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”
Welcome to Vision Essays! For over 10 years we have been helping students like you write, research, and generate ideas for their research papers, essays, term papers, dissertations, editing, resumes, and any other type of work your learning institution may assign you.
We can write any paper and have flexible payment plans with a minimum deadline of 6 Hrs.