Swan-Davis, Inc. (SDI) manufactures equipment for sale to large contractors. The company was founded in 1976 by Tom Stone, the current chairman, and it went public in 1980 at $1 per share. The stock currently sells for $15, Stone owns 14 percent of the shares, and other officers and directors control another 13 percent. The industry is cyclical, and competition is strong, so profits are some-what unstable. Tables 1, 2, and 3 provide historical balance sheets, income statements, and ratios for the company for the period 1994–1996, Table 4 provides industry average data for 1994-1996, and Table 5 provides one security analyst’s forecasted data for the company based on assumptions set forth later in the case.…
Clarkson Lumber’s first scenario is one of continued rapid growth with Suburban Bank as the creditor and is represented by tables 1, 1.2, and 1.3. Using the most relevant expectation of about five and a half million dollars in 1996 net sales for Clarkson Lumber, as given by Northrup Bank’s investigator along with historical income statement data, I found that an annual growth rate of 22 percent was reasonable this…
Regina Company Inc. was known as a complacent slow-growth company and was dominated by Hoover and Eureka within the floorcare industry. Donald Sheelen was a promising young individual when he was hired first as the head of the marketing division in Regina, and then became its president. Shortly after becoming company president, Sheelen set out to make Regina the industry’s number one company and repeatedly vowed to “bomb” Hoover, the number one firm in the industry at the time. Sheelen expanded Regina’s product line and started an aggressive advertisement campaign to promote Regina’s products over Hoover’s. His strategy paid off, as Regina’s profits grew substantially, and after Regina went public, its stock price soared by nearly 500 percent, making Sheelen and the company’s other principal stockholders millionaires many times over. However, it turned out that the impressive financial figures released by Regina after it went public were fabricated by Sheelen. “Instead of a growth company with bright prospects, Regina was a dying company mired in mounting losses.” The major reason behind Regina’s financial difficulties was the poor quality of its new products, which resulted in a reported 50 percent customer return rates. After realizing that Regina was in a deep trouble, Sheelen, with the help of Regina CFO Vincent Golden, came up with several illicit accounting schemes to keep the company’s stock prices at a high level. In addition to significantly understating customer product returns and company’s cost of goods, they recorded bogus sales to inflate sales revenues, and implemented a so-called “ship-in-place” booking scheme. After realizing that he could no longer conceal the company’s deteriorating condition, Sheelen decided to let the public know of the company’s dire financial condition. Although Sheelen and Golden initially blamed the computer system for errors, they later pleaded guilty to federal mail and security fraud charges in 1989. Sheelen…
This case study is about a manufacturing company that designs, customize, and manufacture connector that are used to reinforce wood joins for construction purposes. The company has a good reputation in the industry and among construction professional for its customized products, and is consider one of the leading companies in the industry by enjoying a 60 per cent market share, which had fallen from 70 per cent in recent years; however, since 2006 to 2008, the company has seen its net income fall from $1456 to $7, which have raised concerns about the overall performance of the company among its executives. After analyzing the company’s finances, I have concluded that there are three main reasons for company’s low performance: Poor investment management, competition in the industry, and low demand due to recession.…
Frequently, Chaplin possessed comprehensive knowledge of management and financial theory, which permits the audience to apprehend the reasoning behind Nestegg’s failure. Chaplin also provides the information in a practical and functional manner which empowers the readers to grasp the material naturally. At the same time, Chaplin delivers numerous quantitative figures throughout the article which may obfuscate the interpretation to readers. He also uses a variety of reliable sources during the course of the article, although he uses a reasonable amount of sources that were written in Toronto. As a result, this may question the credibility due to the nature of the business mostly arising in Western Canada.…
The ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles, introducing the new project to build cedar dollhouses by shingle scrap materials for reaching $3 million annual sales within the next 3 years. Explain the overall risk profile of the ABC Company based on current economic and industry issues. In order to help out the CEO I prepare reports that will contain the information regarding the project. These statements refer to the accompanying Excel spreadsheet as well as word documents. The statements are; Cash Flow statements, Product Cost, Net present value, Depreciation, Contribution Margins and Break-even Point of sales. In the last conclude the major risk factors in this project, management accountant responsibilities of the project and recommendations.…
Executive officers, Bill Hayes, president of the company and Hal Atkins, the Chief Financial Officer are concerned about the cost of the system in relation to the immediate tangible results, or lack there of, given in the proposal. They are basing their decision on their position to approve projects that are not able to…
This assignment sets out to explain the pertinent financial concepts and principles found in chapters two and three of the text Corporate Financial Management by (Emery, Finnerty, & Stowe, 2007) and how they relate to the context of the Guillermo’s Furniture Store scenario. Guillermo’s was a leading furniture manufacturer who enjoyed inexpensive labor and convenient supplies of raw material next to his location in Sonora, Mexico, until in the late 1990s when his downturn started. An overseas competitor from Norway entered the area with a high-tech approach to the furniture manufacturing business. They offered to make product to exact specifications and at an all-time low price. Besides, challenge came from the burst of development in the area and an influx of people. This hindered the safe economic environment Guillermo’s enjoyed.…
In this case, as an advisor to the CFO, I am under the assumption that I have no power in making any decisions that will affect the financial statements or the net income. This means that no stakeholders are directly or indirectly influenced by my actions because all I am doing is providing insight to the CFO in regards to the issues presented to me. Therefore, there are no users in this…
Notes: The Shareholders, Cary Bryant, CLO, Me, Carol Tempest, VP HR, Jamal Moore, Aaron Webb…
1. Bauer Industries is an automobile manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight trucks. Bauer plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental free cash flow projections (in millions of dollars):…
When replacing the roof of your home, it may take some time and effort to come to a decision as to which roofing companies you might trust to undertake such an important job. How do you decide once you have narrowed down your choices?…
Introduction Kohler Company was faced with a very tough decision of whether or not to settle outside of court or go to court to settle with the dissenting shareholders. We will take you through the history of the company and why they recapitalized. Also, we will touch on some of the risks of going to trial to have the courts set a price. We have also broken down the numbers and found many different prices found by using the dividend growth model and the multiples approach. We will also show how different outcomes will affect Kohler’s retained earnings and cash standing. In the end, we believe we have chosen the best possible price to make everyone in the case happy without much sacrifice from either side and without having to go to court. History & Privacy Issue By creating a hog trough John Michael Kohler established one of the most profound plumbing companies in the world. In addition to the continual development and production of plumbing supplies Kohler also hit many other markets since its formation in 1873. The company’s private dedication to excellence has allowed them expand and seek control of these other industries. Some of these include furniture, engines, generators, rental services, and most recently the elegant golfing resort destinations which gives travelers a sense of privacy. Privacy happens to be one of Kohler’s most important values of which their success can be partially credited to it. In a publicly held firm, the company’s ownership is held and controlled by outsiders who had in some way bought into the firm as an investment, but in Kohler’s case being private means something totally different.…
Summary of facts: In 1981 by Mark Butler and his brother-in-law Henry Stark founded the Butler Lumber Company. In 1988 Mr. Butler bought Mr. Stark’s share for $105,000 to be paid of in 1989 out of which $70,000 was raised by a loan carrying an interest rate of 11% and repayable at the rate of $7,000 over the next 10 years. Over the past five years, Butler Lumber Company has experienced rapid growth in its business. It derives its business from retail distribution of lumber products in the local area. A large portion of its business is based in repair services, and as a result, it should be somewhat protected from a downturn in the real estate market.…
This manufacturer of RFID smart tags was experiencing severe parts shortages, increases in work-in-process inventory, and other production difficulties due in part to the fact that it was running two distinctly different production lines serving two quite different industries – pharmaceutical and retail. In addition, there are longer-range concerns about capacity constraints in the face of rapidly growing demand.…