The document summarizes financial information for Baldwin Bi-Cycle Company including income statement, balance sheet, assumptions, and profitability metrics. It also discusses strategic risks and rewards of accepting a large order to become a contract supplier as well as Ms. Leister's considerations about what action to take and why.

1. Baldwin Bi-Cycle Company

2. Q5 . Profit , Return on sales, equity, assets ?
Sales Revenue 12,840$
COGS 9,567$
Gross Profit 3,273$
Gross Margin 25.5%
Other Expenses 2,607$
PBT 666$
Income Tax 306$
Tax Rate 46.0%
Net Income 360$
% 2.80%
Income Statement
cash 342 324.2255 666.2255
A/R 1359 144.1667 1503.167
Inventories 2756 543.2667 3299.267
Plant & machinery 3635 5 3640
total asset 9108.659
current liabilities 3478 3478 3478
Non-current liabilities 2204.433
Total liabilities 5682.433
owners equity 3102 324.2255 3426.226
Liabilities and equity 9108.659
Balance Sheet

3. Cont ..(2/3)
Assumptions (Balance Sheet)
 All sales are in cash
 A/R, inventory increased
due to new operation
 Cannibalization effect has
been taken care of
inventory and COGS
 Profit is included in equity
Assumptions (Income Sheet)
 Assets related costs are
included in other expenses
 COGS : last years COGS+
25000(Hi-Vals) -3000(sales
loss)

4. Cont(3/3)..
Profit 360
Return on sales 3%
ROA 4%
ROE 11%

5. Risks :
• Brand value and Market reputation will be diluted
• In a long run profits will be reduced due to loss of sales
• Loss of distributors due to loss of sales
Rewards:
• Company does not need marketing activities
• Buying ad selling process will be in Bulk
• Company will have small no of bulk buyers to concentrate on
Q6 strategic risks and rewards ?

6. • Accept the order
As the company is gaining more than the variable cost incurred
As the production capacity is under utilized
• Should not convert its business into contract supplier
• Concentrate on new designs and models to differentiate itself
from competitors
• Focus on Operations management to reduce product selling
price
Q7 What should Ms. Leister do ? Why ?

7. Thank You ..