Decision: how much money would he need to keep up with growi Essay Help

Decision: how much money would he need to keep up with growing demand ? should they level load Problem: C. R. Plastics need financing in order for growth of the company ? bank line of credit: $500 000 ? personal money: $150 000 ? credit card: $35 000 ? Jamie has exhausted his means in financing and needs an injection of new money Objective: convince the Dragons? to provide financing without giving up more than 30% of his company Company Recycled plastics ? assemble into chairs KSF ? cost control ? innovated products ? managing inventory Industry ? outdoor furniture is high fragmented and competitive ? C. C. R. Plastics R. Plastics are competing with a lot of different companies making their business risky to invest in ? other businesses have the opportunity to cut costs lower if they see the opportunity to do so making the business riskier ? trend for North America to be a net importer of furniture due to cheaper oversea production ? hard for the company to bring value to consumers based on price ? difficult for the company to create bigger margins for themselves ? the strong $CA impedes competitiveness with oversea companies ? risky because the company will not be able to compete on price ? how will investors recuperate their money ? outdoor furniture is highly seasonal ? the company has a narrow time frame to generate sales making the business riskier ? furniture business is not novel ? highly likey for companies to come up with similar product ? would investors want to invest in a company that does not have patents or security in knowing they are the sole providers of such a product ? currently no national retailer interested in high-quality recycled plastic furniture ? minimal opportunity to get a deal with a large order unless a Dragon is able to have a connection ? company has inventory issues (financing cash issue ? tying up cash) ? where do we keep the chairs ? obsolete Company Overview ? Bailey has offered a variety of other plastic products in his company portfolio ? the original Adirondack chair comprises of 50% of sales ? perhaps the cost of offering so much variety increases the COGS ? C. R. Plastics already has so much financing ($500 000 line of credit $35 000 credit card) ? they have a significant amount of money they need to pay back riskier for investors to put their own money and add to the mix Income Statement ? 2009 their gross margins increased significantly however the trend up to 2009 did not look healthy ? their operations show economies of scale (healthy sign) Balance Sheet Current Ratio CA/CL = 2.07 ? solid ratio confirming if the company were to liquid they will be able to cover all their liabilities Quick Ratio: be conservative and check the situation of the company disregarding their inventory CA-INV/CL = 0.89 ? assuming the value of the inventory is low the company does have liquid assets that can almost cover the value of the liabilities ? shows a relatively positive sign if the company were to liquid Debt Ratio: TA ? TOE / TA = 0.83 ? 83% of the firms assets are financed by the debt ? as an investor risky to see the firms assets are funded through debt ? $150 000 on cash injection + bank has evaluated the company as low risk in order to provide the loan in the first place Return on Equity: Net Income/TOE = 0.96 ? company is very efficient with generating income throughout their current capital Level Seasonal ? constant # of workers ? save $16 000/month x 8 months + $135 000 ? save COGS ? cash flow issues (producing more in slower) -risk of obsolete ? hire workers to meet ? need funding”

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