Bodie Industrial Supply Essay

1022 Words Jul 3rd, 2013 5 Pages
Last four digits of student ID#:4981
Name of the business: Bodie Industrial Supply, Inc
Nature of the business: Retailer of equipment for the construction, utility and farming markets.

Marketing Analysis:

Bodie Industrial Supply, Inc is a full service distributor of top line, brand name, new and used certified machine tools, maintenance parts and related equipments for the construction, utility and farming markets. The demand for equipment is relatively cyclical, with Bodies having a slight increase in sales to farming markets in the summer. Bodie’s has seen a huge sales growth increase in 2003-2004 of 72% and 29% in 2004-2005. This is mostly due to an increase in net sales and keeping a constant level of costs of goods sold.
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The cash conversion cycle was 104 in 2004, 90 in 2005 and 124 in 2006. This is mainly attributed to the increase in accounts payable outstanding from 90 days in 2005 to 124 in 2006. Given the cash flow and inventory data, Bodie’s supply has positioned themselves well enough through operations to stay competitive. Minor changes such as decreasing accounts payable days and decreasing inventory days need to be made to make the company more efficient. The purchase of land, building and equipment has paid off with company being highly asset intensive in 2006 and continuing to improve fixed asset turnover.

Financing Analysis: Bodie Industrial Supply has funded itself mostly through loans. These loans include a bank loan, transport loan, mortage payable and CCB mortage payable. They took out a loan in 2005 in order to pay for the purchase of land, building and equipment. Liz Bodie expects sales growth to increase in 2007 and thus needs funding to build an extension to the warehouse to hold more inventory. Looking at BIS’s cashflow statements, you notice a significant increase in net cash flow from financing from 2005-2006. There is also an increase from the cash flow of operations from 2005-2006. In 2005 net cash flow was -$13,500 and increased rapidly in 2006 to a healthy net cash flow of $49,720. Based on current ratio, the company is losing liquidity, decreasing from 2.63 in 2004 to 1.52 in 2006. The quick ratio is another indication…

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