statement items for Rian Company:

• Cash sales: $298,000
• Credit sales: $672,000
• Total sales: $970,000
• Cost of goods sold: $570,000

Problems include calculating the average production cycle, reducing production cycle, analyzing the collection and accounts payable cycles, and determining the necessary balances to meet target goals.

12/31 annual income statements for Barron Pizza, Inc.: Revenue, cost of goods sold, gross profit, operating expenses, operating income, other income, EBIT, interest expense, income before tax, taxes, net income, and earnings per share for 2017, 2016, and 2015, with missing values to be calculated.

12/31 balance sheet for Barron Pizza, Inc.: assets, liabilities, owner's equity, with missing values to be filled in, including current assets, liabilities, long-term assets, and equity components.

Paper For Above instruction

This analysis focuses on various aspects of financial forecasting, strategic HR planning, and organizational effectiveness as outlined in the provided scenarios. It encompasses sales forecast calculations, ratio analyses, and strategic considerations for a healthcare and manufacturing organization, aiming to align HR initiatives with future business growth.

Sales Forecasts for Different Companies

The calculation of sales growth rates over previous years is fundamental in projecting future sales figures, and it typically employs the formula:

Growth Rate = ((Sales in current year - Sales in previous year) / Sales in previous year) * 100%

Applying this to Nathional Beverage Company, the sales growth from 2016 to 2017 is calculated as:

((23,104 - 21,962) / 21,962) * 100% ≈ 5.22%

Similarly, for California Cement Company, the growth rate from 2016 to 2017 is:

((21,167 - 20,011) / 20,011) * 100% ≈ 5.72%

The average growth rates over two years for each company are used to project the sales for 2018. For Nathional Beverage, the forecasted sales in 2018 are computed by applying the average growth rate to the 2017 figure:

Projected Sales 2018 = Sales 2017 * (1 + Average Growth Rate)

For Nathional Beverage: $24,088 * (1 + 0.0522) ≈ $25,320

For California Cement: $22,923 * (1 + 0.0572) ≈ $24,223

Ratio analyses such as current ratio, liquidity ratios, and inventory turnover are critical for understanding the financial health of Rian and Barron Pizza companies. For instance, the current ratio is calculated as:

Current Assets / Current Liabilities

Evaluating these ratios over time monitors organizational efficiency and financial stability, which informs strategic decisions.

Inventory, Cash, and Accounts Payable Cycles

Average production cycle, collection cycle, and accounts payable cycle are important operational metrics. The average production cycle for Rian Company can be derived from inventory turnover ratios, commonly calculated as:

365 / Inventory Turnover Ratio

The goal is to optimize these cycles—reducing the production cycle to thirty days involves adjusting inventory and production practices to enhance efficiency.

For the collection cycle, Rian's current figure is calculated as:

Accounts Receivable / (Total Sales / 365)

If targeting twenty days, they would need to adjust their collections to expedite cash inflows, possibly by offering discounts or tightening credit policies.

The accounts payable cycle relates to how quickly the company pays its suppliers. To meet a target of fifteen days, Rian must optimize its accounts payable balance, which involves managing payable turnover ratios effectively.

Financial Statement Analysis for Barron Pizza, Inc.

The missing values in earnings and balance sheets are computed through algebraic methods and ratio applications, such as calculating gross profit as:

Revenue - Cost of Goods Sold

Operating income derived after subtracting operating expenses from gross profit aids in evaluating operational efficiency, while net income reflects overall profitability.

In the balance sheet, total assets equal the sum of liabilities and owner’s equity, and missing components are determined through algebraic relationships, such as:

Assets = Liabilities + Equity

Furthermore, in analyzing the financial statements over multiple years, trends in revenue, expenses, and profit margins offer insights into the company's growth trajectory and areas requiring strategic intervention.

Strategic HR Considerations

Aligning HR functions with the strategic growth plans involves prioritizing talent acquisition to support expanding technological offerings, focusing on learning and development to cultivate innovation, fostering a culture of collaboration, and ensuring organizational effectiveness through appropriate reward systems. Diversity and inclusion are integral to creating a sustainable workforce that drives innovation and global competitiveness. Developing a business case for HR initiatives ensures that talent growth directly supports overarching business objectives of entering new markets, increasing technological innovation, and capturing market share.

Legal and Ethical Considerations

Understanding legal compliance in employment law, anti-discrimination statutes, and ethical standards in decision making is essential, especially when aligning HR strategies with rapid expansion plans. Ethical considerations include fair labor practices, privacy concerns, and equitable treatment of employees across diverse workforces, which are fundamental to maintaining organizational integrity and reputation.

FAQs for Executive Discussion

• What strategies will best attract and retain top talent in a rapidly growing high-tech healthcare environment?
• How can continuous learning and development be integrated into daily operations to foster innovation?
• What are the legal risks associated with aggressive talent acquisition and expansion, and how can they be mitigated?
• How can diversity and inclusion initiatives be effectively embedded into the corporate culture?
• What metrics should be used to measure the success of HR alignment with strategic growth objectives?

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