Seeing that I have already made millions upon millions in my moderately successful modeling career, I have decided to turn my attention to investing my money in stock, in particular, Robert Mondavi. 1998 was a hard year for Mondavi, an unforeseen shortage of their most popular wine (Woodbridge Chardonnay- 55% of their revenues) and stiff competition from several new imported brands forced net income down almost $8,000, and cut their earnings per share by 78%. For 1999, Mondavi was forced to take several actions to achieve their objectives. This included redoubling focus on the two largest-volume brands, appointing their Chief Financial Officer to Chief Operating Officer, doubling media expenditures to $7.3 million, taking a $6 million charge to write-off excess inventory and streamline their workforce, creating Brand Teams to improve accountability and planning, and adopt FIFO method of inventory accounting to improve predictability earnings and improve the measurement of inventory value.Mondavi has apparently shown great results from the restructuring, the concentration on the two largest-volume brands have accounted for 20% of the growth of all U.S. varietal wines. They reported record gains in their first quarter report of 2000. The bottom line of the annual report for 1999 shows a 14% increase in net income.But is the company safe to invest in? Stable growth throughout 1995-97 showed net income bolt to $38,125, up 310%. But 1997 showed the risks involved with investing in a company that so heavily relies on natural resources (grapes). Shortages in supplies dropped net income by almost $8,000; earnings per share dropped .53 from 2.43 to 1.90. After analyzing the financial statement, I was able to determine several interesting aspects: a .52 debt ratio shows appeal to lenders; a current ratio of 6.31 is very impressive. Seeing that inventory is so unstable and subject to many natural extraordinary events, the more important aci...
