e DATE: 2/23/13 TO: Mr. Ansley Chua FROM: Austin Johnson‚ Enxing Liu‚ Tyson Hilyard‚ and Tanner Strathman SUBJ: Aurora Textile Company EXECUTIVE SUMMARY Aurora Textiles has historically been one of the premier textile companies in the United States and now has a decision to make. With the opportunity to invest in equipment that could help cure our slumping financials‚ we must carefully explore whether this investment is appropriate for a company with such an uncertain future. With that
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Introduction Aurora Textiles is a textile company that specializes in hosiery‚ knitted outerwear‚ woven‚ and industrial and specialty products. They develop finished fabric to meet specific needs as the leading yarn manufacturer established in the 1900s. However‚ both Aurora and the whole U.S. textile industry have been struggling financially due to globalization and other external factors. Aurora itself may not have responded quickly enough to the deteriorating business environment and has caused
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Introduction Aurora Textile Company having over 100 years history has been producing cotton and synthetic/cotton blend yarns to textile industry consisting of U.S. and the international market. The majority of the company’s revenue came from the domestic market and revenue sources for Aurora consist of the hosiery market accounting for 0.43‚ the knitted-outwear market accounting for 0.35‚ the wovens market accounting for 0.13‚ and industrial and specialty products accounting for remaining 0.09
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Case 20: Aurora Textile Company GROUP QUESTIONS Learning Objectives: 1. The basics of incremental-cash-flow analysis: identifying the cash flows relevant to a capital-investment decision 2. The construction of a side-by-side discounted-cash-flow analysis for a replacement decision 3. How to adapt the NPV decision rule to a troubled industry 4. The recognition that a reduced investment horizon is a significant consequence of financial distress 5. The importance of sensitivity analysis
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Case 20: Aurora Textile Company Summary: In early 2003‚ Michael‚ CFO of Aurora Textile Company‚ is deciding whether or not to install a new machine called Zinser 351 in order to save the declined sales and increase its competitive force. In deciding whether or not to invest Zinser 351‚ it is important to get the NPV and the payback period. To get the NPV and the payback period‚ we firstly need to forecast the future cash flows that the new machine will generate. We found the ten-year NPV to be
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Aurora Textile Company Inc Case Study Finance 450 I. Recommendations Aurora Textile Company is currently not in very good financial situation. Based on calculations that I made for the capital budgeting‚ my recommendation is to buy the new Zinser machine. After computing the NPV for the project it came out to be $10‚160‚579 over the period of 10 years. According on the analysis of the CFO of the company‚ Zinser would produce a finer- quality yarn that would be used for higher quality and higher
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PART I Review & study of the past and present situations of the company Brief Historical Review 1901 John F. Queeny founds the original Monsanto. He used capital from a soft drink company to start Monsanto. 1920 Monsanto expanded into basic industrial chemicals like sulfuric acid. 1940 It became a leading manufacturer of plastics‚ including polystyrene‚ and synthetic fibers. 1970 Monsanto is the leading producer of Agent Orange for US Military operations in Vietnam. 1973 Monsanto began manufacturing
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Textile industry Textile industry is an industry that manufactures products range from hi-tech synthetic yams to wool fabrics‚ cotton bed linen to industrial filters. According to Mr Settimi the sector employs over 205 million workers and majority of those workers are women. Industry includes the following divisions: initial processing of textile raw materials‚ fulling and felting‚ and the production of cotton fabrics‚ linen fabrics‚ wool fabrics‚ silk fabrics‚ nonwoven materials‚ hemp and jute
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Auora Textile Company Case Study Industry Cheaper production costs Industry shift Consumer preferences Increased IT liability Auora Overview Established in early 1900s Hosiery Knitted Outerwear Wovens Industry Specialty Products 90% revenue in U.S. market Ratio Graphs Alternatives Problem: Should Aurora Textile Company install the Zinser 351 to replace its older-generation machine? The Zinser 351 Advantages: Produce a finer-quality yarn Increase efficiency Greater reliability Disadvantages:
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Diversity of Small Caps Aurora Cannabis Inc. (ACB.CN) Our group decided to only pick three small cap companies to invest in‚ because we were only left with $3‚000 to invest with‚ so we spent $1‚000 on shares on each of the 3 companies. The first company we invested $1‚000 into was Aurora Cannabis Inc. (ACB.CN). Aurora Cannabis is a licensed producer of medical marijuana‚ and is a key player in the cannabis industry. Our group picked this stock because medical/legal marijuana is becoming very popular
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