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Economics and financial managment
excel spreadsheet assignment
Cash Flow Statement
The manufacturing manager for Modern Manufacturing Company is working on a justification for implementing a
“Lean/Just-in-time” manufacturing system. No upfront investment will be needed. No revenue changes are forecasted.
A team of employees will spend their time training employees and making process changes. The salaries and benefits
of the “Just-in-time” staff are shown below for the three years of the project.
A team of employees will spend their time training employees and making process changes. The salaries and benefits
of the “Just-in-time” staff are shown below for the three years of the project. There will not be any change in
other S.G.&A. expenses.
Financial gains are expected to be a reduction in the following areas: cost of good sold, inventory, and accounts
payable. The data is shown below where each year changes from the previous year by the percentages shown.
Determine the present worth of the project to see if the savings justify the costs.
Data Block
Time Span
3
Years
Year
0
1
2
3
JIT Team costs
$300,000
$200,000
$100,000
COGS-Reduction per year
7.5%
annually
COGS at end of year 0
$3,000,000
Inventory Reduction per year
10%
annually
Inventory at end of year 0
$200,000
Accounts Receivable reduction
0%
annually
Accounts Receivable at end of year 0
$150,000
Accounts Payable & reduction
10%
annually
Accounts payable at end of year 0
$100,000
Tax Rate
25%
annually
Interest Expense annually
$250,000
constant every year
MARR
15%
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