On the other hand, the quick ratio is well above the ideal quick ratio i. It is operating in automotive parts industry with product lines in advanced heating and air conditioning systems, engine cooling systems and parts and fuel injection and transfer systems. See Exhibit 1 Furthermore, projected income statement of the company shows in given conditions company would be generating good net income from the operations on a monthly basis. What seems to be an appropriate amount, if any? The vice president of the local bank, was considering a loan request from a longtime client, Jackso Automotive systems. Finding unskilled and low wage labors to cut their cost causing redundancy in the employment ultimately increases the unemployment rate. Hence, for this reason, it can be determined that the company is in urgent need of extension in the credit facility till September to run its operation in order to ensure its going concern and continue its business operations to compete in the already highly competitive market.
Business case study paragraph by paragraph mapping will help you in organizing the information correctly and provide a clear guide to go back to the case study if you need further information. In some cases you will able to find the central problem in the beginning itself while in others it may be in the end in form of questions. The president approaches the bank for an extension to repay a loan and for an additional loan to cover the new equipment purchase. The case can also be used as a take-home final exam. However, the company issues share to gain equity capital to fund expansions, but because of the weak economic growth, the company' management could think that holding on to those unused equity funds would be worthless hence,it could have decided to buy back its common shares.
This leads to either missing details or poor sentence structures. Jackson Loan Repayment The potential reasons for its inability to repay its current outstanding loan could be that the company is in a state of insolvency where the could have a significant amount of assets available but does not have the appropriate cash to pay off its debt because of cash flow mismanagement and inappropriate allocation of money. Jackson Automotive is a small private company which sells its products to local customers located in Michigan. The additional loan would be needed by the end of July and would be payable at the end of September with monthly interest payments remaining at 0. During this event the sales of the companies decline and the cost of doing business becomes difficult to bear. Industry has rebounded since 2010 and has returned to profitability as of 2011. So, these are the reasons that made profitable company unable to repay its loan to the bank.
Jackson has been producing at capacity over the past few months and expected to continue at that rate through the end of the fiscal year. The company experiences a bottleneck in production of some key electronic components and, as a result, is unable to repay its outstanding debt to the bank. Jackson Automotive Systems produces automotive parts for advanced heating and air conditioning systems, engine cooling systems, fuel injection and transfer systems, and various other engine parts, and it supplies them to the automotive industry primarily in Michigan. By taking on debt and also reducing their equity through the repurchasing of stock, Jackson Automotive was putting itself in a. The president approaches the bank for an extension to repay a loan and for an additional loan to cover the new equipment purchase.
Therefore, it is better to hire a consultant or an expert who can unearth all the hidden impacts of the first time introduction of the debts and helps the company like Jackson to smoothen their operations. So instead of providing recommendations for overall company you need to specify the marketing objectives of that particular brand. Inexperience of having debts: The companies like Jackson, who are through equity which is considered to be riskier and the most costly source of finance around the world,want to introduce debts in their company to attain further growth, then sometimes they may be unable to identify the impact and the changes required to get the implementation of debts successfully. Furthermore, the situation was that company was working under the capacity, and it has to acquire the new equipment that would increase its operational efficiencies and would help thecompany to reduce the backlog of the customer orders. Competition from overseas producers coupled with higher cost structures forced many U. However, automotive ethics has an affect on how automobiles are made, what rules the government puts on them, and their danger on the environment.
The case offers a comprehensive overview of key issues in a typical corporate finance or financial management course, including capital budgeting, debt capacity analysis, security issuance, and acquisitions. The company also provided the bank with 9 month period balance sheet aug2013-may2013 exhibit 2 and 3. All three decisions are interrelated and require different techniques to assess. In September 2012, Edwards decided to repurchase stocks from a group of dissident shareholders. This is just a sample partial case solution.
Fruhan, Wei Wang Case Study Description Jackson Automotive Systems produces automotive parts for advanced heating and air conditioning systems, engine cooling systems, fuel injection and transfer systems, and various other engine parts, and it supplies them to the automotive industry primarily in Michigan. Jackson was glorified by his impressive war accomplishments and humble background of the frontier. Many manufacturers work together to put together one automobile. Do the cash budget and pro forma financial statements yield the same results? Jackson affected the outlook on the class system, the method of electing our president, the spread of the spoils system, the fighting between the north and the south, the interactions between America and the Indians, and he helped lead our country to inflation. . By using cash source of fund to fund for this repurchase, Jackson Automotive has used 60% of the source of fund available for the company.
The net income will also very increased as compare to the net income of previous months. The firm's president asked for an extension of time to repay its loan and to request for the approval of an additional loan. This means that the company has less financial stable than before, and more risky to the creditors and investors. Jackson was a common man himself; orphaned as a boy, Jackson, rose to the top and became an admired general and commander in chief. We make the greatest data maps. The company is suffering from cash flow problem to efficiently run its operations activity and in sustaining its production without disruption.
Meanwhile, the company was specialized in the production lines and was making sales locally. Key Facts The key facts in this case are fairly straightforward. Economic Disasters:These are disastrous and fierce events that move many conglomerates towards their dark side. On the other hand, the developments during that period were that sales of the company declined in mid of 2013, and the reason behind the sales decline was the interruptions in the shipments due to the installation of the new system. Factors such as economic recessions, direct pressure from competitors, and industry shifts essentially inhibit Jackson Automotive and create an obligation for the entity to need debt financing. Fruhan, Wei Wang Abstract: Jackson Automotive Systems produces automotive parts for advanced heating and air conditioning systems, engine cooling systems, fuel injection and transfer systems, and various other engine parts, and it supplies them to the automotive industry primarily in Michigan. In particular, the acquisition decision must be analyzed as both an investment and a financing opportunity, as the acquisition could be used to resolve the financial constraint problem.