MBA 640 Final Project Milestone Three T.Olsen.docx - Running head Justification 1 External Capital Funding Proposal Justification MBA 640 Southern New

MBA 640 Final Project Milestone Three T.Olsen.docx -...

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Running head: Justification 1 External Capital Funding Proposal: Justification MBA 640 Southern New Hampshire University Teresa Olsen March 5, 2020
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FUNDING PROPOSAL 2 Abstract This report will analyze the financial impact that Nordstrom could face by expanding operation into China. It will show the current situation of Nordstrom and their projection of revenue, pretax income, cash with and without the expansion. Then it will compare the proposed funding and methods used to make the expansion happen smoothly without causing the company to fold. It will access the vulnerability and viability of the company to expand into this market. Lastly, showing the loan company on how dedicated and financially reliable Nordstrom’s is and why they deserve the expansion loan. It will explore their financial statements and other indicators that Nordstrom’s is in great health for the expansion.
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FUNDING PROPOSAL 3 Milestone Three: Justification Financial Impact Continuing to work on the expansion plan Nordstrom would show their dedication to growing outside the US. By guaranteeing the expansion will be successful and make a greater profit for the company they need to focus on the projected figures. That means they need to move forward on not opening one location in China, but multiple locations. Nordstrom should continue to study the current market during the unfavorable market. They must look for costs, capital requirements, conditions, sales projections and investment performance. During Nordstrom’s first quarter they reported their net earnings of $37 Million with “earnings before interest and taxes (“EBIT”) were $77 million, or 2.3 percent of net sales, compared with $153 million, or 4.4 percent of net sales, during the same period in fiscal 2018. The decrease was driven primarily by lower sales volume (Nordstrom, 2019).” Their net sales decreased by 5.1% compared to the same period the previous year. Their off-price sales also decreased .6% over the previous year quarter. Administrative, selling and general expenses also increased due to “fixed expense deleverage on lower sales volume (Nordstrom, 2019).” The second quarter reports showed a different picture. “Investors traditionally respond well to strong inventory discipline, which Nordstrom cited as a key driver in the fiscal second- quarter earnings beat. The company said inventory was down 6.5% over the last year, marking the second consecutive quarter of positive spread between inventory and sales (Wu, 2019).” Nordstrom then moved to repurchase 4.1 million shares back costing the $186 million, which then took an impact on “return on Assets, Debt to Net Earnings, Adjusted Return on Invested Capital (non-GAAP measure) and Adjusted Debt to EBITDAR (non-GAAP measure) (Investor, 2019).”
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FUNDING PROPOSAL 4 “Investors traditionally respond well to strong inventory discipline, which Nordstrom cited as a key driver in the fiscal second-quarter earnings beat. The company said inventory was down 6.5% over the last year, marking the second consecutive quarter of positive spread between inventory and sales (CNBC, 2019).”
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  • Summer '18
  • BRUCE HARRINGTON
  • Balance Sheet, Generally Accepted Accounting Principles, Nordstrom Rack

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