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Durango Manufacturing Company: Business Plan

You have been selected as the consultant to develop a business plan for Durango Manufacturing Company, which is a start-up, medium-sized public manufacturing company. The CEO has a background in manufacturing and is well versed in supply chain management. However, the CEO has limited experience in financial management and creating value for the various stakeholder groups. Your business plan must include a five (5) year strategy to increase revenues by 10% and a recommendation for creating an organizational structure to comply with SOX mandates for strong corporate governance over the internal controls. Your business plan must also include prescriptions for creating an ethical environment. Your recommendation must be approved by the Board of Directors before the company can begin its operations.

1.As the consultant, create an argument that you will present to the CEO that suggests accounting and financial management knowledge and skills will be essential to the company's success and stability over the next five (5) years. Provide support for your argument.
2.Suggest to the CEO how the company's stakeholders (investors, lenders, and employees) will use financial statement information and ratio calculations to make key determinations related to the financial condition and operational efficiency of the company. Provide support for your rationale.
3.Given the strategy to increase revenue during the five (5) year plan period, which will need to be achieved through expansion and capital expenditures, determine which capital budgeting ratio is appropriate for Durango to evaluate its proposals for capital expenditures, such as NPV, IRR, etc. Defend your position.

Please provide your references.

Solution Preview

During the next five years your company seeks to grow by way of sales revenues and profits. Accounting and financial management knowledge and skills are essential for your company's success and stability. Accounting and financial management knowledge is required to track cash management. Trade credit is managed properly. If you want the company to grow during the next five years different budgets has to be developed regularly and the actual spending has to be compared with the budgets. This will allow you to control the company. Accounting and financial management knowledge will help you develop financial statements. These are aggregate compilation of financial information. They inform you and other stakeholders of the current position of the business. Accounting and financial management knowledge is essential for timely production of accounts, better resource management, and improved ...

Solution Summary

The response provides you a structured explanation of the business plan of Durango Manufacturing Company . It also gives you the relevant references.