Case Report Essay

1504 Words Oct 22nd, 2012 7 Pages
Celebrations and Memories Ltd. (CML)

Current Situational and Future Growth Opportunities Analysis

By: Robyn Berg, CMA (1072063)

For:
Gordon Hoops
&
Chris Mantha

Executive Summary

Introduction
MCL has been operating successfully for decades, but as times change, now they are finding themselves in a situation which requires in mediate action.

Situational Analysis

Even though MCL is still profitable, the ratios calculated (Appendix 1) indicate that the company is not very liquid, and is in risk of becoming insolvent.

CML’s liquidity ratios all fall below the commonly acceptable. For example, the quick ratio for 2011 is 0.11, when the acceptable is 1.

In
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(Total 7 new Stores in 2 years) ▪ Stores in Alberta could have 10% higher revenues than in BC ▪ This will generate more revenues, aligning with the board’s desire. ▪ Has a before tax net present value of $2 Million dollars. (please refer to Appendix 4 for complete analysis) o Cons: ▪ Stores in Alberta could have 15% higher operating costs ▪ This will increase corporate office travel expenses, which goes against board’s desire to decrease expenses. ▪ New Stores opportunities are limited due to not many new secondary malls been build in growing urban sectors

• Good operating profits from new stores(S)

3. Warehousing o Pros: ▪ Higher Contribution Margin, as delivery charges would decrease ▪ Will decrease delivery expenses. This will satisfy the boards desire to decrease expenses. o Cons: ▪ New warehouse would have to be constructed, 2 vehicles purchased and a drivers would have to be hired. ▪ This would only serve stores in Quebec and Ontario, not to B.C or Nova Scotia ▪ High cost of building and maintaining warehouse ▪ Negative NPV $3 Million dollar (Please see Appendix 5 for detail calculations)

Recommendations

It is recommended that CML starts selling the collectible plates and DVDs, as well as see into expanding into the new 7 locations.

It is also recommended

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