Oats R Us free essay sample

After considerable help from local retailers and a sponsorship by a major bread company their firm, Oats ‘R’ Us, was established in 1998 and reached sales of over $4 million by 2004. Given the current trend of eating healthy snacks and keeping fit, Mason was confident that sales would increase significantly over the next few years. The industry growth forecast had been estimated at 30% per year and Mason was confident that his firm would be able to at least achieve if not beat that rate of sales growth. We must plan for the future,† said Vicky. â€Å"I think we’ve been playing it by ear for too long. † Mason immediately called the finance manager, Jim Moroney. â€Å"Jim, I need to know how much additional funding we are going to need for the next year,† said Mason. â€Å"The growth rate of revenues should be between 25% and 40%. I would really appreciate if you can have the forecast on my desk by early next week. We will write a custom essay sample on Oats R Us or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page † Jim knew that his fishing plans for the weekend had better be put aside since it was going to be a long and busy weekend for him. He immediately asked the accounting department to give him the last three years’ financial statements (see Tables 1 and 2) and got right to work! Questions: 1. Since this is the first time Vicky and Mason will be conducting a financial forecast for Oats ‘R’ Us, how do you think Jim should proceed? Which approaches or models can they use? What are the assumptions necessary for utilizing each model/approach? 2. If Oats ‘R’ Us is operating its fixed assets at full capacity, what growth rate can it support without the need for any additional external financing? 3. Oats ‘R’ Us has a flexible credit line with the Midway Bank. If Mason decides to keep the debt-equity ratio constant, up to what rate of growth in revenue can the firm support? What assumptions are necessary when calculating this rate of growth? Are these assumptions realistic in the case of Oats ‘R’ Us? Please explain. 4. Initially Jim assumes that the firm is operating at full capacity. How much additional financing will it need to support revenue growth rates ranging from 25% to 40% per year? 5. Portray analytical view of plan for 2013 along with summarized statements in PPT along and excel Table 1 Oats R Us Income Statement For the Year Ended Dec. 1st, 2012 2012 2011 Sales 4,700,000 3,760,000 Cost of Goods Sold 3,877,500 3,045,600 Gross Profit 822,500 714,400 Selling and GA