AFM211 Lecture Notes - Lecture 2: Fixed Cost, Asset Turnover

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM211
• Professor: Nancy Vanden Bosch

Document Summary

Bwgc has large number of public players who are take it or leave it golfers. Publi(cid:272) players (cid:373)ay be pursuing other for(cid:373)s of entertain(cid:373)ent (cid:894) don"t like value proposition(cid:895) Cost of sales % of rev increasing yoy. Rev is declining and bwgc is a fixed cost business managing cost well -> decreasing pt wages decreasing hours worked less maintenance, decrease in value proposition, Consultant hired to perform a performance assessment on bwgc, with focus on financial analysis, identify significant business issues, suggest possible improvement. Times interest earned at a minimum of 1. 8. Ltd to total capitalization at a maximum of 0. 45. The business is heavily weighted to run as a golf course so overall in terms of profitability we should be looking at the pm. The nature of a golf course is fixed costs, which have been well maintained, indicated by the lack of changes to asset turnover. Therefore we have isolated it to revenue declining.