Rondo Company-Financial Plans

Introduction Preparing a six-year financial plan for the Rondo Company begins with an accurate sales forecast. After analyzing Rondo's recent sales history from 2003 though 2005, sales and net income had grown year over year between 8 and 10%. The relationship between sales and the various types of assets was important when calculating this six-year financial forecast. Key Assumptions Based on Rondo's annual company growth of 5% to 10%, Rondo will continue to maintain their level of growth in sales over …

…are projected to degrade and inventory reduction strategies need to be investigated. A major problem for Rondo is the number of days it takes to collect accounts receivable. Significant focus is required in this area to free up cash, which can then be used to invest in property, plant, and equipment. These problems areas contribute significantly to an inefficient operation. This inefficiency inhibits profitability at Rondo and may led to a loss of investor confidence.