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Word Count: 518
Work assumption 1Assume that the sales will increase by 10 for each new title as indicated the Backlist sales increase 2Assume that the total number of new titles remain unchanged since Ramsey is trying to publish fewer segments and focus more resources on trying to publish fewer segments and focus more resources on differentiation those books in the marketplace there is no reason for him increase the new titles 3Assume that they plan to increase their gross margin by 2 and decrease the expenses of sales by 1 for each of the six formats as given for Backlist 4Assume that AR as the percentage of sales remains 20 as indicated by Backlist 5Assume that inventory as the percentage of sales decrease by 15 as indicated by Backlist 6Assume that AP as the percentage of sales will stretch to 20 as the last year percentage for the first five formats is 18 The 10 increase in sales 2 increase in GM and 1 decrease in expenses should be critical since it will increase the profit dramatically And the decrease in inventory is also critical because it will decrease the lower part of the ROA formula Since the overall goal of the profit plan is to achieve the 10 increase in ROA so the above assumptions will directly affect the end results Problem 2 Review the list of financial performance measure presented above What measures or calculations should Ramsey use to manage the business How should those measures be calculated 1Annual sales growth rate should be used to measure their performance because this rate helps management to evaluate the quality of their decisions and also helps to make the new strategy for the future development It is calculated by suing the difference between current year sales and previous years divided by the previous year sales 2Profit is the most critical measurement of a business performance Without profit or potential to earn profit in the future
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