Preview

Tire City Case

Powerful Essays
Open Document
Open Document
2031 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Tire City Case
Backg

Introduction

Tire City, Inc is a growing distributor of tires in the Northeastern part of the United States. Tire City, Inc is positioned in eastern Massachusetts, southern New Hampshire and northern Connecticut. Tire City, Inc distributes its product through a chain of 10 stores and a central warehouse outside Worcester, Massachusetts. In the past three years, Tire City has grown at an annual compound rate of 20% which was attributed to its excellent reputation for service and competitive pricing. Due to its growth, Tire City is currently at maximum capacity in its warehouse and is considering expanding its current warehouse facility to accommodate service levels. Jack Martin and Abeer Mandil are in the process of presenting the financial position of the company to their bank in order to request a five-year loan for the expansion.

Case Analysis

1-Tire City, Inc. Financial Health for 1995

Liquidity

|Liquidity Ratios |1993 |1994 |1995 |
|Current ratio |2.03 |1.92 |2.03 |
|Quick ratio |1.32 |1.29 |1.35 |
|Cash ratio |0.22 |0.21 |0.22 |
|Working capital ratio |0.36 |0.34 |0.37 |

Liquidity ratios are used to measure the company ability to meet its current obligations.
Tire City Inc. has improving current ratio; it increased from 1.92 in 1994 to 2.03 in 1995.
Moreover, quick, cash and working capital ratios increased slightly in 1995. Overall the company has good cash flow and stable position during 1993 to 1995.

Leverage

|Leverage Ratios |1993 |1994 |1995 |
|Debt ratio
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Good Essays

    Cost Accounting Cc2 Unit 2
    • 2988 Words
    • 12 Pages

    Cost Accounting Cc2 Unit 2

    Operating cash flow before working capital changes has largely fluctuated, increasing to a peak in 2006 and falling again. The highest point can be observed in 2008. Finance costs have decreased in 2008 by almost half. Stores and stocks increase at a steady rate but show a spike in 2008. Trade debts reach a peak in 2006 and then fluctuate. Other receivables, however, show an increase. Net cash from operating activities shows a peak in 2006. The greatest addition to plant, property and equipment is witnessed in 2008. Net cash used in investing activities reaches a peak t 2008. Net cash used in financing activities shows an upward trend with a peak in 2008. Cash and cash equivalents show a peak in 2008, with a smaller peak in 2006. *CC5 FIVE-YEAR GROWTH RATES Sales and net-income have increased over the years but the per-share results are different because the number of shares goes up considerably in 2008, reducing per-share values and making growth rates negative. No dividends were paid in the first two years and as a result, the growth in dividends per share has been 100%. Equity per share has shown a growth over the years. Issuing more shares has resulted in lower sales and net income per share. The negative effect is especially felt on net income per share. This is not a good sign for the company, as it will negatively affect share prices financial markets. Financing the expansion in 2008 with a growth in equity seems to have been an unreasonable…

    • 2988 Words
    • 12 Pages
    Good Essays
    Read More
  • Good Essays

    Jet2 Task 2 Financial Analysis Paper
    • 2299 Words
    • 10 Pages

    Jet2 Task 2 Financial Analysis Paper

    A bit of a mixed indicator is total assets increased 16.5%. While over all this appears to be a strength, the total cash on hand increased 348%. So on the surface this may be indicative of strength but when digging deeper the cash/asset ratio increased from 1.3 to 2.6 which is not necessarily a good thing. The company has enough money to pay its immediate bills but it shows that more can be invested in increasing sales or even paid out in dividends.…

    • 2299 Words
    • 10 Pages
    Good Essays
    Read More
  • Powerful Essays

    Canadian Tire Financial Analysis
    • 4124 Words
    • 17 Pages

    Canadian Tire Financial Analysis

    According to the financial analysis, Canadian Tire had a successful business year during 2010. The gross operating revenue had growth of $294.3 million with a rate of 3.4%. The net income was increased from $335.0 million to $453.6 million, with a significant rate of 35.4%. Though the corporation’s total assets had a slight decrease of 1.2%, the total liabilities had decreased by 9.4%. As a result, there was a 10.3% increase in the shareholders’ equity compared to 2009. This growth in the shareholders’ equity is expected by the investors and it will make them more confident to invest in the business and will attract more potential investors.…

    • 4124 Words
    • 17 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Discount Tire Company Marketing Activities
    • 2474 Words
    • 10 Pages

    Discount Tire Company Marketing Activities

    The purpose of this paper is to explain and evaluate the marketing activities of Discount Tire Company. The name Discount Tire Company and the abbreviation DTC may be used interchangeably within this paper. It is my intent to expound upon the marketing activities that have made this company so successful. I contend that, in a down economy, these marketing activities have allowed the company to remain ahead of its competition.…

    • 2474 Words
    • 10 Pages
    Powerful Essays
    Read More
  • Good Essays

    Horizontal and Vertical Analysis from Macy’s Inc.
    • 803 Words
    • 4 Pages

    Horizontal and Vertical Analysis from Macy’s Inc.

    The Total Assets from the company represent a figure of 21,300 in the latest year, which represent a decrease of 3.82% from the previous year. The Current Assets sum up a total of 30.44% and 32.31% of the Total Assets as of January 2009 and January 2010 dates respectively, which represent a real growth, between the dates, of $142 to reach the $6,882. Part of this growth is due to the increase of 29.1% of the Cash and Cash Equivalents account, which in the later date is valued as $1,686; it also increase its participation in the total assets from 5.9% to 7.92% from one year to another. Also worthwhile mentioning is the significant reduction of the Accounts Receivable of 18.45% which varied $81 from the $439 figure we had in the FY08.…

    • 803 Words
    • 4 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Bed Bath and Beyond
    • 296 Words
    • 2 Pages

    Bed Bath and Beyond

    |Net working capital increases from FY 1992 to 1993 is an indication |Increase in debt ratio is a concern, which means the firm is |…

    • 296 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Tire City
    • 323 Words
    • 2 Pages

    Tire City

    Tire City has constantly been producing increasing amount of cash every year -- from $508,000 in 1993 to $609,000 in 1994, and to $706,000 in 1995. During 1993-1995, the company have met current ratios above 1.90 and quick ratios around 1.3 each year and showed that they have been able to meet their short-term liabilities without the help of outside financing. Overall, as of 1995, Tire City, Inc. is in a good financial…

    • 323 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Discount Tires Research Paper
    • 1705 Words
    • 7 Pages

    Discount Tires Research Paper

    The tire industry is a very competitive industry to be in. It's all about the low that can be provided for the clientele as well as the convenience of a short wait time for a vehicle to be worked on. They rely heavily on the ability to bring in new clients and to wow the…

    • 1705 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Case 2 Rim
    • 455 Words
    • 2 Pages

    Case 2 Rim

    1. What were some of the challenges RIM faced to protect its Intellectual Property and how did RIM handle those challenges?…

    • 455 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Summary: Tire City Case
    • 709 Words
    • 3 Pages

    Summary: Tire City Case

    Using the established line of credit, that had not yet been used, 0 this as of '95, 7 years remain of annual installments to 125 MidBank for '91 loan A/P in relationship to sales: 6.4% in 93, 6.5% in 94, 6.1% in 95 (Avg 1440 6.33%) 0.0633 Accr Exp as % sales (7.06% in 93, 7.04% in 1653 94, 7.03% in 95) 0.0704 3218 Using the established line of credit, that had 398 not yet been used…

    • 709 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Goodyear Tire and Rubber Company and Bridgestone Tire Co.
    • 5129 Words
    • 21 Pages

    Goodyear Tire and Rubber Company and Bridgestone Tire Co.

    This analysis focuses on the Bridgestone tire company, specifically it explains how and when the company started, how many employees do they have around the world, which are their main competitors, financial analysis from 2007 to 2012, and it concludes by showing the company’s strength, weaknesses, opportunities and threats.…

    • 5129 Words
    • 21 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Hobby Horse Minicase
    • 735 Words
    • 3 Pages

    Hobby Horse Minicase

    Available cash, or rather the lack of it, is a critical problem facing the company. All of the liquidity ratios are showing signs of decline. The current ratio has been in decrease over the past 4 years, possibly due in part to rapid expansion and more recently to poor product selection. There has been a much sharper weakening over the past 2 years.…

    • 735 Words
    • 3 Pages
    Powerful Essays
    Read More
  • Good Essays

    Oakville Tire Case Study
    • 478 Words
    • 2 Pages

    Oakville Tire Case Study

    Your tires go through a lot when you drive your vehicle. With so many factors contributing to their performance and ability to handle the road, it is necessary that you have an understanding of their limitations. Just by driving fast or putting too much weight in your car can add unnecessary stress to your car's future performance. Luckily for you though, there are plenty of tire stores in Oakville who are qualified to handle all of your car maintenance needs, including our list below of the 3 best tire stores in Oakville.…

    • 478 Words
    • 2 Pages
    Good Essays
    Read More
  • Good Essays

    Fly by Night
    • 621 Words
    • 3 Pages

    Fly by Night

    Fly By Night International was founded by Douglas C. Mather in the mid 1970's. He started the company as a pilot training school. Then he branched out into government contracting. He used his “rent-an-enemy” fleet to the Navy and Air Force for use in fighter-pilot training. The company experienced great success during the first five years of its operations and the stock price almost doubled. However, in year 14 the company started a rapid descent. The company did not have enough cash flow to service its debt. Furthermore, the company found material misstatements in their financial statements. After analyzing the financial statements of the company it has become clear the causes of the cash flow problems.…

    • 621 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    Goodweek Tires Case Study
    • 2387 Words
    • 10 Pages

    Goodweek Tires Case Study

    The Goodweek Tires, Inc. is a tire producing company. After extensive research and development (R&D) it has developed a new tire named SuperTread. This tire will be ideal for the wet weather and off road driving in addition to normal highway usage. The research and development department has already incurred a total cost of $10,000,000. It is expected that the SuperTread will stay on the market for a total of four years. Test marketing, costing…

    • 2387 Words
    • 10 Pages
    Powerful Essays
    Read More

Related Topics