Lee Manufacturing
Capital Budgeting Analysis
In 2004 David Lee started Lee Manufacturing, a company dedicated to manufacturing simple yet efficient gas barbecues. The barbecues are made of aluminum and stainless steel and are priced at the middle of the market. David’s goal has always been to make a barbecue that cooks great food. This means, good quality parts, simple construction, even heat, no hot or cold spots, and a barbecue that will hold temperature from the lowest setting to the highest setting. David’s motto is “high quality for a fair price”. The company offers four basic grill sizes (models) and several options and accessories that can be added on to each model. Lee’s barbecues have been well received. Revenue and profits have grown steadily.
Based on the recommendation from his sales and marketing department Mr. Lee is considering broadening his product line by adding a new product line of Lee charcoal barbecues
Purpose of Assignment
Provide students with a basic understanding of financial management, goal of the firm, and the basic financial statements. Students should be able to calculate and analyze solvency, liquidity, profitability and market value ratios, and create proforma financial statements.
Assignment Steps
Resources: Tutorial help on Excel
® and Word functions can be found on the Microsoft
® Office website. There are also additional tutorials via the web that offer support for office products.
Complete the following Questions and Problems (Concepts and Critical Thinking Questions for Ch. 1 Only) from each chapter as indicated.
Show all work and analysis.
Prepare in Microsoft® Excel® or Wor
Respond to each question with a minimum of 125 Words:
- If you were going to use either IRR or NPV to help choose between one house or one car over another, which one do you believe would give you the most reliable answer. (Hint: You probably would only use NPV for a lease versus buy analysis on a vehicle which is known as an NAL analysis/model).
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Why are ratios by themselves and looking at them for only one company for a particular year not a good enough measure to look at when analyzing a company or a business? What else would you need to look at in addition to the current year ratios of the company you are evaluating?
