Booker Jones Analysis Essay

1.
A. If the cost of barrels were to be incorporated into the stock list history ( equilibrate sheet ) . so the cost of barrels used ( Income statement ) can be reduced. From 1960-1961. Booker Jones increased its barrels produced from 43. 000 barrels to 63. 000 barrels. That is 20. 000 barrel increased in merely one twelvemonth. The cost per barrels is $ 31. 50. ( 20. 000 * 31. 50= $ 630. 000 )

We can cut down the cost per barrel disbursal from income statement of $ 630. 000. ? ( -407. 000+630. 000= 223. 000 ) Therefore. pretax net income would hold been $ 223. 000 alternatively of net loss of $ 407. 000.

B. If the alteration were made retroactively as of June 1. 1959 so

Consequence on the balance sheet at the terminal of 1960

Number of barrel in stock list in 1960 is 172. 000
( 172. 000 barrels * $ 31. 50 = 5. 418. 000 )
$ 5. 418. 000 is the increased stock list after incorporated the cost of barrels to stock list. ( $ 5418000 + $ 4. 506. 000 = $ 9. 924. 000 )
$ 9. 924. 000 is the new stoping stock list in 1960
Postponing the Ripening costs into the stock list balance would increase the Net Net income in 1960. This would so increase the Retained Earnings history on the balance sheet



Consequence on the balance sheet at the terminal of 1961

Number of barrels in stock list in 1961 is 192. 000
( 192. 000 barrels * $ 31. 50 = $ 6. 048. 000 )
$ 6. 048. 000 is the increased in stock list after integrating the cost of barrels to stock list ( $ 6. 048. 000 + $ 5. 030. 000 = $ 11. 078. 000 )
$ 11. 078. 000 is the new stoping stock list in 1960
Postponing the Ripening costs into the stock list balance would increase the Net Net income in 1960. This would so increase the Retained Earnings history on the balance sheet



Consequence on the income statement for 1960

2. We do non believe that Jones went from a net income in 1960 to a loss for
1961 because they can capitalise the patented barrels as stock list alternatively of disbursal it. Because of the 4 old ages aging life. it makes sense to capitalise the barrels and write off it as the aging procedure reduced.

7.
1. The original Levi’s Store Channel has a higher return on invested capital. intending it is a good investing in a long tally.

Column1
Sweeping
Channels
Estimate
Original Levi’s
Shop Channel
Estimate
Operating Net income before Tax
4
6
Tax at 40 %
1. 6
2. 4
NOPAT
2. 4
3. 6














Fixed Asset

Factory PP & A ; E
5
5
Distributed PP & A ; E
1
2
Entire Fixed Asset
6
7
Non-Cash Working Capital








Current Asset
8
12
Current Liability
1
1
Cash
0
0
Entire Non-Cash Working Capital
7
11
Invested Capital
13
18













Tax return on Invested Capital
18 %
20 %

2. Value Chain Analysis

Supplying strategic way – corporate scheme
Supply the perfect fit denim for clients
Market section for unsated clients
Broaden market section by offering customized denims
Generating client demand – gross revenues. selling and client service Increase in net income
24 % unsated clients
Supply more manners. more colourss. better tantrums
4224 possible combination of measuring
400 paradigm brace stock at Kiosk for clients to seek on
Carry throughing client demand – supply concatenation. fabrication. production Order is transmitted straight to Levi’s mill. Each brace of denims is separately cut 3 yearss transporting back to clients ( at $ 5 excess charge per brace ) Pull based: reactivity to existent purchasing forms. better fabrication. and bringing rhythm Need to happen ways to repair the 8 months slowdown between telling cotton cloth and selling the concluding brace of denims. Supplying support services – Finance. HR. legal and conformity Need extra finance to pay for trained personal clerks








Need to take out loan to finance initial investing of the undertaking In 4 retail shop locations

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