Danforth Donnalley Laundry Products Company Integrative Problem Assignment

Danforth Donnalley Laundry Products Company Integrative Problem - Assignment Example If the company will not assume or include the $2 million rental cost, it will understate the cost of Blast, and gave an erroneous costing, and so also on the final price. This is usually done through the so-called â€Å"shadow pricing† method, in which the impact of any project is fully reflected in its valuation. This will also give a more accurate idea of the project viability. Shadow pricing is a very useful tool in cases where there is no definite market price yet. From the viewpoint of the project feasibility evaluation, the hypothetical and additional cash inflows from the erosion of sales from current laundry detergent products should not at all be included in the projected cash inflows, as shown in Table 1 (Titman, Martin & Keown, 2011, p. 411). Including these cash flows gives a wrong impression that the proposed project is viable, when in fact, it might not be that feasible because from the standpoint of the company, there are no new cash inflows coming in (no net addition to sales revenue). In marketing industry parlance this is merely a â€Å"cannibalization† of an existing product, or transferring monies from one pocket to the other pocket, to use an analogy. But on the other hand, if there is a distinct possibility that competitors will introduce a product similar to Blast, then that would impact on the project as it can introduce other factors into the equation, such as grabbing or retaining market

Published Financial Statements Essay Example | Topics and Well Written Essays - 2000 words

Published Financial Statements - Essay Example As the study stresses published financial statements are used by millions of people who depend on them for vital information. This information is, in most instances, on the financial health of the business concern in question. Tracy classifies these users as investors and financial analysts, vendors, or creditors, and the management. These users are the ones who make it necessary for financial statements to be published. Financial statements are published for the following reasons; To avail information and data concerning the company’s financial position and performance. This information includes the cash flow and profitability position of the company. This information allows financial analysts to assess the financial position and performance of the company and trends in the performance To avail information to outside investors who comprise people or organizations that may be interested in buying the company’s stocks or lend it money. Lenders need information about the company’s stability and cash flow. Publication of financial statements avails them with this information. To avail information concerning the likelihood of the firm to have enough cash to pay its debts in the immediate future. This information is needed by vendors and creditors in view of the fact that they advance funds to the company in form services and products. To avail information concerning the failures and successes in each of the many facets of running a business to the management. The management makes use of this information to identify relative strengths and weaknesses in operations and to find the areas to put effort to correct problems and enhance performance.