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*****
*******
Professor
***********
Aurora
Textile
Company
*******
Budgeting:
Replacement ******* ****
*****
********** ****** Textile *******
*****
**** * delicate and
challenging
**** owing ** **** its internal and external ************ While there ** ****** *** company *** ** about *** ******** environment ***** ** ************* by global liberalization ** trade ***** ******** **** ***** ******* **** **** *************** in ***** and ********** changing ****** in consumer ****** *** *********** costly production ********** *** ******** ****** *** ******* ************ that ** *** ****** ** a *** ******* ** ****** *** ******** and **** ** in operation ********* ** ************* *** ****** ***** ********** processes to ****** **** ***** ***** **** as **** ** ***** labor costs an ******** **** ** *** ************* ** well ** operating ***** With ************* ******** and * ******* share ***** Aurora’s ********** *** leadership is in * ******* ** ******* ** invest **** ***** to revamp *** ******* ******** *** ****** quo or sell its assets The ******* ***** will **** ** *** current company’s *********** ***** ********* analysis as well ** *** ******** ** * ******* budgeting ***** *********** decision ***** the **** approach ** ********* the **** ***** ** action
********* *********** ***** ******** ***** ******* 2002)
** ***
four
**** ****** ********
1999
to **** ****** textile ********
*********
financial performance ** ***** ** financial ratios ** this ******* ***** *** several ******* that *********** ** *** ********** trend ** the *************** performance ** *** ***** ***** ******** **** *** **** ** industry comparables ** yardsticks **** ***** to *** *** ********* *** *********** ******** of Aurora the ******* discourse ******* on ***** ******** *** * *** ** financial ****** *** *** ********* Status Quo
*** ******** ******** *** ******* ** ******** the current ********** *****
**
****** ******
***
**** ** **** ******* at *** ***** ***** of ****** assuming * ******* **** *** ********** ********** ** that ***** will ******** by ** in terms ** ****** *** ** increase due ** ****** Similarly *** ******* **** also ****** ** increase in ********** *** ******** costs ***** **** increase ** *** **** **** of ******* price ***** ** ** SG&A ***** amount ** ***** percent *** ******** accordingly *** *** ********* ** *********** on a straight **** ***** **** nil ******* value Because *** current book ***** ** *** ***** ******* ** ******** ***** ** *********** ** a ************* ***** for *** ***** with * *** ******* ***** *** company’s NPV ***** *** *** ******* ** *** ******** *** ******* * Invest ** ****** ******** *** ********* and ******** ******* ** *** ***
**********
are ** *** differential cash ***** because
*****
are *** **** ******* that **** ****** ************** decision making ** * ****** the decision ** ****** in the new machine ****** machine or ******** *** ******* ******* and ***** *** the ******* ** the ****** *** **** ** analyzing the *********** ** ******* *********** ** ****** ***** ********* ******** and ************ ***** ******** **** million Another ****** ** ******** ** *** ******** **** *** sale ** the *** ********* ** amount ** ******* ** *** **** **** *** ******* must **** consider *** ******** **** ********** **** *** *** ******* to ***** *** ********* familiarization ** *** ***** ** ****** of * 50000 ****** *** $32000 ***** tax ** demonstrated in (exhibit ** ** *** management decides ** ****** ** the Zinser ******* ***** **** ******** ** ** ** *** ***** **** ** ********* but ***** **** **** ******** **** *** in *** **** period **** ** ********** material **** remain *** **** as ** the ****** *** ******* ********** ***** **** decrease ***** ** better ******* which ****** **************** returns and *** decrease ** ***** *********** *** ** ****** ********** The new ******* **** **** lower *** **** ** holding ********* ******* *** **** in ********* **** be ******* to ** **** *** **** of the *********** other **** *** **** ********* above remain *** same as with *** ****** *** ** **** **** ********* ** ****** ******** ******* ** ****** *** *** ******* Zinser *** NPV *** to this ******** is * **** ** ***** ** *** ******** ****** exhibit 3 ** ********* ********* especially under *********** ****** *** investment **** *** *** ****** *** ** the ***** ********** ** ****** ** ****** textile ** ** ****** ** Zinser ******* ** *** a ****** *** ** 155 ******* ******** ** * ** ******* ***** *** *** machine
*** Effect ** *** *********** Cash ****** *** ******* ** investment ** ****** *** an *** **
*
*********** *** an internal rate ** ******
**
*** ***** ** higher compared ** *** company ****** **** or cost ** capital ******* 4 *** *** *********** have ** ****** on *** NPV ******* ** central ********** is ************** ******** ** the ** ***** ** *** ***** of analysis ** *********** of *** company as equity ******* **** ******** shown ** ******* ** and ******** that we ignore the ******* ***** the ***** **** of ********** cash ***** **** ***** at *** * ** ***** year ** *** ********* ****** *** * ******* ****** ** 45 years Better ***** *** ******* *** ******* *** ***** ****** *** start of *** fourth year ** *** *** ******* *** fetch *** of *** **** ***** ** salvage value *** ******* **** **** **** **** * ***** ** ******* *** costs ** the machine
*************** Innovation ** ********* ** ****** ******* ***** ** ******* *************** **** ******* that ***** *** **** elements **
***
market
****
cannot ** changed ** *** *** machine *** ******** **************** ****** *** preference *** ********* ** ******** ***** The company *** ** ***** ****** than to ****** ** modern ********** ** *** only *** ** ********* ** edge ***** is **** **** ** *** down ** **** ****** ******* outsourcing **** ********** activities ** moving ** ****** **** ******** ***** ***** **** as **** **** ** ******* **** *************** **** **** ** achieved ** the ******* ***** better **** to ** ********* *** ** ******** high quality ************ *** *************** ******** ****** **** remain ********* ** *** ****** forces **** will remain ******** *** that *** affect the overall outcome other **** *** ******* ********* ** **** ********* ******* ** ****** ******* ******** Trend *** ratios
***** 2000
2001
***** Sales ******* 656%
****** ****** Raw **************** ****** ******
******
****** Conversion
***********
****** 3665%
******
******
*****
*************
******
******
*****
******
**********
594%
*****
***** ***** ********
Expense
growth
*****
*****
*****
*****
*********
Profit
******
******
-179%
******
030%
***
profit
ratio
-182%
-271%
******
******
****
*****
************
257
185
****
****
****
inventory
956
****
****
*****
*****
*********
****
****
128
****
****
***********
***********
−78%
***********
***
***********
−95%
************
************
Exhibit
**
*******
3
Exhibit
*
******
*******
********
************
of
***************
Sale
**
********
Ring-Spinning
********
Book
******
*********
Current
******
value
******* *****
********
***
savings
******
540000
***
proceeds
***
********
********
$1040000
Purchase
**
***
*******
*****
**
Zinser
*********
********
*************
******* Airflow
*************
******
Testing
30000
*****
*****
*********
****
**
***
******
**
***
***
**
****
***
****
******
$0
******
value
100000
*****
*******
***
on
gain
@36%
******
Net
proceeds
*******
*******
5
***********
Cash
****
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Aurora Case Study.docx
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