Assignment 3 Capstone Research Project

Project Parameters:
You have been selected as the consultant to develop a business plan for Durango Manufacturing
Company, which is a start-up, medium-sized public manufacturing company. The CEO has a
background in manufacturing and is well versed in supply chain management. However, the CEO
has limited experience in financial management and creating value for the various stakeholder
groups. Your business plan must include a five (5) year strategy to increase revenues by 10% and a
recommendation for creating an organizational structure to comply with SOX mandates for strong
corporate governance over the internal controls. Your business plan must also include
prescriptions for creating an ethical environment. Your recommendation must be approved by the
Board of Directors before the company can begin its operations.
Based on your knowledge of accounting and financial, prepare a ten to twelve (10-12) page report
in which you:
1. As the consultant, create an argument that you will present to the CEO that suggests
accounting and financial management knowledge and skills will be essential to the
company’s success and stability over the next five (5) years. Provide support for your
argument.
2. Suggest to the CEO how the company’s stakeholders (investors, lenders, and employees) will
use financial statement information and ratio calculations to make key determinations
related to the financial condition and operational efficiency of the company. Provide support
for your rationale.
3. Given the strategy to increase revenue during the five (5) year plan period, which will need to
be achieved through expansion and capital expenditures, determine which capital budgeting
ratio is appropriate for Durango to evaluate its proposals for capital expenditures, such as
NPV, IRR, etc. Defend your position.
4. In order for the company to improve its operational efficiency, recommend which production
departments should use process, job order, and activity-based costing—all three (3) of
which must be implemented within Durango. Defend your choice for each department.
5. The CEO would like to consider outsourcing his manufacturing operations if labor can be
supplied cheaper overseas than in the U.S. Create an argument either for or against
outsourcing the manufacturing operation to a foreign country. Your argument should include
key points that support your position. The key points should address economic and business