week four individual. - Emikele Okhipo University of...

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Emikele Okhipo University of phoenix Fin/370 Nicole L. Landry, MBA October 10, 2011
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Cases in Financial Management Summary In 1934, the company was established by Jim. In early years he felt difficulties in running the business, as he was not a natural businessman; rather he wanted to join army. But he was sure that the business would pick up its momentum and in 1976 he proved to be correct and the annual sales rose to $800000. At this point he thought that this is the right time to handover the business to his son, who also had left the army in 1968 as he was wounded. Due to natural ability of businessman, the son could not understand the financial aspect of the business and run the business on traditional style. Due bad financial management bank has refused to renew the line of credit, which is one of the most important and crucial source of financing for the business to meet its working capital requirement. All the financial ratios are not up to the mark and they are below the industrial average. The utilization of assets and inventory was below the industrial average, which is reflected in poor turnover ratios, such as assets turnover and inventory turnover ratios. The company could have improved its financial position by utilizing the assets effectively. The problem accumulated as the company profit margin was also below the industrial average thus resulting in lower return on assets. If company could have raised profit margin by controlling expenses, the affect of low
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This note was uploaded on 10/10/2011 for the course FIN 370 SA09BSB02S taught by Professor Nicolas during the Spring '11 term at University of Phoenix.

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week four individual. - Emikele Okhipo University of...

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