Corporate Treasurer Of An Australian Based Property Development, Management And Investment Company

Another option is the issuing of preferred stock, the company’s common stock is already overvalued in the market; therefore, sourcing additional capital through common stock might result to lower proceeds.

Our company will plan to finance our strategy principally through issuing stock and cash flows from operating activities generated from the company’s normal business functions. It is undesirable for our strategy to issue debt because we would like to stay away from interest payments. Our company anticipates our debt to equity leverage ratio to be around 0.5.

Finance. In order to finance our startup year, we issued stocks and borrowed loan to finance our operation and for safety in case the sales did not go well. Financing using stocks means that we are selling common or preferred stocks to individuals. In return for the money, they get some ownership over the company and its interest. This helps to bring public’s awareness about the company. If the sales suffice, we will pay the debt in the second round.

The final option was raising capital in debt markets. Because of its current leverage KTM would only receive short term financing from banks and the management was thus rather considering the bond market opportunity.

2. New bank credit facility, 600 million cash on hand to take advantage of opportunities that may arise

Our company is an outstanding corporate that is highly respected among our peers in the outside world. The time and research we put into every new and old project in which we financially support, tends to lead us to greatness, as those products usually create a sustainable amount of wealth and growth. We have a huge reputation in regards to investing in local businesses in order to help them not only gain immediate attention by tagging our name to them but also assist them in making there visions come to life in which our company’s capital resources have given them a huge

As shown in the ratios chart, working capital has increased by $13M. Maturities of short-term investments and cash flow from operations are projected to be sufficient to sustain the company’s overall financing needs, including capital expenditures. The following corporate strategic plan identifies a project that needs financial backing.

2. Forecast the firm’s financial statements for 2002 and 2003. What will be the external financing requirements of the firm in those years? Can the firm repay its loan within a reasonable period? In order to forecast the financial statements of 2002 and 2003, the following assumptions need to be made. The growth of sales is 15%, same as 2001, which is estimated by managers. The rate of production costs and expenses per sales is constant to 50%. Administration and selling expenses is the average of last 4 years. The depreciation is $7.8 million per year, which is calculated by $54.6 million divided by 7 years. Tax rate is 24.5%, which is provided. The dividend is $2 million per year only when the company makes profits. Therefore, we assume that there will be no dividend in 2003. Gross PPE will be $27.3 million (54.6/2) per year. We also assume there is no more long term debt, because any funds need in the case are short term debt, it keeps at $18.2 million. According to the forecast, Star River needs external financing approximately $94 million and $107 million in 2002 and 2003, respectively. In order to analysis if the company can repay the debt, we need to know the interest coverage ratio, current ratio and D/E ratio. The interest coverage ratios through the forecast were 1.23 and 0.87 respectively, which is the danger signal to the managers, because in 2003, the profits even not

Depending on how much additional investment needed and what will be the payback period. Another cash flow statement will be needed for further reviewing to decide whether additional funding will be a good

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As Jackie Patrick, loans officer for the Commercial Bank of Ontario, the key issue is whether or not I will accept or reject Mackay’s request for a bank loan and line of credit. My key objective is to develop a thorough understanding of the facts presented in the case in order to make an informed decision that will best serve the interest of the Commercial Bank of Ontario, myself as the newly appointed loans officer, and of course my client Mr. Mackay.

As of December 31, 2005, the company had long term indebtedness of $1.52 billion. The company makes annual and semi-annual interest payments on the indebtedness under its two convertible notes, which are due in 2009 and 2010. The company has not issued any bonds.

The company is experiencing cash flow problems and has not achieved profitability for the past five years. Management is seeking a $2 Million private long-term loan.

The company maintains a minimum cash balance of $50,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month.

Apart from the funds already mentioned like the commercial paper, loans from local and international banks and the issue of ordinary shares, other funds that could help Mabati Rolling Mills are the issue of bonds and rights issue to existing shareholders.