Tire City Case Study

Using the assumptions given in the case, all elements of income statement and balance sheet can be projected for next three years 2010, 2011 and 2012. Sales cycle of the products of the company is such that sales of a particular product increases initially for few years and then starts to decline as the new technology

The Activity ratios help to determine the company’s ability to convert different sectors of the balance sheet into cash or sales (Potter, Libby, Libby & Short; 2010). The ratios used under this test are; Days inventory, Days Receivable, Fixed Asset Turnover, Total Asset Turnover and Days Payable.

* Our company’s sales forecast has been based on performance from previous years along with market circumstances. We are looking at the future of the business objectively which we then can evaluate past to

Tire City, Inc. has petitioned MidBank for a loan in order to expand their business, and build a new warehouse. Through the financial statement reporting and the numbers that have been presented to me, I believe that this is a sound investment. The growth percentage of 20 percent per year is conceivable, if business stays as it currently is. The amount of debt that would need to be financed for this expansion is palatable, and well within the normal ranges for these sort of projects. Moreover, the company has very solid net working capital and leverage ratios. All of these factors lead me to believe that this will be a profitable investment for the bank. The one issue that I had was in 1996 when Tire City capped their

When forecasting Polymold Division’s financial statements there are some assumptions that need to be taken into account before projecting the numbers. One of the assumptions is

These number will be used for predicting future financial statements later in this case study.

This will be a basic forecast created from pro-forma financial statements, using basic forecasting procedures.

From 1976 to 1982 the compound annual growth in net sales was 18.5% and the compound annual growth of after tax profit was 25.9%. Therefore, a 10% net sales growth shown in the proforma financial data seems reasonable.

For current assets for each of the following three years, we are projecting the same percentage of 32% of sales. Assets that are constantly flowing in and out of a organization in the normal course of its business as cash converted into goods and then back into cash show small growth if any, in periods of time. The assets that are expected to last or be in use for less than one year will also show the small growth if any due their usage life expectancy. Because of these facts of our current assets, we will continue to use the projected 32% of sales as in previous years. Because this projection served correctly in previous years, we will again use it for the next three years. This decision is based on past accurateness and the consistency of the company.

Using the assumptions given in the case, all elements of income statement and balance sheet can be projected for next three years 2010, 2011 and 2012. Sales cycle of the products of the company is such that sales of a particular product increases initially for few years and then starts to decline as the new

The full report shows all the forecasting data for 2012 – 2016, it clearly estimate the financial trend of our company (attachment). For the data used in this model, some of them are current data, the other are historical or most recently or average number. It only depends on actually situation – for which method is much more realistic.

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

Northcutt Bikes is a bike manufacturer and a service provider of bike parts to the many retail businesses that sell Northcutt bikes. Northcutt Bikes has a warehouse that is 95% utilized however they have an order fulfillment rate of less than 80%. This has caused a loss of revenue due to orders being cancelled when needed parts are not in stock. To resolve the problem, we looked at 3 alternatives including establishing pooling groups within the same geographic region, establishing a continuous review inventory management system or staying the course. Our recommendation is to establish a continuous review inventory system that will reduce unnecessary inventory, increase needed inventory and improve service levels.

Asset utilization ratios measure how quickly a company is able to turn over their receivables, inventory, and other assets. The faster the company is able to turn over their assets, the more efficiently the company is running because they

Based on figure 4.24, there is 48.58% probability that the post-tax NPV forecast values in field A are greater than the mean forecast scenario of 1,118 million. In addition, there is 100% certainties that the forecast values is positive. The values prediction are ranges between $770 million and $1,473 million. Furthermore, the mean and median forecast values, which are $1,118 million and $1,114 million, are significantly higher than the base-case due to the influence of more profitable forecast results. The CoV is at 0.1363, while the level of skewness is at 0.054.