Case ID: 9B12B030
Solution ID: 13627
Words: 1646
Price $ 75

Rawhide Brewery

Case Analysis

The first proposal put forward by Upson will raise the manufacturing output of Rawhide. The increase in manufactured units will be attributed to the sales made to Tabby. This outsourced project can have vital implications for the firm. Let’s look at them one by one. The payment terms are not explicitly mentioned. However, it can be assumed that the A/R of Rawhide can increase a little bit. But the possibility of default from this creditor is very remote because of its viable financial position. The capital structure of the company will remain the same. However, inventory turnover will be affected as now Rawhide has to make sure that the demand from the Tabby perspective is met, and it may maintain a high inventory to cater for this need. If inventory holding is increased, the current ratio of the company will also increase.

Excel Calculations

RAWHIDE BREWERY BALANCE SHEET AS AT DECEMBER 31, 2011

RAWHIDE BREWERY INCOME STATEMENT  FOR THE YEAR ENDED DECEMBER 31, 2011

Proposed Balance sheets

 For Proposal 2

 For Proposal 3

Questions Covered

Accounting Implications of Proposal 1-2-3

 

Effects on Balance Sheet

Effects on Income Statement

Effects on Cash flow Statement