Essay on Coast4Life
To :Coast4life Inc
From: Pat Brown, CMA
Subject: Options for Cost savings and revenue generation
Introduction: Coast4life Inc with the expected downturn situation due to recent terrorist attack on a cruise ship in 2012 and on airline industry would prepare to remain profitable by finding ways to cut cost or generate additional revenue. Target is to recommend the best among the four alternative as directed and aiming at 16% after tax return and tax rate of 38%.
Identification of Issues and related alternatives:
• Debt to Equity Ratio of 1.23 more than 1 reveals that more than half of assets are financed by debt.
• $3.6 million required for repairs of hull before 2013.
• Gross profit of 60% …show more content…
• Training required for unskilled workers to meet Coast4 life standards.
Alternative 4: Web-Based booking
• Savings on commissions to agents by 10%
• Advantages for customers to book online
• Helps in maintaining database for Customer behavior
• Incremental cash flow of 11 million in 2013 id web based booking increases (Appendix 5)
• Setup cost and software $50000 and accounting module of $25000.
• Maintenance of the web server
• Training cost required for staffs to get hands on Accounting Software
• To continue to maintain the Fraser dry dock as it has not generated a positive Cash flow. There is growth opportunities in Vancouver.
• Implement the web based system and avoid commissions to agents and maintain a centralized database of customer information’s