9.8End-of-Chapter Case: Running the Numbers to Chase Your Dream Job
Context
Congratulations, you just landed an on-site interview for your dream job as a buyer at Intermountain Health Care. Intermountain Healthcare operates 23 hospitals and 198 clinics and has been recognized as one of America’s best-run health services providers. During your pre-interview planning, you learned the following two key points.
Evidence-based decision-making. Intermountain Healthcare is known for emphasizing evidence-based decision-making. You translate this to mean that you will need to back up every answer during the interview with solid number crunching and sound critical thinking.
Strategic Partnering. Intermountain Healthcare has a reputation for picking partners carefully and building collaborative capabilities with them. You’ve heard that during the day-long interview, you will be asked to develop and defend a supplier-evaluation scorecard.
Task
Immediately after lunch with the other five interview candidates, you are all given the same assignment. Jeromie Atkinson tells you all, “We’ve really enjoyed our initial interviews today. We will be doing some individual and group activities this afternoon. To get us started, we’d like you to identify a supplier of choice for oral care products that Intermountain’s health care professionals can distribute to its patients. We’ll give you 60 minutes to develop and compile the results for a supplier-evaluation scorecard. Each of you will then make a 15-minute presentation that communicates the following:
Selection Criteria. Explain why you chose each of the criteria in your scorecard.
Criteria Importance. Tell us how you decided to establish the importance of each criterion.
Financial Health. Discuss the financial viability—strengths and weaknesses—of each potential supplier. Specifically identify the supplier in best position to be a long-term partner.
Supplier Selection. Make the case for your supplier of choice.
The good news: You had built a spreadsheet template just in case you were ever asked to run the financials to assess a supplier’s financial health. You quickly determine that the three prime candidates are Unilever, P&G and Colgate and populate your spreadsheet (see the basic income statement and balance sheet data below). Now, it’s time to finish your calculations for P&G’s ratios, decide what the analysis means, and prepare your presentation. A faint smile crosses your lips as you say to yourself, “Let’s go to work.”
Balance Sheet Data
P&G
Unilever
Colgate-Palmolive
Current Assets
$23,990
$12,147
$4,556
Accounts Receivable
$6,508
$4,436
$1,668
Beginning Total Assets
$132,244
$47,512
$12,724
Ending Total Assets
$139,263
$46,166
$13,394
PPE (Fixed Assets)
$21,666
$9,445
$3,852
Beginning Inventory
$6,721
$4,601
$1,327
Ending Inventory
$6,909
$4,436
$1,365
Current Liabilities
$30,037
$15,815
$3,736
Accounts Payable
$8,777
$11,668
$1,290
Total Liabilities
$70,554
$30,450
$11,004
Income Statement Data
Sales
$84,167
$51,324
$17,085
Prior Year Sales
$83,680
$46,467
$16,734
COGS
$42,428
$30,703
$7,153
Prior Year COGS
$42,391
$27,930
$7,144
SGA Expense
$26,950
$12,033
$5,930
Prior Year SGA Expense
$26,421
$12,013
$5,758
Interest Expense
$667
$526
$15
Operating Income
$14,481
$6,989
$3,889
Net Income
$11,312
$4,948
$2,472
Equity Data
Beginning Stockholder’s Equity
$64,035
$14,293
$2,541
Ending Stockholder’s Equity
$68,709
$15,159
$2,390
Profitability Ratios
P&G
Unilever
Colgate-Palmolive
Gross Profit Margin
40.2%
58.1%
Operating Profit Margin
13.6%
22.8%
Profit Margin
9.6%
14.5%
Return on Assets
10.6%
18.9%
Return on Equity
33.6%
100.3%
Liquidity Ratios
P&G
Unilever
Colgate-Palmolive
Current Ratio
0.77
1.22
Quick Ratio
0.49
0.85
Leverage Ratios
P&G
Unilever
Colgate-Palmolive
Debt to Equity
2.01
4.60
Times Interest Earned
10.41
165.80
Activity Ratios
P&G
Unilever
Colgate-Palmolive
Inventory Turnover
6.92
5.24
Avg. Days in Inventory
52.74
69.65
Fixed Asset Turnover
5.43
4.44
Days Receivable
31.55
35.63
Days Payable
139.46
65.48
Composite Ratio
P&G
Unilever
Colgate-Palmolive
Cash to Cash Cycle
-55.18
39.81
Questions
Based solely on your financial analysis, which supplier do you recommend? How does your recommendation change when you include the other criteria on your list?
What does your scorecard look like? Be prepared to explain your logic.
What did you learn about each supplier from your assessment of financial health? What inferences can you draw regarding each company’s long-term supplier development strategy?
The post End-of-Chapter Case: Running the Numbers to Chase Your Dream Job appeared first on Smart online Writing.
