Ratios for sale of Vineyard
Hi guys,
Have a question, got a case study where a wine company sold its vineyard and decided to purchase all of its grapes and processes themselves. What ratios do you normally look at to find out why the decision was made and that is the right way to go?
I was thinking of fixed asset turnover or asset turnover.
Any help would be greatly appreciated.
T
You realize that asset turnover is just Sales / Assets. So naturally displacing a large asset and generating same sales will increase the ratio. However this is only tangential as to why the decision was made and therefore isn't the right answer.
While I have just about zero experience in the wine industry other than an interview at Gallo, some things you would want to consider are what was the cost of farming the grapes vs buying the grapes.
Did the sale allow them to expand the number of bottles they ship or improve facilities and yield?
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