Description please see attachment for requirement, also attached professor email, its a case analysis 4 attachmentsSlide 1 of 4attachment_1attachment_1attachment_2attachment_2attachment_3attachment_3attachment_4attachment_4.slider-slide > img { width: 100%; display: block; } .slider-slide > img:focus { margin: auto; } Unformatted Attachment Preview 11.1 Sohni Company Remember not every case requires every step Identified in the Case Analysis tool kit we discussed on September 22 What is my role? • • outside consultant, marketing manager, etc. Who am I reporting to? e.g. Board of Directors, CEO, etc. What is the Issue ? • What is the problem you are tasked with solving? • Sometimes it is given, sometimes you have to discern it • Are there minor operational issues that need to be addressed? Examine the Facts • Filter through the data presented in the case – watch for extraneous data • External Analysis • Internal Analysis • What strengths or weaknesses does the organization appear to have? • Who are the major stakeholders? • Do stakeholders have preferences? Analyze Alternatives • For the key decisions, identify all of the alternative courses of action • For each alternative provide the costs and benefits/pros and cons • include both quantitative as well as qualitative analysis. Choose what tools are most appropriate given the situation and the decision. • choose the relevant facts and figures to analyse. • Remember, this is analysis and not just a restatement of facts. • Uncertainty will always be difficult to deal with. Use sensitivity or probability analysis where appropriate. Make a decision/recommendation • What are your decision criteria? • Clearly identify what the main question was that you intended to answer. • Clearly identify what your main recommendation is – usually which alternative is best. • Keep in mind that there likely were some disadvantages for even your recommended alternative. Be sure to indicate how you plan to mitigate these. • Address any of the other issues or problems that need to be solved in conjunction with the main problem. In many cases there may be more than one good solution. The best reports provide thorough analysis and logical conclusions. 68/81 Chapter 11: Performance Measurement 11.1 Sohni Company Sohni Company is a retailer with operations across Canada. Sohni is divided into four divisions (Western, Prairie, Central, and Eastern). Each division is treated as an investment centre in that it has responsibility for its income as well as the capital invested in the division. A consolidated income statement for 20X3 is given in Exhibit 1 and highlights of a segmented balance sheet are in Exhibit 2. It’s Maelle Stewart’s first year as president of Sohni. Maelle is a certified accountant and, while she has never been in charge of such a large organization, she has extensive experience at several smaller Canadian firms. Sohni currently uses return on investment (ROI) to evaluate the four divisions. Maelle is aware of the challenges of using ROI and wonders if there is a better way to measure divisional performance Managers of the four divisions each have projects they are considering for 20X4. Exhibit 3 lists the projects’ required investment as well as the estimated increase in operating income from the projects. A management team meeting is scheduled next week and items on the agenda include the divisional performance in 20X3 and the planned investments in the divisions for 20X4. Also, the Eastern division has always been the poorest-performing division and the previous president had often questioned whether the division should be dropped. This issue will likely resurface at the meeting. The divisional managers will be at the meeting and Maelle wants to make sure she is prepared. She will need a report that outlines the ROI in 20X3 for each division as well as the effect on the division’s ROI if the projects are accepted for 20X4. She also needs to think about how to deal with the issue of dropping the Eastern division. Finally, Maelle remembers learning about residual income as another way to evaluate the performance of investment centres when she was studying for her accounting designation but she has never had the opportunity to use this tool. She wants to look into this for the meeting and see what effect residual income would have on the divisional performance last year and the decision to invest in the divisions next year. She gets to work right away and starts by finding the following information: 20X3 revenue was $11 million in the Western division, $3 million in the Prairie division, $9 million in the Central division, and $2 million in the Eastern division. Variable costs are assumed to be 20% of revenue. Fixed costs were divided among the divisions as follows: $3.5 million (Western), $800,000 (Prairie), $3 million (Central), and $600,000 (Eastern). The required rate of return for all divisions is 10%. Required Assume the role of Maelle and prepare a report that addresses the issues outlined above. >> Chapter 11: Performance Measurement 55 EXHIBIT 1 – CONSOLIDATED INCOME STATEMENT SOHNI COMPANY Consolidated Income Statement Year Ended December 31, 20X3 $000’S 25,000 12.900 12,100 Revenue Expenses Operating income Interest (12%) Income before income taxes Income taxes (35%) Net income 1,452 10,648 3,727 6,921 EXHIBIT 2- HIGHLIGHTS OF THE SEGMENTED BALANCE SHEET SOHNI COMPANY Highlights of the Segmented Balance Sheet as at December 31, 20X3 $000’s Western Prairie Central Total asets Eastern 2,000 Total 30,500 Total assets performance in 20X3 and the planned investments in the divisions for 20X4. Also, the Eastern division has always been the poorest-performing division and the previous president had often questioned whether the division should be dropped. This issue will likely resurface at the meeting. The divisional managers will be at the meeting and Maelle wants to make sure she is prepared. She will need a report that outlines the ROI in 20X3 for each division as well as the effect on the division’s ROI if the projects are accepted for 20X4. She also needs to think about how to deal with the issue of dropping the Eastern division. Finally, Maelle remembers learning about residual income as another way to evaluate the performance of investment centres when she was studying for her accounting designation but she has never had the opportunity to use this tool. She wants to look into this for the meeting and see what effect residual income would have on the divisional performance last year and the decision to invest in the divisions next year. She gets to work right away and starts by finding the following information: 20X3 revenue was $11 million in the Western division, $3 million in the Prairie division, $9 million Central division, and $2 million in the Eastern division. 69/81 ble costs are assumed to be 20% of revenue. costs were divided among the divisions as follows: $3.5 million (Western), $800,000 (Prairie), w willion (Central), and $600,000 (Eastern). The required rate of return for all divisions is 10%. Required Assume the role of Maelle and prepare a report that addresses the issues outlined above. >> Chapter 11: Performance Measurement 55 EXHIBIT 1 – CONSOLIDATED INCOME STATEMENT SOHNI COMPANY Consolidated Income Statement Year Ended December 31, 20X3 $000’S Revenue Expenses Operating income Interest (12%) Income before income taxes Income taxes (35%) Net income 25,000 12.900 12.100 1.452 10,648 3,727 6,921 EXHIBIT2-HIGHLIGHTS OF THE SEGMENTED BALANCE SHEET SOHNI COMPANY Highlights of the Segmented Balance Sheet as at December 31, 20X3 $000’s Total assets Total liabilities Total shareholders’ equity Western 15,000 5,250 9,750 Prairie 3,500 1,575 Eastern 2,000 Central 10,000 4.400 Total 30,500 12,065 18,435 840 1,925 5,600 1,160 EXHIBIT 3 – POTENTIAL CAPITAL EXPENDITURES FOR 20X4 Western Eastern Prairie 200 Increase in operating income Investment required 300 Central 500 1.000 400 3,200 Total 1,400 6,200 800 1,200 Chapter 12: Relevant Costs 12.1 NutriCrisp Incorporated Contributed by 4:14 7 微信 < Brightspace today. I can't log in and I've heard from several of you that you can't either. I was planning to do a little work on Sohni Company and give you time to work on the case. I am attaching a word document that you can use to guide your work on Sohni. It is similar to the presentation we went through on September 22. Note that not every number in the case is important. For example, ROI requires only the investment and the operating income - tax amounts or interest expenses aren't required. Likewise, Rl requires only the investment, the operating income, and the required rate of return. Don't get distracted by irrelevant data presented in a case. That is part of a good case analysis "being able to separate the wheat from the chaff" Take today's class time to work on Sohni and we'll meet on Thursday. Glen W sohni company case analysis.docx #vix 16.07K 目 Purchase answer to see full attachment Tags: quantitative analysis Investment planning company case study Sohni Company cost benefit analysis User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Description

please see attachment for requirement, also attached professor email, its a case analysis

4 attachmentsSlide 1 of 4attachment_1attachment_1attachment_2attachment_2attachment_3attachment_3attachment_4attachment_4.slider-slide > img { width: 100%; display: block; }
.slider-slide > img:focus { margin: auto; }

Unformatted Attachment Preview

11.1 Sohni Company
Remember not every case requires every step Identified in the Case
Analysis tool kit we discussed on September 22
What is my role?
•
•
outside consultant, marketing manager, etc.
Who am I reporting to? e.g. Board of Directors, CEO, etc.
What is the Issue ?
• What is the problem you are tasked with solving?
• Sometimes it is given, sometimes you have to discern it
• Are there minor operational issues that need to be addressed?
Examine the Facts
• Filter through the data presented in the case – watch for extraneous data
• External Analysis
• Internal Analysis
• What strengths or weaknesses does the organization appear to have?
• Who are the major stakeholders?
• Do stakeholders have preferences?
Analyze Alternatives
• For the key decisions, identify all of the alternative courses of action
• For each alternative provide the costs and benefits/pros and cons
• include both quantitative as well as qualitative analysis. Choose what tools are most appropriate
given the situation and the decision.
• choose the relevant facts and figures to analyse.
• Remember, this is analysis and not just a restatement of facts.
• Uncertainty will always be difficult to deal with. Use sensitivity or probability analysis where
appropriate.
Make a decision/recommendation
• What are your decision criteria?
• Clearly identify what the main question was that you intended to answer.
• Clearly identify what your main recommendation is – usually which alternative is best.
• Keep in mind that there likely were some disadvantages for even your recommended
alternative. Be sure to indicate how you plan to mitigate these.
• Address any of the other issues or problems that need to be solved in conjunction with the main
problem.
In many cases there may be more than one good solution. The best reports provide thorough analysis
and logical conclusions.
68/81
Chapter 11: Performance
Measurement
11.1 Sohni Company
Sohni Company is a retailer with operations across Canada. Sohni is divided into four divisions (Western,
Prairie, Central, and Eastern). Each division is treated as an investment centre in that it has responsibility for
its income as well as the capital invested in the division. A consolidated income statement for 20X3 is given
in Exhibit 1 and highlights of a segmented balance sheet are in Exhibit 2.
It’s Maelle Stewart’s first year as president of Sohni. Maelle is a certified accountant and, while she has
never been in charge of such a large organization, she has extensive experience at several smaller Canadian
firms.
Sohni currently uses return on investment (ROI) to evaluate the four divisions. Maelle is aware of the
challenges of using ROI and wonders if there is a better way to measure divisional performance Managers
of the four divisions each have projects they are considering for 20X4. Exhibit 3 lists the projects’ required
investment as well as the estimated increase in operating income from the projects.
A management team meeting is scheduled next week and items on the agenda include the divisional
performance in 20X3 and the planned investments in the divisions for 20X4. Also, the Eastern division has
always been the poorest-performing division and the previous president had often questioned whether the
division should be dropped. This issue will likely resurface at the meeting. The divisional managers will be
at the meeting and Maelle wants to make sure she is prepared. She will need a report that outlines the ROI
in 20X3 for each division as well as the effect on the division’s ROI if the projects are accepted for 20X4. She
also needs to think about how to deal with the issue of dropping the Eastern division.
Finally, Maelle remembers learning about residual income as another way to evaluate the performance
of investment centres when she was studying for her accounting designation but she has never had the
opportunity to use this tool. She wants to look into this for the meeting and see what effect residual income
would have on the divisional performance last year and the decision to invest in the divisions next year. She
gets to work right away and starts by finding the following information:
20X3 revenue was $11 million in the Western division, $3 million in the Prairie division, $9 million
in the Central division, and $2 million in the Eastern division.
Variable costs are assumed to be 20% of revenue.
Fixed costs were divided among the divisions as follows: $3.5 million (Western), $800,000 (Prairie),
$3 million (Central), and $600,000 (Eastern).
The required rate of return for all divisions is 10%.
Required
Assume the role of Maelle and prepare a report that addresses the issues outlined above.
>>
Chapter 11: Performance Measurement
55
EXHIBIT 1 – CONSOLIDATED INCOME STATEMENT
SOHNI COMPANY
Consolidated Income Statement
Year Ended December 31, 20X3
$000’S
25,000
12.900
12,100
Revenue
Expenses
Operating income
Interest (12%)
Income before income taxes
Income taxes (35%)
Net income
1,452
10,648
3,727
6,921
EXHIBIT 2- HIGHLIGHTS OF THE SEGMENTED BALANCE SHEET
SOHNI COMPANY
Highlights of the Segmented Balance Sheet
as at December 31, 20X3
$000’s
Western
Prairie
Central
Total asets
Eastern
2,000
Total
30,500
Total assets
performance in 20X3 and the planned investments in the divisions for 20X4. Also, the Eastern division has
always been the poorest-performing division and the previous president had often questioned whether the
division should be dropped. This issue will likely resurface at the meeting. The divisional managers will be
at the meeting and Maelle wants to make sure she is prepared. She will need a report that outlines the ROI
in 20X3 for each division as well as the effect on the division’s ROI if the projects are accepted for 20X4. She
also needs to think about how to deal with the issue of dropping the Eastern division.
Finally, Maelle remembers learning about residual income as another way to evaluate the performance
of investment centres when she was studying for her accounting designation but she has never had the
opportunity to use this tool. She wants to look into this for the meeting and see what effect residual income
would have on the divisional performance last year and the decision to invest in the divisions next year. She
gets to work right away and starts by finding the following information:
20X3 revenue was $11 million in the Western division, $3 million in the Prairie division, $9 million
Central division, and $2 million in the Eastern division.
69/81 ble costs are assumed to be 20% of revenue.
costs were divided among the divisions as follows: $3.5 million (Western), $800,000 (Prairie),
w willion (Central), and $600,000 (Eastern).
The required rate of return for all divisions is 10%.
Required
Assume the role of Maelle and prepare a report that addresses the issues outlined above.
>>
Chapter 11: Performance Measurement
55
EXHIBIT 1 – CONSOLIDATED INCOME STATEMENT
SOHNI COMPANY
Consolidated Income Statement
Year Ended December 31, 20X3
$000’S
Revenue
Expenses
Operating income
Interest (12%)
Income before income taxes
Income taxes (35%)
Net income
25,000
12.900
12.100
1.452
10,648
3,727
6,921
EXHIBIT2-HIGHLIGHTS OF THE SEGMENTED BALANCE SHEET
SOHNI COMPANY
Highlights of the Segmented Balance Sheet
as at December 31, 20X3
$000’s
Total assets
Total liabilities
Total shareholders’ equity
Western
15,000
5,250
9,750
Prairie
3,500
1,575
Eastern
2,000
Central
10,000
4.400
Total
30,500
12,065
18,435
840
1,925
5,600
1,160
EXHIBIT 3 – POTENTIAL CAPITAL EXPENDITURES FOR 20X4
Western
Eastern
Prairie
200
Increase in operating income
Investment required
300
Central
500
1.000
400
3,200
Total
1,400
6,200
800
1,200
Chapter 12: Relevant Costs
12.1 NutriCrisp Incorporated
Contributed by
4:14 7
微信
< Brightspace today. I can't log in and I've heard from several of you that you can't either. I was planning to do a little work on Sohni Company and give you time to work on the case. I am attaching a word document that you can use to guide your work on Sohni. It is similar to the presentation we went through on September 22. Note that not every number in the case is important. For example, ROI requires only the investment and the operating income - tax amounts or interest expenses aren't required. Likewise, Rl requires only the investment, the operating income, and the required rate of return. Don't get distracted by irrelevant data presented in a case. That is part of a good case analysis "being able to separate the wheat from the chaff" Take today's class time to work on Sohni and we'll meet on Thursday. Glen W sohni company case analysis.docx #vix 16.07K 目 Purchase answer to see full attachment Tags: quantitative analysis Investment planning company case study Sohni Company cost benefit analysis User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.