Essay about MBA Foundations Copy

1595 WordsOct 31, 20147 Pages
Nano Brewery 1 Evaluation of the Nano Brewery MBA Foundations Course Patten University James P. McQuiston Abstract The Nano Brewery is a very small business that has been operating for two years. The two owners have found that demand for their product has outstripped their ability to supply it. They are considering expanding their company to meet this demand. We will analyze their financial performance and evaluate broader environmental factors before providing a recommendation on company expansion. Nano Brewery 2 Introduction The Nano Brewery operates in the microbrewery industry. A commonly cited definition of a microbrewery is a brewer that produces less than 10,000-15,000 barrels per year. This relatively small quantity fosters…show more content…
Debt ratio This is the proportion of the brewery’s assets that are financed by debt. Debt ratio= Total liabilities/ total assets Total liabilities= $43236 Total assets= $70152 Debt ratio= $43236/$70152 Debt ratio= 0.616 This indicates that nearly 62% of the brewery’s assets are currently financed by debt. This is relatively high, but should not be viewed in isolation. Debt to Equity Ratio The debt-to-equity ratio demonstrates how the brewery is financed (outside creditors vs shareholders.) Debt to Equity ratio= Total liabilities/ shareholder equity Total liabilities= $43236 Shareholder equity= $26915 Debt to Equity ratio= $43236/$26915 Debt to Equity ratio is 1.62 Nano Brewery 6 This debt ratio is concerning and hints that the brewery may have difficulty paying its liabilities including the sizable government loan. Working Capital Working Capital= current assets - current liabilities As noted in the brewery balance sheet: Total Current Assets: $18211 Total Current Liabilities: $4073 Working Capital is $14138 Environmental Analysis Political factors Political factors primarily include government regulation of alcohol and taxes. According to data collected by The Beer Institute, the beer industry generated $5.3 billion in federal and state excise taxes1. There has been recent interest in increasing the “sin tax” for products such as alcohol, cigarettes to offset healthcare costs. With the recent

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