A fan is designed to last for a certain time before it will have to be replaced (planned obsolescence). The fan only has one speed (at a maximum of 650 rpm), and it reaches the speed in 2.0 s (starting from rest). It takes the fan 7.0 s for the blade to stop once it is turned off. The manufacturer specifies that the fan will operate up to 1 billion rotations. Andre lives in a hot climate, works outside of the home from approximately 8:00 am to 5:00 pm, Monday through Friday, does not own an air conditioner, and can't sleep with the fan running. Estimate how many hot days ?hot Andre will be able to use the fan, rounded to the nearest day.

Explain Malibu Boats' business model (be certain to include the value proposition and profit formula). How — if at all — has it changed over the first five years?

Information:

Jack Springer, CEO of Malibu Boats since 2010, looked out over the main production facility of Louden, Tennessee, facility. In his ten years at the helm of the Tennessee boat company, he had transitioned it from an industry leader in high-performance towboats to a diversified firm that included high-performance fishing boats. A significant facet of this transition was Malibu's 2017 purchase of Cobalt Boats for $130 million and the 2018 purchase of Pursuit Boats for $100 million. Unknown at the time of the purchase was the havoc the COVID 19 pandemic would have on the world economy and the boating industry. Springer's task this summer morning was to prepare a written assessment to present at the upcoming Board of Directors meeting. Earlier in the week, the board had requested an assessment of the Cobalt and Pursuit acquisitions in the current economic context. As he looked out on the production floor, he pondered several questions: is Malibu in a better or worse competitive position with the acquisitions? What impact will a down economy have on the future success of this acquisition? And, what had the company learned from the experience?

Malibu Boats

Headquartered in Loudon, Tennessee, Malibu Boats is a top designer, manufacturer, and marketer of a diverse range of recreational powerboats, including performance sport, sterndrive, and outboard boats (Globe Newswire, 2020).

Founded in 1982 by Bob Alkema and Steve Marshall, Malibu Boats began production averaging two boats per week. The company grew quickly and increased staffing and production. In 1986, the company implemented an employee stock ownership program and had achieved a nine percent market share by 1988. Needing to expand production, Malibu opened a second plant in Tennessee, which allowed the company to produce almost 1000 custom ski boats that year.

In 1992, Malibu built a new manufacturing facility in Loudon, Tennessee. The company's focus on innovation led it to create and patent a fiberglass engine chassis system (FibECS) that eliminated vibration and noise. In the mid-nineties, Malibu expanded internationally to Australia thorough a licensee agreement.

In the area of water sports, Malibu was on the front end of research and development of wakeboarding features. By recognizing that the wakeboarding market was a natural outgrowth of the traditional sport of water skiing, Malibu was able to capitalize on this fast-growing market (Willet, 2012).

In the early 2000's Malibu established itself as the largest custom ski boat manufacturer in the world. In 2006, Horizon Holdings and Black Canyon Capital acquired Malibu.

Unlike competitors in the industry, Malibu was able to expand market share during the Great Recession of the mid-2000s.

Jack Springer was named CEO in 2009, and under his direction, Malibu launched the Axis Wake Research brand and relocated headquarters to the firm's production facility in Loudon, Tennessee. In doing so, Malibu positioned itself closer to the freshwater marine manufacturing industry.

In 2013, Malibu established a new holding company for all operations – Malibu Boats Inc. The new entity was formed, in part, to prepare for the company's initial public offering (IPO) in January of 2014. In going public, initial trading began at $14 a share, generating a market capitalization of $300 million (Kaiser, 2014).

Malibu's International Presence

Malibu has a small but important international footprint. In the early 1990s, the company had established its brand and a manufacturing facility in Australia through a licensee agreement. After Malibu's successful IPO, the company acquired all equity interests in Malibu Boats Australia and made assurances the company would maintain its presence in that market. Malibu Boats Inc. has publicly stated that Malibu Australia may become Malibu's primary producer for the entire Asian market.

In addition, through the acquisition of Cobalt boats and its dealer network, Malibu Boats Inc. has access to locations in Canada and overseas.

Acquisition of Cobalt and Pursuit Boats

Malibu's first major acquisition was a $130 million deal to purchase competitor Cobalt Boats (Malibu Boats, Inc., 2017). The deal maintained separate manufacturing operations; Malibu in Louden, TN, and Cobalt in Neodesha, KS.

In October of 2018, Malibu Boats acquired Pursuit Boats from S2 Yachts to expand its premium brand into the fast-growing saltwater fishing boat industry. The purchase price was $100 million. In addition to expanding its brand offerings, Malibu states, "the acquisition gives the company the ability to leverage manufacturing, design expertise, and distribution to accelerate outboard growth" (Trade Only Today, 2018). Malibu will finance the $100 million purchase with $50 million in cash on hand and $50 million in credit (Boating Industry, 2018).

"Pursuit is an incredible addition to the Malibu family," said Jack Springer. "This highly complementary business creates strong strategic opportunities to enhance product development across our portfolio of brands. Together, we have an opportunity to broaden our outboard offering, while leveraging the manufacturing and design expertise of the respective teams." (Trade Only Today, 2018).

Cobalt Boats

Cobalt Boats is a market leader in mid to large-sized sterndrive boats that include cruisers, bowriders, and outboards used for cruising, skiing, entertaining, surfing, and fishing (Malibu Boats, Inc., 2017). Cobalt is a world-class brand producing 24 models across six series. The company has a dealer network of 132 locations in the U.S., Canada, and overseas. The year prior to the acquisition, Cobalt generated approximately $140 million in net sales.

Pursuit Boats

Pursuit Boats, located in Fort Pierce, Florida, builds 15 models of high-quality saltwater fishing boats in lengths of 23 to 40 feet. Pursuit has established itself as a premium brand by building high-quality offshore fishing boats for over 40 years (Boating Industry, 2018).

A2 Yachts, the original parent company of Pursuit Boats, is a privately held firm. S2 Yachts will continue to operate and own Tiarra Yachts and Tiarra Sport. Limited financial information is available on S2 Yachts as it is a privately held firm.

Malibu Today

Today, Malibu Boats is a leading designer, manufacturer, and marketer of a diverse range of powerboats across four primary brands: Malibu, Axis, Cobalt, and Pursuit (Malibu Boats, 2019). Company accolades include holding the #1 market share position in the U.S. in the performance sport boat category, the #1 market share position in the U.S. in the 24'-29’ segment of the sterndrive category, and a holding a leading market position for fiberglass outboard fishing boats (Malibu Boats, 2019). Malibu's boats are used for activities including water sports and recreational boating and fishing. Retail prices across the various models range from $60,000 - $800,000.

• Malibu – The flagship line provides consumers the latest innovations and designed for customers seeking a premium performance sport boat.
• Axis – Designed for customers who desire a more affordable performance sport boat yet expect high performance.
• Cobalt – Comprise mid to large-sized cruisers and bowriders providing exceptional comfort, performance, and quality.
• Pursuit – Consist of saltwater outboard fishing boats using a center console, dual console, and offshore models.

Competitive advantage across the brands is created by new products, a strong dealer network, and innovation. Malibu has built a distinctive competitive advantage. As an example, the Integrated Surf Platform (ISP) patented Surf Gate is an industry-leading (and envied) product. Similar to other boat brands in the industry, the dealership network is vital to the customer experience and Malibu Boats. As such, Malibu dedicates significant resources to find, develop, and improve the performance of dealerships. As of July 2019, the company's distribution channels consisted of 350 dealer locations globally. Innovation continues in 2020 with the launch of Stern Turn, which provides the driver the maneuverability of a sterndrive or outboard boat, thereby making navigation easier (Malibu Boats, 2019).

Compared to competitors, Malibu Boats has a higher degree of vertical integration. Malibu manufactures many of its own parts, including towers, stainless materials, trailers, and, more recently, engines. CEO Jack Springer builds as much as 25% more in-house compared to rival companies (Malibu Boats, 2019).

• Malibu is traded on the NASDAQ – Global Market index under MBUU, a Class A common stock.
• In 2019 Net sales increased 37.6% to a record high of $684 million.
• Malibu Boats continued to be a growth company finishing 2019 as the twenty-eighth fasted growing company on Fortune Magazine's Fastest-Growing Companies List.

Marine Industry

Towable performance boats have been a large part of the marine industry. Malibu has long held a premium position in this industry segment. The saltwater outboard fishing market is one of the largest and fastest-growing segments of the marine industry.

Conclusion

As Springer reflected on the upcoming board meeting, he could not help but recall his optimism in the 2019 annual report. Specifically, he cited that the U.S economy was strong, consumer confidence high, inflation low, and employment high. As such, he was confident that markets would remain strong for the foreseeable future. Then, the COVID 19 Pandemic changed everything. The rosy picture he had painted for the 2020 fiscal year will look very different.

Assignment: A complete analysis should include a summary of the case, a SWOT analysis, a financial analysis, identification of strategic issues and challenges, and a strategic plan. You must support your case analysis with at least 3 sources in addition to the textbook.

The case describes the business model of one of the world’s largest e-tailers, Amazon.com, Inc. (Amazon). Amazon had been at the forefront of innovation, adding and refining technology and changing the way customers shopped. It had a sustainable and innovative business model that intensely focused on its long-term growth opportunities as opposed to short-term profit margins. The case discusses the business model innovation at Amazon and how it evolved from just an online bookstore into one of the largest e-commerce platforms in the world where customers could find and discover anything they wanted to buy online in a more convenient way. The case outlines the four pillars of Amazon’s business model — low prices, wide selection, convenience, and customer service. Amazon attracted customers through low prices, prompt delivery, an ever-expanding array of services and products, and exemplary customer service.In 2015, Seattle-based e-commerce giant Amazon.com, Inc.(Amazon) surprised investors by posting an unanticipated second quarterly profit in a row after struggling with profitability the previous year. In the third quarter ended September 30, 2015, Amazon’s revenues increased by 20% to US$23.2 billion, while net income was US $79 million, compared with a net loss of US$437 million in the corresponding quarter of the previous year. The revenue growth was attributed to the company’s rapidly growing cloud-computing business, higher sales in North America, and initiatives to attract more customers. On the back of these unexpected quarterly results, Amazon shares surged, making it the most valuable retailer in the world surpassing Wal-Mart Stores Inc as of July 2015. BUILDING AND EVOLVING THE BUSINESS MODEL Over the years, Amazon had disrupted the online retail industry and transformed itself from an e-commerce player to a powerful digital media platform focused on growth and innovation. It constantly reinvented its business model and found new ways to create value for its customers. According to analysts, Amazon’s business model was innovative because it combined the company’s online retail expertise with its ability to understand the needs of its customers. Amazon moved beyond books to foray into completely new product categories such as e-readers and enterprise cloud computing services. AMAZON’S GROWTH WHEEL In 2001, Bezos and his employees outlined a virtuous cycle called the “Amazon Flywheel”, which they believed powered their business. Bezos once invited well-known author and business consultant Jim Collins (Collins) to participate in Amazon’s executive retreat in 2001 to discuss the company’s future. As part of the discussions, Collins told Bezos and his executives that they had to decide what they were best at. Drawing on Collins’s concept of a flywheel, Bezos and his executives drew their own virtuous circle placing customer experience at the core of Amazon’s flywheel. Internally, it was referred to as Bezos’ napkin diagram as he drew it on a napkin... GROWTH NOW, PROFITS LATER Amazon generated revenues by selling millions of products to customers through its retail website and by charging third party sellers who sold products on Amazon’s website. It also served as a platform for independent publishers to publish books on Kindle with a 35% or 70% royalty option. In addition, Amazon generated revenue from its cloud business by providing web technology infrastructure to developers and enterprises. It followed a high fixed costs and low marginal costs business model. According to Eugene Wei, a former Amazon employee... RESOURCES AND PROCESSES THAT SUPPORT THE STRATEGY Amazon was one of the most innovative companies in the US. From the beginning, it had been at the forefront of innovation, adding and refining technology and changing the way customers shopped. On invention being a second nature at Amazon, Bezos said... CHALLENGES According to industry observers, Amazon over the years had disrupted other online retailers and brick-and-mortar stores and leveraged its e-commerce operations to become a retail Goliath. However, some critics felt that Amazon was too ambitious as it had been growing alarmingly and investing heavily. They felt that the strategy could backfire and that Amazon needed to be selective about the opportunities it pursued as it could not take customers and the competition for granted... THE ROAD AHEAD Going forward, the company planned to launch new digital products and service categories, build more fulfillment centers, power AWS, and expand the Kindle Fire Ecosystem. The company also planned to hire 100,000 people in North America for the holiday season.

Wildhorse Co. had net income of $175240 and paid dividends of $40000 to common stockholders and $19000 to preferred stockholders in 2020. Wildhorse Co.’s common stockholders’ equity at the beginning and end of 2020 was $862000 and $1370000, respectively. Wildhorse Co.’s return on common stockholders’ equity was

11.00%.

14.00%.

10.00%.

16.00%.

Sheffield Corp. had net income of $163625 and paid dividends of $48500 to common stockholders and $16500 to preferred stockholders in 2020. Sheffield Corp.’s common stockholders’ equity at the beginning and end of 2020 was $890000 and $1250000, respectively. Sheffield Corp.’s return on common stockholders’ equity was

13.75%.

10.75%.

9.75%.

15.75%.

1. The Cinci Company issues $100,000, 10% bonds at 103 on April 1, 2020. The bonds are dated January 1, 2020 and mature six years from that date. Straight-line amortization is used. Interest is paid annually each December 31. Compute the bond carrying value as of December 31, 2023.

Answer

$_______________

Assuming that Mccphae Corporation has done each of the following in preparation for its fiscal year-end December 31, 2020 statements, and no adjustments or corrections were made except as noted, what would be the effect of each on: (a) total assets on December 31, 2020? (b) total liabilities on December 31, 2020? (c) owners’ equity on December 31, 2020? (d) cash on December 31, 2020? Circle U/S for understate, O/S for overstate, or NE for no effect. Treat each item independently and ignore income tax effects. 1. No entry for accrued interest on a note payable was made. The $60,000 note was issued on March 1, 2020 and accrues 8% interest annually. The interest will be paid on March 1, 2021. (a) total assets U/S O/S NE (b) total liabilities U/S O/S NE (c) owners’ equity U/S O/S NE (d) cash U/S O/S NE 2. Insurance of $6,000 was prepaid on November 1, 2020 for the six months beginning November 1 and recorded as “Prepaid Insurance.” On December 31, 2020, the following adjustment was made: Insurance Expense $2,000 Cash $2,000 (a) total assets U/S O/S NE (b) total liabilities U/S O/S NE (c) owners’ equity U/S O/S NE (d) cash U/S O/S NE 3. Employee wages of $100,000 were earned in December, but will be paid in January of 2021. No entry was recorded. (a) total assets U/S O/S NE (b) total liabilities U/S O/S NE (c) owners’ equity U/S O/S NE (d) cash U/S O/S NE 4. Depreciation of factory equipment for $200,000 was not recorded. (a) total assets U/S O/S NE (b) total liabilities U/S O/S NE (c) owners’ equity U/S O/S NE (d) cash U/S O/S NE

O’Brien Company is in the process of closing its books at the end of 2020. The company's preliminary income statement for 2020 and its reported income statement for 2019 are given below.

O’Brien's records reveal the following information:

1. In examining the preliminary financial statements, O’Brien realized that it failed to accrue sales commissions at the end of each of the last two years. O’Brien should have accrued $3,500 at the end of 2019 and $2,500 at the end of 2020.

2. O’Brien purchased equipment on January 2, 2017, that cost $70,000 and had a useful life of 10 years and zero salvage value. The straight-line method of depreciation was originally chosen. However, in reviewing the preliminary financial statements, O’Brien decided to change the depreciation method from straight-line to sum-of-the-years'-digits; the estimates relating to useful life and salvage value remained unchanged.

3. At the end of 2020, O’Brien decided to change its inventory costing method from FIFO cost to the Average method. An analysis of the accounting records provides the following cost of goods sold amounts under average cost and FIFO:

                                    Year                     FIFO             Average

                                    2018                 426,500            428,000

                                    2019                 428,750            430,000

                                    2020                 427,500            432,000

O’Brien purchased equipment on July 2, 2016. The asset's original cost was $30,000, and this amount was entirely expensed in 2016. This particular asset has a 10-year useful life and a $5,000 residual value. The straight-line method was chosen for depreciation purposes.

Required:

1. Prepare the necessary journal entries at December 31, 2020, to record the above information.

2. Prepare new comparative income statements to reflect the adjustments required (1) through (4) above. You may ignore income taxes.

3. Retained earnings reported for the end of 2019 was $696,380 and at the end of 2018 was $625,400. Dividends of $30,000 were declared in each year. Prepare comparative statements of retained earnings for O’Brien Company for 2020 and 2019, reflecting appropriate adjustments from items (1)-(4) above, ignoring income taxes.

The unadjusted trial balance of Vancouver Trucking Inc., at December 31, 2020, is as follows:DebitCreditCash$17,310Accounts Receivable102,500Allowance for Doubtful Accounts$3,390Inventory61,000Prepaid Insurance4,559Bond Investment at Amortized Cost57,120Land31,800Buildings154,000Accumulated Depreciation—Buildings12,560Equipment32,400Accumulated Depreciation—Equipment5,400Goodwill17,000Accounts Payable100,400Bonds Payable (20-year, 7%)162,000Common Shares120,100Retained Earnings61,139Sales Revenue197,000Rent Revenue10,350Advertising Expense23,400Supplies Expense10,300Purchases97,100Purchase Discounts950Salaries and wages expense52,800Interest Expense12,000$673,289$673,289

Preparethe followingadjusting and correcting entries for December 31, 2020, using the information given, for the scenarios below (#1 -#9):

1.Actual advertising costs amounted to $1,580 per month. The company has already paid for advertisements for the first quarter of 2021.

2.The building was purchased and occupied on January 1, 2017, with an estimated useful life of 10 years, and residual value of $38,400. (The company uses straight-line depreciation.)

3.Prepaid insurance contains the premium costs of several policies, including Policy A, cost of $2,807, one-year term, taken out on April 1, 2020; and Policy B, cost of $1,962, three-year term, taken out on September 1, 2020.

4.A portion of Vancouver’s Trucking Inc. building has been converted into a snack bar that has been rented to the Blue Spruce Corp. since July 1, 2018, at a rate of $8,900 per year payable each July 1 in advance.

5.One of the company’s customers declared bankruptcy on December 30, 2020. It is now certain that the $2,680 the customer owes will never be collected. This fact has not been recorded. In addition, the Companyestimates that 3% of the Accounts Receivable balance on December 31, 2020, willbecome uncollectible.

6.An advance of $610 to a salesperson on December 31, 2020, was charged to Salaries and Wages Expense.

7.On November 1, 2015, Vancouver Truckingissued 162 $1,000 bonds at par value. Interest is paid semi-annually on April 30 and October 31.

8.The equipment was purchased on January 1, 2015, with an estimated useful life of 10 years, and no residual value. (The company uses straight-line depreciation.)

9.On August 1, 2020, Vancouver Truckingpurchased at par value 42 $1,860, 8% bonds maturing on July 31, 2019. Interest is paid on July 31 and January