Scott Equipment

In: Other Topics

Submitted By itmightbeme29
Words 1029
Pages 5
Scott Equipment Corporation
Scott Equipment Corporation is trying to determine which financial policy, between aggressive, moderate, or conservative, will best fit their business. We will discuss these options and include the calculations that will show the expected rate of return on stockholders’ equity, net working capital position, and current ratio.
According to Gitman (2009), profitability is “the relationship between revenues and costs generated by using the firm’s assets-both current and fixed-in productive activities” (p. 639). The firm chooses to increase their profits but must do so by increasing revenue and or decreasing cost. Risk is “the probability that a firm will be unable to pay its bills as they come due” (Gitman, 2009, p. 639). If a firm’s net working capital is high it is a lower risk because it has the funding to pay its bills. The trade-off between profitability and risk is done by changing current assets and current liabilities, separately, to identify the impact of each and decide which fits best with the firm.
Expected Rate of Return on Stockholder’s Equity
Expected rate of return on stockholder’s equity is determined by taking the percentage of return (profit) that was gained on each dollar that the stockholder invested. The calculation is net income divided by stockholders’ equity. In the model of Scott, shown in Table 1, we see that the expected rate of return for the aggressive policy is 6.89%, moderate policy is 6.81%, and conservative policy is 6.73%. These percentages show that, by using six million dollars in EBIT and we subtract the interest, as shown in Table 2, we are able to arrive at the EBT. From this point we take the EBT and subtract the tax giving us the EAT. We use this number to arrive at the expected rate of return. The aggressive policy shows that Scott would have higher EAT than the conservative policy. The moderate…...

Similar Documents

Scott Equipment Memo

...Scott Equipment Organization Memo To: Scott Equipment Organization Management Team From: Date: RE: Financing Options Scott Equipment Organization anticipates current assets to be around $66 million. The income tax rate for Scott Equipment is 40%, which would make the projected tax amount for next year around $26.4 million. The organization has three options available to when implementing their financial policies. The aggressive financial policy has a large amount of short-term debt, moderate policy utilizes a moderate amount of short-term debt, and the conservative option uses a small amount of short-term debt. Each financial policy has their own benefits, but it the best decision is based on the current and expected position of the company’s financials is. The expected rate of return on the stockholder’s equity is .99%. Based on the level of an aggressive financial policy the net working capital position would be at $42.50 million and the current ratio would be at 2.81. According to the moderate financial policy the net working capital position would be at $49 million and the current ratio would be at 3.88. The conservative financial policy has the net working capital position would be at $55 million and the current ratio would be at 6.00. Based on the aggressive financial policy the net working capital is at its lowest as is the current ratio. The moderate financial policy is a bit higher in both the net working capital and the current ratio. The conservative......

Words: 576 - Pages: 3

A Scott

...In the beginning of the 17th century the Scottish people faced religious prosecution and English control, many fled to the Americas to find their freedoms, others were forced Because of hostile clan wars and the country’s political problems ("The Original Scots Colonists of Early America" 1612 - 1783, Dobson). Many Scotts were deported as criminals and banished to the Americas, forced to work for English plantation owners until they could buy their freedom (Scotland Guide - Scottish History - Scots emigration/immigration to the US." Stevens). Because of the strict clan system that the Scottish live under, when one member of the clan immigrated to the Americas, the other members of the clan would normally fallow, by the time of the American Revolutionary war had begun, around 150,000 Scotts had immigrated to North America ("The Original Scots Colonists of Early America" 1612 - 1783, Dobson). For the Scotts that came to the Americas freely, on their arrival they congregated in Scottish communities, Scottish families could be found throughout the colonies, but many centralized in Georgia, the Carolinas, upper New York, Nova Scotia and Jamaica, due to the fact of fertile land, good farming, and job opportunities ("The Original Scots Colonists of Early America" 1612 - 1783, Dobson). Although once they arrived they were looked down upon by the Germans, Dutch, and English, because they were thought to be less civilized and drunks (Scotland Guide - Scottish History - Scots......

Words: 705 - Pages: 3

Scotts Miracle Grow

...Scotts Miracle-Gro : The Spreader Sourcing Decision John Gray Michael Leiblein 1 As Bob Bawcombe drove to work on a warm California morning in June 2007, his mind was occupied with an upcoming meeting with the folks from the corporate office in Marysville, Ohio. Bawcombe was the director of operations of Scotts’ Temecula plant. For over five years, he had been in charge of the Temecula manufacturing plant, which produced all of Scotts Miracle-Gro’s domestic lawn seed and fertilizer spreaders (see Exhibit 1). As a result of the plant’s location in Southern California, Bawcombe was under constant pressure to justify why Scotts should not offshore/outsource production of its spreaders to a low-wage manufacturing site, such as China. COMPANY HISTORY 2 The Scotts Miracle-Gro Company (Scotts), based in Marysville, Ohio, was formed by a 1995 merger of Miracle-Gro and The Scotts Company. The merger made Scotts the largest company in the North American lawn and garden industry. It was the world’s leading supplier and marketer of consumer products for do-it-yourself lawn and garden care, with products for professional horticulture as well. 1 In the 2007 fiscal year, Scotts had net sales of $2.7 billion (see Exhibits 2 and 3). 3 The Scotts Company was founded in 1868 by Orlando McLean Scott as a purveyor of weed-free seeds. By 1879, Scotts had diversified into distribution of horse-drawn farm equipment and also started a mail-order farm seed distribution channel.......

Words: 3223 - Pages: 13

Dred Scott

...The Dred Scott Decision (1857) Jordan Stuart History 121- Early America to the Civil War Professor Hamilton November 11, 2013 Dred Scott, who was born into slavery in Virginia, moved with his owner to St. Louis, Missouri. After Scott’s original owner had died the ownership was sold to John Emerson. Throughout many years Dred Scott moved with John Emerson to many free states. Once Emerson died, the ownership of Dred Scott was passed to Irene Sanford Emerson, John Emerson’s wife. At this point Scott attempted to buy his freedom but Irene refused, thus creating an uprising of controversial court cases. Dred Scott claimed he had become free while living in free states and that once free he could not be reenslaved. Dred Scott fought for his freedom in court until his case made it to the Supreme Court. The Dred Scott decision of 1857 ruled that African-Americans, free or enslaved, could never be citizens of the United States and held no rights under the Constitution. This decision proved to have a dramatic effect on American politics. The ruling of Chief Justice Taney was the most important decision ever issued on slavery. The Dred Scott decision was controversial, raising many questions regarding African Americans as citizens, whether or not the congress had the right to prohibit slavery in any territory, and the equality of all men under the Declaration of Independence. The question brought up in court was whether a negro whose ancestors were imported into the......

Words: 646 - Pages: 3

Scott Electronic

...approach into action. There are many issues that Scott Electronics plc would have to consider if it is to implement a strategy of innovation. The main issue that Scott would have to consider would be the financial aspect, as the initial cost of £10m is a very high cost considering company is only making profits of 8-10m per annum, the financial risk to the business is very high, as they projected sales value of the proposal is only £1.5m less £1m fixed costs per annum. If the projected sales is only a little lower than forecast then the profits may not be worth the initial investment as the company may find it hard to raise the finance for this strategy to work. Scott will need to increase the percentage of revenue that is spent on research and development, as this is currently well below the industry average at 1% compared to 10%. Equally the number of new products launched is per year is currently five per year compared to the average of 15, for Scott to implement this approach, he must increase the amount of revenue spent on R&D, as this currently puts the company at a competitive disadvantage in terms of new product development, although capacity utilisation is higher than the industry average. Increasing the amount spent on this may have an effect of the capacity utilisation. Scott electronics currently have a marketing model that focused on gaining a reputation of being competitively priced, reliable and functional products and Scott Electronics has placed little......

Words: 412 - Pages: 2

Scotts Miracle

...Gro | | Objective/Scope The purpose of this article is to determine whether staying at the Temecula plant or outsourcing to China is the best option for Scotts Miracle-Gro. A cost analysis will be used to determine which option will give Scotts Miracle-Gro the best opportunity for long-term growth and profit. Recommendations It has been determined that staying in the United States at the Temecula plant in California will be the best decision for Scotts Miracle-Gro financially and with regards to their image and product quality. However, in order to remain competitive, costs must be lowered to keep profits up to par with where they would be had the company decided to outsource. To do this, it has been recommended that Scotts Miracle-Gro cut production costs by reducing: 1. Energy Costs, 2. Raw Materials Costs, and 3. Labor Costs. By reducing costs, Scott’s Miracle-Gro can remain competitive while in the United States and avoid outsourcing the production line to China. Analysis Risk and Benefits Upon reviewing the information regarding the production line of The Spreader, it has been concluded that there are many risks with outsourcing the production line overseas to China which include but are not limited to: 1. Loss of quality 2. Loss of production innovation 3. Forgoing in-mold label capabilities or paying to provide such technology to a contract manufacturer 4. Lead time; Defective batches will not be detected until......

Words: 1870 - Pages: 8

Scott Petterson

...Scott Peterson's attorney, Mark Geragos, now has to contend with more than a guilty verdict for his client - and the penalty phase of the trial, now delayed for a week by the judge. Geragos is also facing a bar complaint related to the case. In the complaint, Florida attorney John B. Thompson - who has no reported connection to the case - argues that Geragos violated a key ethic rules forbidding communication with jurors. According to Thompson, Geragos did so by putting a replica of Scott Peterson's boat two blocks from the courthouse. Geragos, who remains under a under a gag order preventing him from discussing the case with the media, has not been able to respond to the allegations. Thompson says that Geragos's alleged boat display not only broke the California ethics rule barring juror communication, but also broke the California ethics rule against extrajudicial communications about a case. (As a recent column by Jonna Spilbor for this site noted, the penalty phase of this case - in which a death sentence could be imposed - has yet to occur.) Reportedly, the boat contained homemade concrete anchors - such as those the prosecution alleged Scott used to weigh down Laci Peterson's body - and a dummy representing the body. The defense's theory was that Scott could not have thrown Laci's heavily pregnant body over the side of the tiny, anchor-filled boat without swamping the boat with water and tipping it over. The display was apparently intended to illustrate just how......

Words: 5059 - Pages: 21

Scott Equipment

...Scott Equipment 5 Aggressive Financing Scenario With the first two plans displayed, the third and most aggressive plan can be laid out, and then an analysis of the three can be completed. Scott Equipment Organization went with a very aggressive third option: out of the 25 million in needed financing for assets under this plan, all but one million will be financed by short term debt. With 24 million in short term debt to just one million in long term debt, the organization will need to see a significant return in comparison to the other plans. With its must aggressive plan, Scott Equipment must pay the highest rates of interest of all three plans here: short term debt is at 5.5%, and long term debt at 8.5%. Still, with the vast majority of the financing in short term debt, the overall interest to be paid for the year is actually lower. The organization will pay 1.405 million in interest on this plan, less than either of the other two. This means that the EBIT will also be higher than the other two plans, with 4.595 million available before taxes. At the same corporate tax rate of 40%, Scott Equipment will have a net income under this plan of 2.757 million dollars. With the net income in place and a fixed equity amount of 40 million to work with the rate of return on equity for the aggressive plan comes in at 6.89%. Net working capital with this plan takes a considerable hit – with 24 million in current liabilities, it leaves only 6 million in working capital......

Words: 675 - Pages: 3

Scott P.

...Scott Panetti This article concerns a Texas man named Scott Panetti who committed murder by shooting his wife’s parents. Scott Panetti was diagnosed with schizophrenia about 14 years prior to the shootings, and was set to receive a lethal injection; however, the execution was stop do to “the 5th U.S. Circuit Court of Appeals acknowledges the legal complexity of putting a mentally ill inmate to death.” The court explains that they had to sort out legal issues that are involved with mental instability. The sentence change was further ruled as the right decisions by the Supreme Court which stated that “mentally ill people cannot be executed if they don’t have a factual and rational understanding of why they’re being punished.” This was confirmed by Panetti’s lawyers who stated that even though he had not had a competency evaluation in seven years they would still most likely conclude that he was severely mentally ill, and, in this case, to mentally unstable to be executed. Also noted, was that the previous competency evaluation that Panetti took indicated that he was extremely unstable mentally. To further indicate his sporadic behavior, in his first trial he attempted to “summon” Jesus Christ as a witness. He also was convinced that the prison dentist had implanted devices in his teeth to send messages to him. Finally, he exclaimed that Satan was doing his work through the prison officials as they were trying to get him executed in order to stop him from teaching the......

Words: 710 - Pages: 3

Scott Drury

...Representative Scott Drury is a democrat in the General Assembly of the 58th district, which includes all or portions of Bannockburn, Deerfield, Glencoe, Highland Park, Highwood, Knollwood, Lake Bluff, Lake Forest, Lincolnshire, Northbrook, North Chicago and Riverwoods all suburban cities. He is serving his second term beginning in January 2013. The committees he has been apart of are Appropriation-human Services; Higher Education; Insurance Judiciary; Personnel & Pensions; Tollway oversight, and the General Law Subcommittee. He was born in 1962. Before he was an Illinois state representative he went to the University of California-Berkeley in 1995 getting his B.A. in Political Economy of Industrialized Societies, than he got his J.D. from Northwestern University School of Law in 1998. Drury professional experience included work as an adjunct professor of Trial Advocacy form Northwestern University School of Law, and counsel to Reed smith Limited Liability Partnership. Some of Drury main campaign contributors were Illinois Democratic party leading with 179,452. Contributors that is not the Democratic Party in order from most are friend of Michael J Madigan, Illinois Education Association; Stand fro Children, Construction General Laborers District Council of Chicago & Vicinity, among other contributors. Scott Drury has opposed many bills and for many bills he has a tendency to vote nay for bills that had to do with Education reform, Criminal records being revealed......

Words: 663 - Pages: 3

In 419 Week 4 Individual Assignment Scott Equipment Organization Paper

...Assignment Scott Equipment Organization Paper Get Tutorial by Clicking on the link below or Copy Paste Link in Your Browser For More Courses and Exams use this form ( ) Feel Free to Search your Class through Our Product Categories or From Our Search Bar ( ) Week 4 – Scott Equipment Organization Paper Determine the following for each policy: • Expected rate of return on stockholders’ equity • Net working capital position • Current ratio IN 419 Week 4 Individual Assignment Scott Equipment Organization Paper Get Tutorial by Clicking on the link below or Copy Paste Link in Your Browser For More Courses and Exams use this form ( ) Feel Free to Search your Class through Our Product Categories or From Our Search Bar ( ) Week 4 – Scott Equipment Organization Paper Determine the following for each policy: • Expected rate of return on stockholders’ equity • Net working capital position • Current ratio IN 419 Week 4 Individual Assignment Scott Equipment Organization Paper Get Tutorial by Clicking on the link below or Copy Paste Link in Your......

Words: 1520 - Pages: 7

Dred Scott

...Dred Scott Dred Scott was the name of an African-American slave. He was taken by his master, an officer in the U.S. Army, from the slave state of Missouri to the free state of Illinois and then to the free territory of Wisconsin. He lived on free soil for a long period of time. When the Army ordered his master to go back to Missouri, he took Scott with him back to that slave state, where his master died. In 1846, Scott was helped by Abolitionist lawyers to sue for his freedom in court, claiming he should be free since he had lived on free soil for a long time. The case went all the way to the United States Supreme Court. The Chief Justice of the Supreme Court, Roger B. Taney, was a former slave owner from Maryland. In March of 1857, Scott lost the decision as seven out of nine Justices on the Supreme Court declared no slave or descendant of a slave could be a U.S. citizen, or ever had been a U.S. citizen. As a non-citizen, the court stated, Scott had no rights and could not sue in a Federal Court and must remain a slave. At that time there were nearly 4 million slaves in America. The court's ruling affected every enslaved and free African-American in the United States. The Supreme Court also ruled that Congress could not stop slavery in the newly emerging territories and declared the Missouri Compromise of 1820 to be unconstitutional. The Missouri Compromise prohibited slavery north of the parallel 36°30´ in the Louisiana Purchase. The Court declared it violated the......

Words: 393 - Pages: 2

O.M. Scott & Sons Company

...I. Exec summary O.M. Scott & Sons company is a company that processes clean, weed-free grass seed since 1868. Over the years, its product line has evolved into a wide variation of farm seeds and total lawn care systems. Between 1955 to 1961, the company implemented different programs to market and distribute its product with the aim to increase the company’s past success and growth. Due to these efforts, sales increased from about $10 million to $43 million. However, even with certain policies in place, results of 1961 operations showed that the company’s net income decreased despite the increase in sales. In late 1961, the company’s officials, with the numbers showing the results of operations, geared for the production year ahead. II. Problem Institutional What changes should the company implement to effectively manage its distribution channel, in order to increase market share and profitability Operational What changes should the company implement to improve its collection on receivables, manage inventories turnover, and marketing in order to increase profit III. Corporate Objective A. To be the market leader in grass, and farm seed industry B. To be able to implement effective marketing and sales programs through profitable product lines and effective distribution system C. To be able to effectively manage expenses in the distribution level IV. Areas of consideration Macro-Economic indicators Political The year 1950s was generally......

Words: 2302 - Pages: 10


...DEVELOPING GOOD BUSINESS SENSE BUS/210 Courtland Trent Scott University of Phoenix Axia College  The three companies that I have chose are Wendy’s, McDonalds, and Burger King. I have researched and also observe how the employees do their tasks within the business. In today’s assignment I will be discussing the main kinds of OMM cost companies have and how does the OMM cost companies affect the operations. I will also be discussing how does the company design their operating systems to give them a competitive advantage. Last I will identify which five main components of operations, materials management cost, and the methods companies use to reduce them. Within any company the primary goal for operation managers is creating a happy and loyal costumer. By effectively analyzing and managing their business operations, the company creates the right products with the right features at the right cost. Without using operation management materials you can do none of this. In a business you have to have the right product at the right price and the other way is having the product in stock that the costumers are buying. If you don’t keep products that customers are buying then the customer will find someone else to spend their money and you company will lose profits. McDonalds is the world largest chain of hamburgers fast food restaurant, serving more than 58 million customers daily. A McDonalds restaurant is either operated by a franchise, an affiliate, or the corporation itself....

Words: 723 - Pages: 3

Scott Mortgage

...Running head: SCOTT MORTGAGE Scott Mortgage James Jones Organizational Behavior 14 June 2010 Abstract This paper discusses the nature of change in a mortgage lending firm. It takes a look at the reaction to change from the employee and organizational view points. The characteristics of Ethical Intensity are reviewed as pertaining to the decision making process. It identifies the Decision Making Model and Approach to Change that Scout Mortgage used in revamping its human capital structure. Nature of Change The 21th Century has ushered in several factors that have been the catalyst for a dynamically transforming environment. Scout Mortgage, a loan mortgage broker since 1999 (Hellriegel & Slocum, 2009) has experienced the bullish and the bearish economic environment. In a work environment, the typical factors of change are driven by technological advancements which enable global-market-reach or globalization. With the increase of information technology and global communications, the world is communitively smaller. Any situation that affects a local market can be transformed into a national or international issue. The domestic housing sector economic downturn along with other Wall Street unethical and irresponsible actions have not only lead to a national but international recession and market collapse. In the case of Scout Mortgage, the technological advances have changed the way the company’s Loan Officers conducts business. Technology has automated a lot of......

Words: 997 - Pages: 4

Folklore 1x04 | 21. Post Malone Psycho Ft Ty Dolla Sign mp3 | Mahoujin Guru Guru