Guillermo Store Analysis

Independent business owners should have an effective business plan in place when starting a business. A competitor is one major reason for an alternative business plan in the event of slow profits. Aggregate planning should be included in the business plan. The Guillermo Furniture store is one of the largest furniture manufacturers independently owned by Guillermo Navallez in North America. Guillermo has been faced with changes such as a new competitor and rising costs. This paper will review the various options that management staff at Guillermo Furniture Store can use to assist Guillermo in maintaining its current income and to also increase its earnings in the future.   This paper will also determine the weighted average cost of capital based upon existing operations, present calculations of net income and an income statement for each of the alternatives from the data provided, and discuss the factors affecting the risk of a project and how they might influence a project’s risk (discount rate) versus the firm’s risk (WACC).

Guillermo Furniture Store Analysis 3
Analysis of Different Alternatives
Guillermo Furniture Store alternatives are the three philosophies of financial working capital; the aggressive approach, the maturity-matching approach, and the conservative approach. These three approaches can capitalize on stockholders wealth and can be the driving force of a successful company. According to the aggressive approach long-term funds are used to finance only the core or fixed portion of current assets. Organizations tend to use the aggressive approach because they usually benefit from the decline in interest rates. Organizations that use long term financing are legally bound to the high interest rates, but in many cases the organization does have the option to refinance the debt. The conservative approach allows organizations to alternate between short-term financing and long-term financing. According to conservative approach the total...