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Mini-Case "These Are Exciting Times for Our Company. We've Made a a Lot

question 213

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Mini-Case
"These are exciting times for our company. We've made a lot of changes over the past two years that have really improved our operations and lowered our costs. Now we are ready to expand into new markets. Minimotors is on its way to becoming a global player." The speaker was Sparky Weyer, president and CEO of Minimotors, Inc., a growing manufacturer of small (some of them downright tiny) electric motors used in a variety of power tools and appliances. Sparky was meeting with potential financial backers in an effort to obtain funding for some expensive new machinery he wanted to purchase. "You may have heard about some of the ways we've cut costs," Sparky continued. "We've developed a new arrangement with several of our biggest suppliers. They've agreed to make more frequent deliveries tied directly to our production schedules. This will help us reduce our inventory costs dramatically. We've also greatly reduced the number of defective motors we produce by carefully keeping tabs on all of our manufacturing processes. In fact, we have set a goal of reducing our defects to 3.4 parts per million. The main purpose of my meeting with you today is because we want to install some sophisticated new machinery and software that will allow us to quickly design and produce motors to the exact specifications of our customers. The machinery is computer-controlled and can produce custom-designed products at very little increase in cost compared to our mass-produced motors. We feel this flexibility and quick response time will give us a tremendous competitive advantage and help us attract new customers. Installing the new equipment and training our workers to use it properly will be a complex project, but I'm confident that once we get everything up and running we'll be able to strengthen our position as the leading maker of high-quality electric motors."
-Sparky knows that installing the new equipment and training workers to use it efficiently will be a long and complex process consisting of many different tasks. Which of the following methods would help him determine how long this project is likely to take?

Differentiate between various market values and their implications for stock and bond trading.

Recognize the unique features and risks of different bond types, including floating-rate, junk, and secured bonds.

Understand retained earnings and their significance for a firm's equity and investment strategy.

Comprehend the role and functions of securities markets, including primary and secondary markets.

Definitions:

Formation of Contract

The process by which parties agree on terms and legally bind themselves to obligations and rights defined by a contract.

Smooth Out Problems

To resolve difficulties or conflicts in a manner that restores normalcy or harmony.

Binding Contract

A legal agreement between parties that is enforceable by law, with specified obligations that must be fulfilled by all involved parties.

Acceptance by Silence

A legal principle where silence or inaction can be interpreted as acceptance of an offer under certain circumstances, typically when past behavior has established such a pattern.