Bud Bunyan opened Bunyan's Supply five years ago. Over the years he has been pleased with...
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Bud Bunyan opened Bunyan's Supply five years ago. Over the years he has been pleased with its performance, as sales and profits have steadily increased. Recently, however, Bud bas been having disturbing conversations with his banker. The bank keeps pestering him about reducing his bank debt (It has tripled in the last 3 years). Consequently, the bank continually urges Mr. Bunyan to hire a financial consultant to help him analyze bis business and correct its financial situation. Mr. Bunyan argues that he doesn't need the help of some so-called "expert". He knows how to run his business, which is attested to by the fact that the business continues to grow and has always been profitable. The company, engaged in the wholesale building material business, carries the following product lines: lumber, plumbing; electrical; brick; plaster; and a variety of other building supplies. Sales are primarily to builders and hardware supply stores. Convinced that an independent opinion will support his cause, Bud finally concedes and hires you to examine his operation and make any appropriate recommendations. Answer these questions to answer with your calculations, as well as for in-class participation. A. What is Bunyan looking at that makes him so positive and confident? Why is the bank pestering Bunyan? Who is right? Why? (I had a sneaking suspicion that some of you might need a little direction in answering some of the above questions. Therefore, in addition to the Balance Sheet, Income- Statement and Statement of Cash Flow, I have included some ratio analysis sheets for you to complete. Calculate these ratios and you should be able to answer above questions.) B. Bunyan is projecting sales to reach $6,170 in 19x1. Do you think he will be able to finance this growth assuming his balance sheet items (as a % of sales) stays the same as it was in 19x0? (Once again, I have provided a calculation sheet to serve as a guide. You must also show your work on this sheet. Bud Bunyan opened Bunyan's Supply five years ago. Over the years he has been pleased with its performance, as sales and profits have steadily increased. Recently, however, Bud bas been having disturbing conversations with his banker. The bank keeps pestering him about reducing his bank debt (It has tripled in the last 3 years). Consequently, the bank continually urges Mr. Bunyan to hire a financial consultant to help him analyze bis business and correct its financial situation. Mr. Bunyan argues that he doesn't need the help of some so-called "expert". He knows how to run his business, which is attested to by the fact that the business continues to grow and has always been profitable. The company, engaged in the wholesale building material business, carries the following product lines: lumber, plumbing; electrical; brick; plaster; and a variety of other building supplies. Sales are primarily to builders and hardware supply stores. Convinced that an independent opinion will support his cause, Bud finally concedes and hires you to examine his operation and make any appropriate recommendations. Answer these questions to answer with your calculations, as well as for in-class participation. A. What is Bunyan looking at that makes him so positive and confident? Why is the bank pestering Bunyan? Who is right? Why? (I had a sneaking suspicion that some of you might need a little direction in answering some of the above questions. Therefore, in addition to the Balance Sheet, Income- Statement and Statement of Cash Flow, I have included some ratio analysis sheets for you to complete. Calculate these ratios and you should be able to answer above questions.) B. Bunyan is projecting sales to reach $6,170 in 19x1. Do you think he will be able to finance this growth assuming his balance sheet items (as a % of sales) stays the same as it was in 19x0? (Once again, I have provided a calculation sheet to serve as a guide. You must also show your work on this sheet.
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A Bunyan is likely positive and confident because his business has been steadily growing and profita... View the full answer
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
Posted Date:
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