Value Delivery Networks

In this exercise, students use the SPM Spreadseet (excel) to answer a series of questions.

Value Delivery Networks Assignment #3

Assignment #3 – Financial Analysis Exercise

Given:

Initial Markup                                                         65%

Total Cost of Goods Sold                                      55%

Average Inventory at Cost                                   $360,000

Gross Sales                                                               $3,200,000

Reductions                                                               $400,000

Total Expenses                                                        $600,000

Total Assets                                                             $2,800,000

Net Worth/Owner’s Equity                                 $900,000

Note – These are formal assignments and should be written up clearly and concisely.  In addition to ANSWERING the question, students must note the “SO WHAT” or strategic TAKE-AWAY of their answer.  Where necessary show ALL calculations or provide support.

TO SUBMIT – remove all these instructions and just leave the prompts and your answers, below.  Save the file with YOUR name and assignment # (eg: Conran-Assignment 3). 

1. Do a SPM – attach the SPM model.

2. For each of the following – determine (SHOW ALL CALCULATIONS and comment on what these results MEAN):
   1. Profit Margin
   2. Asset Turnover
   3. Inventory Turnover
   4. Return on Assets
   5. Leverage
   6. Return on Net Worth
   7. If sales increase by 5%, what will be the change in asset turnover?
   8. If inventory accounts for 60% of total assets and this investment declines by 10%, what will be the change in return on net worth?
   9. If leverage increases by 50%, what will be the change in return on net worth?
   10. If cost of goods sold increases by 15%, what will be the change in profit margin?