Working Capital Simulation: Managing Growth

1501 words 7 pages
Working Capital Simulation: Managing Growth
FIN/571
October 13, 2014
William Stokes

Working Capital Simulation: Managing Growth
The Corporate Finance course has helped me, as a student, gain intelligence to make informed decisions upon analyzing the details for Sunflower Nutraceuticals (SNC). These decisions will influence the company’s overall growth annually. In addition to various details of the SNC Company I have also made various decisions in each of the phases of SNC’s simulation which has an estimated values to figure out the results. This paper also explains how SNC’s decisions are influenced with regards to the working capital followed with the final step of evaluating the general affects associated with the limited
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IV. Dropping Poorly Selling Nutraceutical Products – It is absolutely feasible to drop some of the poorly selling products as SNC has more than 100 products. Reducing or discounting those items will allow SNC to reduce its DSI to approximately 3 months, cut its EBIT by approximately 50 thousand, and create more inventory space for the popular products. Doing this will rationalize the SNC’s SKU count. “Although reducing the number of SKUs that SNC carries in its product offering did have a negative impact on sales volume, the amount of cash tied up in inventory decreased significantly as a result of streamlining the SKU count” (University of Phoenix, 2013, Synopsis). Phase 2 of Sunflower Nutraceutical’s Simulation (Years 2016-2018) During phase two of the simulation, SNC was presented with three different opportunities. Those opportunities include: I. Pursue Big-Box Distribution – SNC established a partnership with sales giant Mega-Mart, and that decision allowed SNC to see increase in sales of approximately 25%, 10%, and 5% during 2016-2018. However, SNC’s EBIT declined as a result of this decision. Although this partnership will drop margins and reduce EBIT, a partnership with Mega-Mart will be beneficial. II. Expand Online Presence – SNC would like to expand operations into new retail markets. The

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