This project requires the completion of a comprehensive financial analysis of a company seeking to expand operations. A scenario is presented below as a case study that requires analysis and resolution.
This assessment will evaluate your mastery with respect to the following course outcomes:
Understand at a deeper level the economic analysis of strategic and tactical investments, the effect financial leverage has on firm value, and the integration of investment and financial corporate strategies
Analyze issues that face modern corporate managers when making capital budgeting and capital structure decisions
Apply finance valuation techniques for purposes of business decision making
Integrate, synthesize, and present finance concepts and analyses
Be able to use the corporate finance tools necessary to develop the skills, knowledge, and wisdom (SKW) in current demand by employers
Understand the qualities needed for careers such as corporate managers, financial analysts, investment analysts, brokers, and business practitioners
Scenario: Felicia & Fred, a publicly held U.S. corporation and manufacturer of jewelry, requires a financial analysis of its current year operating performance. Previously, the company expanded capacity to include a Czech crystal bracelet product line. During this year, the company expanded its product offering to include women’s accessories, specifically handbags. These are outsourced through a licensing agreement the company initiated with a manufacturer in Asia. In order to preserve intellectual property and branding rights in the United States, this manufacturer exclusively has the right to Felicia & Fred’s women’s logo purses.
As previously mentioned, the company’s inventory investment has grown, but to date it has not required additional storage space in terms of increases in total plant and property since the company is renting warehouse space to accommodate the necessary real estate. However, the company anticipates that this will change if the demand for this product continues to be met with fervor among its customer base.
Given these considerations and the results indicated in the company’s income statements and balance sheets for the prior year and current year, as well as the company’s cash flow statement for the current year, answer the following questions and address specific qualitative elements as requested.