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create an assessment for each of the investment proposals included...

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create an assessment for each of the investment proposals included...

create an assessment for each of the investment proposals included below, with a rationale that is aligned with the SWOT analysis and financial statement ratio analysis using liquidity ratios, debt ratios, profitability, and asset utilization ratios on the companies performance in the past 5 years . Recommend if ACH should go forward with any of the proposed investments based on this analysis.

 

Mary is considering partnering with a frozen yogurt company to introduce more frozen treats on its menus, similar to what the Canadian company Second Cup did with its partnership with Pinkberry. Stores would have to be remodeled to accommodate the extra space required to hold the yogurt bins, and there would be more capital expenditures required for additional refrigeration equipment. The frozen yogurt company, which has many low-fat options, has exploded in popularity over the last year, with lineups that span for blocks for its few locations and several millions of engaged follows on social media. The frozen yogurt company is backed by several private equity investors and has significant amounts of cash to invest in the partnership.

The second investment proposal would be to purchase a coffee roasting plant in Puerto Rico. ACH has been considering vertical integration in order to get more control over its costs, and to lessen its exposure to Asian suppliers under the current trade environment. Puerto Rican coffee beans are becoming more and more associated with premium products due to their exotic taste. Tropical storms have been wreaking havoc in the territory, causing some businesses to sell at attractive prices in order to rapidly exit the industry.

 

Mary wants you to assess how these two proposals align with the strategy of ACH, using your SWOT analysis and ratio analysis, and, ultimately, to make a recommendation whether to accept none, one, or both of the proposals.

 

Explanation:

  • Strengths - its popularity to millenials, healthier product options, enforcement of fair trade preventing brand backlash, lower price point, strong market research.
  • Weaknesses - its brand position as an affordable coffee provider prevents it from raising prices to offset higher supplier costs and increasing competition, lack of financial flexibility and low market share.
  • Opportunities - changing menu to be more gourmet or premium, engaging in mobile integration to better engage with customers through promotions and rewards.
  • Threats - increasing competition and low market share.
 20132014201520162017
Liquidity ratio (current ratio)1.151.041.161.161.13
Quick Ratio = Cash, Marketable Securites, AR/Current Liabilities0.890.730.720.630.51
Cash Ratio 0.530.340.310.230.06
debt profitability ratio 0.540.640.710.760.87
Long Term Debt to total asset ratio0.30.390.420.450.52
Debt to equity ratio1.21.82.393.166.63
asset utilization ration/a4.785.234.973.51
Inventory turn over ration/a 2.952.652.011.32
Asset turn over ratio n/a0.450.560.590.49

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Answered by Dreambelievesurvive on coursehero.com

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