Jones Electrical Distribution Case Analysis

Be Our Guest’s balance sheet shows good signs of liquidity. Current Ratios for the past four years have remained above 1 proving that the company can handle its current liabilities. The current ratios are not extremely high (19941.27, 1995- 2.17, 1996- 1.15 and 1997- 1.16), but they can cover the current liabilities. It is important to note that the company is operating on a thin line because the current assets are barely covering the current liabilities. This is particularly unpleasant because we are dealing with a company operating in a seasonal business. It is a concern that the current ratio slightly eroded after 1995, and this is primarily due to Be Our Guest converting the bank line into long term debt in

Two-year decrease of liquidity measures including current ratio and quick ratio reveals the problems concerning company’s short-term solvency and liquidity. Butler Lumber Company’s current ratio decreased to 145.05% in 1990 from the level of 180.00% in 1988. The same decrease happened to quick ratio (decreased from 88.08% in 1988 to 66.92% in 1990). As the short-term lender, Northrop National Bank should have noticed that Butler Lumber Company’s ability to pay its bills over the short run without undue press needs to be carefully examined. The decrease of current ratio also implies the decreasing level of company’s net working capital, which is another sign of lower level of liquidity.

The findings of this report has found that the current performance of Chester, Inc. is not positive. Chester, Inc.’s liquidity ratios are steadily eroding over the three-year period. Profitability ratios are showing a trend that is slightly above industry averages, while being below their main competition each year. Solvency ratio analysis has showed the firm having sufficient leverage, but cash flow issues make us believe that acquiring more debt will not be beneficial to the company. A detailed explanation of the individual ratios used to draw these conclusions appear in the ratio analysis section of this report. Ultimately it is up to management to take action to remediate

For my first course of action I must determine the cause of this liquidity problem. The current ratio is the ratio of current assets to current liabilities; therefore a decrease in the current ratio is due to either a decrease of current assets or an increase of current liabilities. As shown on the balance sheets both current assets and liabilities are increasing, but the liabilities are increasing at a quicker rate. From 2002 to 2003 current liabilities have increased by over 100%, whereas current assets have only increased by about 35%. Mackay has accumulated more accounts payable. Taking a look at the efficiency ratios I can see why these accounts payable have increased so dramatically. The two ratios I saw a big change in were the age of receivables and age of payables. In the last year age of receivables has increased from 3 to 7 days and age of payables has increased from 98 to 154 days. This means that Mackay isn’t able to pay off his trade debt as quickly and in turn it accumulates faster. The more trade debt Mackay has the

The Lawsons’ efficiency ratios are another section the bank will find troubling. The company’s age of payables has nearly tripled over the last four years. This can be detrimental to the company’s image and reliability including their reliability toward the bank if granted the loan. Along with increasing age of payables is increasing age of receivables and age of inventory. Indicating that Mr. Mackay is taking longer to collect his receivables and that he has purchased too much inventory. Too much inventory results can result in further issues

Tire City, Inc. is a rapidly growing retail distributor of automotive tires. Although they have 10 shops located throughout the Northeast region, the bulk of TCI’s inventory is managed at a central warehouse. During the last three years, sales have been growing at a compound annual rate in excess of 20%. With such a great reflection of their excellent service and customer satisfaction in their net income, TCI’s central warehouse is “bulging at the seams”. TCI has decided to expand its warehouse facilities to accommodate future growth, and has requested a five year loan. We, MidBank, previously financed a project for TCI in 1991, which is currently being repaid in equal annual installments. TCI plans to

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

As we can see from the figures and the information given in the present case, the company is very profitable due to the ambition and well management done by its owner Mr. Jones. In this regard, we can see in “Table 2 in the spreadsheet”, that the company is taking advantage of the 2% discount offered by suppliers saving around $75,000.00 per year.

3. Conduct an analysis of Williams’ sources and uses of funds during the first half of 2002. How do you expect these numbers to evolve over the second half of 2002? What is the problem facing Williams? How did it get into this situation? How has it tried to address the problem it is facing?

Littlefield Technologies (LT) has developed another DSS product. The new product is manufactured using the same process as the product in the assignment “Capacity Management at Littlefield Technologies” — neither the process sequence nor the process time distributions at each tool have changed. The LT factory began production by investing most of its cash into capacity and inventory. Specifically, on day 0, the factory began operations with three stuffers, two testers, and one tuner, and a raw materials inventory of 9600 kits. This left the factory with zero cash on hand. Customer demand

Jones Blair Company, JBC, currently faces a unique challenge in which the upper level management must act in order to maintain its profitability. Jones Blair current market position is in the process of being eroded due to the mass merchandising efforts of companies like Kmart and Sears. In developing their strategy forward, Jones must address two key issues to address the problem statement. First, Jones Blair must determine which marketing medium they will use to access their potential customers. Secondly, they must determine the geographic locations in which

\Sam Johnson is the owner of a medium-size electronics company, Integrated Electronics Manufacturing (IEM), which produces high-grade electronic modules used by several major electronics manufacturers to produce a variety of military and commercial telecommunications devices such as aircraft radios, navigational equipment, land-based satellite receivers, and other items. IEM has 60 employees. Normally, IEM purchases electronic parts such as resistors, capacitors, circuit boards and enclosures from several different suppliers and assembles the modules in its own facility. Some of the parts, like circuit boards and enclosures, are built to IEM engineer’s specifications while others are “off the shelf”.

Dynamic Aircraft was recently awarded a multibillion contract for a new high-performance aircraft. To continue with the development of our project, Dynamic was unable to use our current wiring in the electrical systems of the aircraft. Luckily this had been known, and Dynamic’s engineers had already started looking for a supplier who could meet their requirements and expectations. One suitable supplier, Advanced Wire, had developed a high quality ceramic coated wire. Without really giving other suppliers a second thought, the engineers at Dynamic were immediately ready to contract Advanced Wire without really considering any of the other suppliers. When the issue was brought up about a lack of suppliers, Dynamic’s engineers refused to hear

Du Pont's financial policy had always been based on maximization of financial flexibility. Taking to consideration the riskiness of Du Pont's businesses, its competitive position and profitability had declined in the last 20 years. Moreover, the firm is still forced to seek external financing each year for the next five years (1983-1987) due to the continued high level of capital expenditures which are considered non-deferrable to redress the causes of poor performance. In view of the importance and magnitude of the projected financing needs, the firm is concerned about how the cost and availability of debt

The liquidity position of a company can be evaluated using several ratios which evaluate short-term assets and liabilities and a firm’s ability to settle short-term debts (Gibson, 2011). These ratios can provide insight into a firm’s ability to repay its debts in the short term (Gibson, 2011). In turn they suggest a firm’s capacity for debt-satisfying capabilities into the future (Gibson, 2011). This paper will use financial statement data as cited in Gibson (2011) from 3M Company (3M) to better understand liquidity measures to evaluate a firm’s total liquidity position. The following paper will focus on various liquidity calculations, their meaning, and their interpretation relative to 3M. Finally, an overall view of 3M’s liquidity