Nci corporation

al Affiliation Number Case study written assignment Question 1
Financial management to Roger’s business relates to the situation where Roger has to send away some workers during the slowdowns. Mew manager should be hired since the present manager has not helped to control the problem of slowdowns wisely rather than laying off the workers. In marketing, the business is not well organized, and nobody knows how to market the new product. Workers in the marketing department should be replaced since in the firm nobody knows how the new product can be marketed.
Question 2
The operating margin for manufacturing caskets is about 40 %. This is the margin NCI corporation already had the capability to produce for the casket market. On the other side, the traditional margin for manufacturing the caskets was about 23%. On average, 23% is the operating margin NCI Corporation previously incurred for the new product.
The increase in the number of discounters in the casket market results to reduced prices of caskets. , the margin increases with the increase in the casket suppliers in the market. The discounters such as the wholesalers, retailers, and other manufacturers do not incur the similar costs incurred by the funeral homes. Therefore, they sell the caskets cheaply and still make a profit because there are low production costs involved. In addition, the discounters sell caskets in large scale thereby enjoying the economies of scale.
Question 3
The number of caskets, I will sell to the different target purchasers depend heavily on the respective buying price the target buyer will offer. I will provide 50 Caskets to the funeral homes. This will be the highest number of caskets I would like to sell. To the retailers, I expect to sell around 60 caskets while the wholesalers will get around 100 caskets.
To achieve the figures, I assumed a constant 40 % margin and particular profits for each purchaser target. For instance, I assumed $ 500,000 profit in the case of funeral homes, $ 180,000 profit in the case of the retailers and $ 250,000. In addition, I assumed $ 50,000 net income, $ 120,000 capital expenditure and investment return worth $ 250,000.

Question 4

Norfolk Cabinet Inc. (NCI)
Consolidated Statements of Cash Flows
(Amount in $)

Fiscal Year and amount
Operating activities
Net Income
50,000
Adjustments to net cash flows
Net gain on the sale of caskets
930,000
Net Cash provided by operating activities
930,000
Financing activities
Purchase of caskets
500,000
Net Cash provided by financing activities
(500,000)
Investing activities
Capital expenditure
(120,000)
Return on investment
250,000
Net Cash provided by investing activities
130,000
Net cash flows
1,060,000
Cash and cash equivalents
At beginning of the period
60,000
At end of period
1,170,000
NCI Case assignment discussion
1. There are various risks associated with NCI’s entry into the casket selling. First, the firm risk losing all the retrenched workers. Secondly, involvement in the new business is risky since neither Roger nor his adviser knows about the marketing of the products. Lastly, the firm risks getting customers for her products since nobody in the business knows the targeted consumers for the caskets.
2. The firm’s sale will increase at the rate of diminishing returns throughout the year. In the casket industry, many discounters are coming in with cheaper ready-made caskets. With time, the firm is likely to lose some of its customers to the cheaper caskets offered by the discounters. Therefore, the high sales volume will only be experienced at the beginning of the year and will later reduce.
NCI will benefit from not hiring back the workers. The estimated benefits are likely to be $ 400,000. On the other side, failure to retrain the workers also saves the corporation the training costs. NCI is likely to benefit an estimated $ 150,000.
3. The operating margin for manufacturing caskets is about 40 %. This is the margin NCI corporation already had the capability to produce for the casket market. On the other side, the traditional margin for manufacturing the caskets was about 23%. On average, 23% is the operating margin NCI Corporation previously incurred for the new product.
The margin for manufacturing caskets is subject to change following the changes in the target purchaser. The increase in the number of discounters in the casket market result to reduced prices of caskets. The margin increases with the increase in the casket suppliers in the market. The discounters such as the wholesalers, retailers, and other manufacturers do not incur the similar costs incurred by the funeral homes.
4. The number of caskets, I will sell to the different target purchasers depend heavily on the respective buying price the target buyer will offer. I will provide 50 Caskets to the funeral homes. This will be the highest number of caskets I would like to sell. To the retailers, I expect to sell around 60 caskets while the wholesalers will get around 100 caskets.
To achieve the figures, I assumed a constant 40 % margin and particular profits for each purchaser target. For instance, I assumed $ 500,000 profit in the case of funeral homes, $ 180,000 profit in the case of the retailers and $ 250,000. In addition, I assumed $ 50,000 net income, $ 120,000 capital expenditure and investment return worth $ 250,000.
5. Income Statement
Norfolk Cabinet Inc. (NCI)
Income Statement
At March 2015
(Amount of $)
Assets

2015
Cash
930,000
Accounts receivable
50,000
Inventory
60,000
1040,000
Liabilities and Owners Equity
Accounts Payable
(500,000)
Retained Earnings
(130,000)
(630,000)
Total Owner’s Equity
410,000
6. NCI should not proceed with the manufacture of the caskets. With the increasing number of discounters in the casket business, the returns are likely to be low. In addition, the sale of caskets to other people other than the funeral homes is legally prohibited. It may bring a challenge to the NCI casket business.
On the other side, NCI should not gear down for the slow season. Slowing down usual puts Roger in a perilous situation. He may end up losing his income from both sides especially if the casket business cannot continue. Instead, Roger should learn to manage his finances efficiently even during the recessions.
Work Cited
Stretcher, Robert, and Timothy B. Michael. Cases in Financial Management. N.J: Prentice Hall, 2005. Print.