Nipissing University School of Business
Lawsons Case Study
Course Name: Economic and Management Decision Making
Course Code: ADMN-3056
Section: 825
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Huda Ali
02/06/2014
Total Number of Pages:
Table of Contents
Issues and Objectives:
There are two chief participants in this case study, Paul Mackay and Jackie Patrick. Mackay, a sole proprietor of Lawsons (a general merchandising retail site in Riverdale, Ontario), has approached the Commercial Bank of Ontario in order to acquire an additional $194, 000 bank loan and a $26,000 line of Credit. Patrick, a first time loans officer, has been appointed to Mackay’s request. As such
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This causes more trade debt, which means a higher the tax penalty. Furthermore, age of payables has increased from 98 to 154 days, nearly tripling over the last four years. This is damaging to the image and trustworthiness of the company, even causing issues from the bank trusting them with grant of loan. Having a large amount of inventory can conclude additional problem involving cost of capital, maintenance cost, aging inventory and the cost of space or storage. This therefore proves the poor management skills that are required to operate a booming and profitable business.
Stability & Growth:
The most noticeable growth in this section is seen in sales from 2002 to 2003. These sales have increased from 3.7% in 2001-02 to 23.5% in 2002-03 after the expansion of the store. This truly helps the company to a positive way when seeing such drastic changes. Net earnings have almost doubled and gross profit was on the rise as well, which is also a positive trend for the company that will not go unnoticed. This indicates a positive correlation and increases in profitability.
Projected Statements: Income Statement
Projected Statements: Balance Sheet
2. Starbucks enjoyed strong financial performance in 2011. The company did not explicitly attribute this, but with an 8% rise in same store sales it seems that either the consumer market bounced back, or Starbucks made changes that attracted more consumers. The company feels that it offered better products and a better experience at its stores. The company also credited operating efficiencies and tight control of spending for improved profits. In addition, the company continued its global expansion, which improved the top line, and used the economies of scale it generated as part of its cost control program.
On May 4, 2017 at approximately 9:34PM I, Deputy George along with Sergeant Kincaid were in the process of conducting an investigation regarding a possible disturbance in front of the address of 398 County Road 4249, Como, Texas 75432.
Although the company seems to be profitable, it has faced shortage of cash. It happened due to increase in Accounts Receivable as well as Inventories. On the other hand, Accounts Payable does not increase that rapidly and difficulties regarding cash collection become evident. Furthermore, the cash collection cycle becomes larger (59 days in year 2003, while more than 70 in year 2006).
Tire City, Inc. has petitioned MidBank for a loan in order to expand their business, and build a new warehouse. Through the financial statement reporting and the numbers that have been presented to me, I believe that this is a sound investment. The growth percentage of 20 percent per year is conceivable, if business stays as it currently is. The amount of debt that would need to be financed for this expansion is palatable, and well within the normal ranges for these sort of projects. Moreover, the company has very solid net working capital and leverage ratios. All of these factors lead me to believe that this will be a profitable investment for the bank. The one issue that I had was in 1996 when Tire City capped their
The main decision for Chembright is in regards to the pricing of their products specifically bleach, which is Chembright’s main product, and how their main competitor R.J. Poulson is pricing theirs bleach in order to get rid of the competition. This has caused Chembright to be unable to compete at these prices since there isn’t any profit margin for them if they lower their price as R.J. Poulson. Therefore Chembright has to stop the price war with R.J Poulson to be able to maintain their products in these markets. Now Chembright is facing the issue of how to retain their customer’s without lowering their prices, since regardless of
From 1976 to 1982 the compound annual growth in net sales was 18.5% and the compound annual growth of after tax profit was 25.9%. Therefore, a 10% net sales growth shown in the proforma financial data seems reasonable.
Mr. Paul Mackay, a sole proprietor, has approached the Commercial Bank of Ontario in order to obtain an additional $194,000 bank loan and a $26,000 line of credit. Paul owns and operates a general merchandising retailer in Riverdale, Ontario named Lawsons’. The bank loan is needed for Mr. Mackay to reduce his trade debt that has a sheer 13.5 per cent interest penalty. The line of credit is needed for sales seasonal downfalls so that Mr. Mackay could properly manage those tough months. Jackie Patrick, a first time loans officer, has been appointed to Mr. Mackay’s request. Although anxious to finish her first loan, Ms. Patrick knows that this particular case is a difficult one.
During this time, sales increased from: $7.11 billion in 2010 to $7.99 billion in 2012. Earnings improved from $2.84 to $3.57. While the total amount of dividends rose from $1.00 to $1.72. These figures are showing how the company has been continually increasing sales, earnings and dividends over the last three years. In the future, the management predicts that their current strategy will increase returns. As, executives believe that their focus on building the brand and accounting for costs will lead to net earnings of $5.20 to $7.19 annually by
Profit growth has on average exceeded stated goals from 1997-2003, averaging on 33 %. Transaction value, an indicator of the activity level, has grown notably less than profits (207 % vs. 289 % over six years), indicating profitable growth. This contrasts with the general squeeze on profitability and growth for the industry. International operations have not performed well. Transaction value has grown more than 50 % from 2001-2003, while profits have declined 65 %.
section). This shows an increase in product purchases and an increase in market share (an increase
In recent years, the company experienced a rapid growth and expects a substantial increase in sales in the spring of
However, it gained 2138.5, thousand in sales at the Santa Rosa market and it continued to improve slightly the next year as well. The consolidated balance sheet shows an increase in total equity from 2003-2004 for the two stores. When comparing the financial performance of Oliver’s
the spring of 1996, anticipated a further substantial increase in sales. Despite good profits, the
As given in the working capital for the year 2007 is $183,129 which compared to previous years has fallen drastically. This means that the financial health of the company is deteriorating and this will keep on happening until the company improves it working capital. In terms of Accounts Receivable, Inventory and/or Accounts Payable the age period is 157 days, 12 days and 57 days respectively. The best way to calculate this is to use ratios and for this purpose we will first look into the Days Sales in Inventory which is 365 / Inventory Turnover which is given as 12 days. This means that the company will receive their inventory 30.4 times in 365 days which is very good for the company’s cash flow and will thus benefit the bank as well.