Aurora Textile Company Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

This case asks students to solve Aurora Textile Company can create value through the modernization of its spinning machines for a better quality of yarn, which is sold at a higher margin. Information on the value allows the student to get the cash flow projections for existing spinning machine and new machines. Cash flows are a lot of different cost components, including depreciation, the number of days of inventory of cotton, and the liability costs associated with revenues from retail. The cost of capital referred to in order to simplify the analysis. Analysis of additional complexity, however, because of the problem of the financial condition of both the company and the U.S. textile industry, which is in decline, as manufacturers migrate to Asia to benefit from lower production costs. This begs the question of whether management should invest in a decline in business, or build a company to pay all profits to owners. The fact is for students just learning the principles of finance, but also rich enough to use with students and experienced managers. The main points of the study are the following: • a phased-cash-flow analysis: determination of cash flows related to the investment decision • Construction of a side-by-side with discounted cash flow analysis for the replacement decisions • How to adapt the rules NPV resolving problems or dying industry • Influence financial disaster for the calculation of NPV • The importance of sensitivity analysis for investment decision "Hide