Haefren Bum Case Analysis

• Net profit margin has been negative and no major patterns over the 9 year period on net profit since the trend of the industry is based mostly on economic factors, and whether or not they secure contracts. Due to high percentage of COGS they are only left with a net profit of $980 or

The high and increasing Operating expenses are cutting into the Operating margins, which also cuts into the bottom line.

Haefren Baum is primarily using financing activities to maintain operations of the business. They are basically staying alive by debt, and will need to re-evaluate its processes to stay in business.

Financial analysis: Haefren Baum is funding itself from bank loans, mortgages, and their supplier’s flexible credit. The major change in consumer demand, from the economic bust, in 1993, lead to lower sales and extended account payable days. The cash flow statements are unhealthy as they negative operating cash flows generated from a negative net income and high account payables. The company is far from liquid with 1.26 quick ratio in 1995 and high account payable days. The company has profitability issues, which is seen in their decrease in operating profit and negative return on equity. As stated earlier this is due to their decline in sales, tough economic conditions, and increased competition. They are highly leveraged company, which is risky. Their debt to equity ratio jumped from 5.84 in 1993 to 8.22 in 1995, which means it is hard for them to sustain that debt with their low equity. For

Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements.

Haefren Baum is an independent home furnishings retailer associated with Wiegandt that sells high quality furniture. The company began as a partnership in 1965. Haefren Baum became a retailer for Wiegandt in 1968. Two years later, it became a corporate entity. Haefren Baum is located in Cologne, which is one of the most populated and rich cities in Germany. Haefren retails home furnishing from a location downtown Cologne, and three recently constructed stores in Rhineland.

Harnischfeger also included the products purchased from Kobe Steel, LTD and sold by them in their net sales instead of stating only the gross margin per unit. They also included the financial statements of some foreign subsidiaries.

For this assignment, purchase and read the case file “Harnischfeger Corp.” You can purchase the reading from Harvard Business Publishing Web site. After reading the case, answer the questions on page three of this document. Submit your assignment by the end of Week 2.

10. Summarize all the accounting changes Harnischfeger made in 1984 and their effects on pre-tax profits and cash flows in 1984. Below are the changes that were made in 1984: Change in Sales recognition strategy with Kobe Steel - No net effect on pre-tax profits and cash flows in 1984; Change in reporting period for certain foreign subsidiaries - No net effect on pre-tax profits and cash flows in 1984; Change in Pension plan - Increased pre-tax profits and cash flows in 1984; Change in bad debt allowance ratio - Increased pre-tax profits and cash flows in 1984; Reduction in R&D expenses -

Note 9 indicates that Harnischfeger decreased its R&D expense considerably in 1984 relative to the previous two years. Do you think this change was motivated by business considerations or accounting considerations? How did this change affect the company’s reported profits in 1984?

Harlequin Enterprises has been able to capture 80% of the series romance market. Our great existing strategy (see exhibit 1) has allowed us to be the biggest player in the series romance market. Now we face the opportunity to capture a rapidly growing market of single-title women 's fiction novels. I recommend that Harlequin aggressively pursue the single-title market, using its extensive back list collection to reissue novels by best-selling authors.

The overall profitability of Chemical Bank has been negatively affected by a decrease in profit contribution from Due Bills. There is an external threat of reduced interest rates and internal threats in the form of misalignment between involved divisions.

It would also reduce the risk of price increases by negotiating future prices. As shown previously, Harnischfeger was able to successfully reduce its cost to sales ratio. Through targeting new growth, emphasizing the high technology portion of its business and developing the Industrial Technologies Group, would create new business and ultimately increase sales for the company, which is shown in its financials, a 24% increase in sales from 1983 to 1984.

Jones over forecasts his inventory and has a low inventory turnover ratio. This drastically increases his accounts payable, as he isn’t able to pay due to low cash inflow. His account’s payable increased by nearly 9 percent in 2006. Nearly half of his current assets are in inventory. Also Jones isn’t able to take advantage of the cash discounts offered by his suppliers due to his slow cash collection process. In order to perform well, the company must improve its inventory system and its cash collection policies.

The financial analysis of Heidelberg Cement Bangladesh Ltd. is performed by using secondary data only. Annual Reports from year 2003-2008 are collected from Dhaka Stock Exchange and also data from websites of Dhaka Stock Exchange (dsebd.com), Heidelberg Cement Bangladesh Ltd., newspapers are conferred with while analyzing the financial position and finding various news related to the firm. Secondary Data of recent 6 years are utilized in this study for