Assignment 3.3: Case Study, Casa de Diseo In January 2012, Teresa Leal

QUESTION

Assignment 3.3: Case Study, Casa de Diseo
In January 2012, Teresa Leal was named treasurer of Casa de Diseo. She decided that she could best orient herself by systematically examining each area of the companys financial operations. She began by studying the firms short-term financial activities.
Casa de Diseo is located in Southern California and specializes in a furniture line called “Ligne Moderna.” Of high quality and contemporary design, the furniture appeals to the customer who wants something unique for his or her home or apartment.

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Assignment 3.3: Case Study, Casa de Diseo
In January 2012, Teresa Leal was named treasurer of Casa de Diseo. She decided that she could best orient herself by systematically examining each area of the companys financial operations. She began by studying the firms short-term financial activities.
Casa de Diseo is located in Southern California and specializes in a furniture line called “Ligne Moderna.” Of high quality and contemporary design, the furniture appeals to the customer who wants something unique for his or her home or apartment. Most Ligne Moderna furniture is built by special order because a wide variety of upholstery, accent trimming, and colors is available. The product line is distributed through exclusive dealership arrangements with well-established retail stores. Casa de Diseos manufacturing process virtually eliminates the use of wood. Plastic and metal provide the basic framework, and wood is used only for decorative purposes.
Casa de Diseo entered the plastic-furniture market in late 2004. The company markets its plastic-furniture products as indoor-outdoor items under the brand name “Future” Futuro plastic furniture emphasizes comfort, durability, and practicality and is distributed through wholesalers. The Futuro line has been very successful, accounting for nearly 40 percent of the firms sales and profits in 2011. Casa de Diseo anticipates some additions to the Futuro line and also some limited change of direction in its promotion in an effort to expand the applications of the plastic furniture.
Leal has decided to study the firms cash management practices. To determine the effects of these practices, she must first determine the current operating and cash conversion cycles. In her investigations, she found that Casa de Diseo purchases all of its raw materials and production supplies on open account. The company is operating at production levels that preclude volume discounts. Most suppliers do not offer cash discounts, and

 

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