Hallstead Jewelers' (hallstead) Case
Autor: financeguy • October 7, 2012 • Research Paper • 1,124 Words (5 Pages) • 2,141 Views
Contents
Summary 2
History and Growth 2
Strengths, Weakness, Opportunities and Threats (SWOT) Analysis 3
External Competitive Environment 3
Analysis 3
The changes in breakeven point in numbers of sales tickets and the margin of safety between 2003, 2004 and 2006. 3
The effect of a 10% price decrease and an increase in sales tickets to 7,500 on the breakeven point in sales tickets and sales dollars. 4
The effect of the elimination of sales commission on breakeven volume. 5
The effect on breakeven point of increasing advertising by $200,000. 5
The amount the average sales ticket would need to increase to breakeven if fixed costs remained the same in 2007 as they were in 2006. 5
Recommendations 5
Whether or not to decrease price by 10% and increase sales tickets to 7,500. 5
Whether or not to eliminate sales commission. 6
Whether or not to increase advertising by $200,000. 6
Works Cited 7
SUMMARY
In early February of 2007, Hallstead Jewelers’ (Hallstead) managing partners reviewed their preliminary income statements for fiscal year 2006, which revealed a loss of nearly double the income of fiscal year 2004, its last “normal” year (Bruns 1).
Profits were declining and sales were immobile since approximately 1999 (Bruns 2). In an effort to increase sales, the managing partners leased and renovated new retail space in 2005, incurring considerable expense (Bruns 2).
Hallstead needed to discover new approaches to return the business to profitability. Hallstead decided to evaluate the following five issues.
• The changes in breakeven point in numbers of sales tickets and the margin of safety between 2003, 2004 and 2006.
• The effect of a 10% price decrease and an increase in sales tickets to 7,500 on the breakeven point in sales tickets and sales dollars.
• The effect of the elimination of sales commission on breakeven volume.
• The effect on breakeven point of increasing advertising by $200,000.
• The amount the average sales ticket would need to increase to breakeven if fixed costs remained the same in 2007 as they were in 2006.
HISTORY
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