Here is a spreadsheet with sample income statement and balance sheet: Sample Data for Activity 2

Assume Inventory Holding Cost is set at 15%.

Using the data found in the sample spreadsheet, compute the impact on the key financial metrics of the following two scenarios:

Scenario #1: The company adopted a new sales and operations planning process that would result in an inventory reduction of 10% (the only other change I would like you to consider is the impact on inventory holding costs).

Scenario #2: The company followed an initiative that would reduce the COGS by by 5% and would also reduce Accounts Payable by 20%. (They negotiated lower prices of raw materials by promising to pay their suppliers quicker.)

XYZ Company XYZ Company