Deutsche Brauerei Essay
Increase in Inventories – Firms are likely to stock up more inventory when they are expecting sales to grow. This is understandable since the company wants to cover the demand that rises among customers. Consequently, Firm needs more money as holding cost increases.
Increase in Capital Expenditures – In order to meet expected increase in demand, Deutsche Brauerei surely needs to expand their production capacity. In sufficient production capacity could result in turning down the orders and that costs the firm. The company have to spend more money on capital expenditures like purchasing new technologically improved equipment, new factories, distribution centers and warehouses building etc. and that's why they should put themselves into debt. Production expansion typically results in lower fixed cost per unit as well.
According to these items that increase together with sales due to firm growth. Deutsche Brauerei definitely needs additional fund to cover these items to run the business smoothly. Since this company is not a public company and the all shareholders are the Schweitzer family with half of them have dividends as their income. We think it