Case Analysis - Chapter 4
Start Assignment
· Due Sunday by 11:59pm
· Points 25
· Submitting a file upload
Due: Sunday
Complete the Mini Case from Chapter 4 (Ho
y Horse Company, Inc.).
To upload your completed work, click on the Submit Assignment button.
Ru
ic
Mini Case Study
Mini Case Study
Criteria
Ratings
Pts
This criterion is linked to a Learning Outcome Analysis and Evaluation of Key Issues and Problems/Questions
10 to >9.0 pts
Exceeds Expectations
Presents an insightful and thorough analysis of all identified issues/problems; includes all necessary calculations. Answered all the questions.
9 to >8.0 pts
Meets Expectations
Presents a thorough analysis of most of the issues identified; missing some necessary calculations. Answered all the questions.
8 to >6.0 pts
Partially Meets Expectations
Presents a superficial analysis of some of the identified issues; omits necessary calculations. Does not answer all the questions.
6 to >0 pts
Does Not Meet Expectations
Presents an incomplete analysis of some of the identified issues; omits necessary calculations. Does not answer all the questions.
10 pts
This criterion is linked to a Learning Outcome Recommendations on Effective Solutions/ Strategies/Answers
10 to >9.0 pts
Supports diagnosis and opinions with strong arguments and well documented evidence; presents a balanced and critical view; interpretation is both reasonable and objective. Co
ect solutions to the questions are present.
9 to >8.0 pts
Supports diagnosis and opinions with adequate reasoning and evidence; presents a somewhat balanced argument; demonstrates adequate engagement with ideas presented. Has most of the co
ect solutions to the questions.
8 to >6.0 pts
Supports diagnosis and opinions with limited reasoning and evidence; presents a somewhat one-‐ sided argument; demonstrates little engagement with ideas presented. Has some of the co
ect answers to the questions.
6 to >0 pts
Little or no action suggested and/or inappropriate solutions proposed to the issues in the case study.
10 pts
This criterion is linked to a Learning Outcome Writing Mechanics
Grammar, Spelling, Citation & Reference Formatting (if required)
5 to >4.5 pts
Excellent writing with co
ect grammar and spelling; citations & references provided and formatted consistently when needed.
4.5 to >4.0 pts
Good writing made with few grammar and spelling e
ors; citations & references made when needed, but may have some formatting e
ors.
4 to >3.0 pts
Acceptable writing with occasional grammar and spelling e
ors; citations & references used rarely or with little/no formatting.
3 to >0 pts
Unacceptable writing with regular grammar and spelling e
ors; citations & references not used at all when required.
5 pts
Total Points: 25
MINICASE Ch. 4
Burchetts Green had enjoyed the bank training course, but it was good to be starting his first real job in the corporate lending group. Earlier that morning the boss had handed him a set of financial statements for The Ho
y Horse Company Inc. (HH). “Ho
y Horse,” she said, “has a $45 million loan from us due at the end of September, and it is likely to ask us to roll it over. The company seems to have run into some rough weather recently, and I have asked Furze Platt to go down there this afternoon and see what is happening. It might do you good to go along with her. Before you go, take a look at these financial statements and see what you think the problems are. Here’s a chance for you to use some of that stuff they taught you in the training course.”
Mr. Green was familiar with the HH story. Founded in 1990, it had rapidly built up a chain of discount stores selling materials for crafts and ho
ies. However, last year a number of new store openings coinciding with a poor Christmas season had pushed the company into loss. Management had halted all new construction and put 15 of its existing stores up for sale.
Mr. Green decided to start with the 6-year summary of HH’s balance sheMINICASE
Burchetts Green had enjoyed the bank training course, but it was good to be starting his first real job in the corporate lending group. Earlier that morning the boss had handed him a set of financial statements for The Ho
y Horse Company Inc. (HH). “Ho
y Horse,” she said, “has a $45 million loan from us due at the end of September, and it is likely to ask us to roll it over. The company seems to have run into some rough weather recently, and I have asked Furze Platt to go down there this afternoon and see what is happening. It might do you good to go along with her. Before you go, take a look at these financial statements and see what you think the problems are. Here’s a chance for you to use some of that stuff they taught you in the training course.”
Mr. Green was familiar with the HH story. Founded in 1990, it had rapidly built up a chain of discount stores selling materials for crafts and ho
ies. However, last year a number of new store openings coinciding with a poor Christmas season had pushed the company into loss. Management had halted all new construction and put 15 of its existing stores up for sale.
Mr. Green decided to start with the 6-year summary of HH’s balance sheet and income statement (Table XXXXXXXXXXThen he turned to examine in more detail the latest position (Tables 4.11 and 4.12).
2019
2018
2017
2016
2015
2014
Net sales
3,351
3,314
2,845
2,796
2,493
2,160
EBIT
−9
312
256
243
212
156
Interest
37
63
65
58
48
46
Taxes
3
60
46
43
39
34
Net profit
−49
189
145
142
125
76
Earnings per share
−0.15
0.55
0.44
0.42
0.37
0.25
Cu
ent assets
669
469
491
435
392
423
Net fixed assets
923
780
753
680
610
536
Total assets
1,592
1,249
1,244
1,115
1,002
959
Cu
ent liabilities
680
365
348
302
276
320
Long-term debt
236
159
297
311
319
315
Stockholders’ equity
676
725
599
502
407
324
Number of stores
240
221
211
184
170
157
Employees
13,057
11,835
9,810
9,790
9,075
7,825
Table 4.10
Financial highlights for The Ho
y Horse Company Inc., year ending
March 31
Net sales
$3,351
Cost of goods sold
1,990
Selling, general, and administrative expenses
1,211
Depreciation expense
159
Earnings before interest and taxes (EBIT)
−$ 9
Net interest expense
37
Taxable income
−$ 46
Income taxes
3
Net income
−$ 49
Allocation of net income
Addition to retained earnings
−$ 49
Dividends
0
Table 4.11
Income statement for The Ho
y Horse Company Inc., year ending March 31, 2019 (figures in $ millions)
Assets
Mar. 31, 2019
XXXXXXXXXXMar. 31, 2018
Cu
ent assets
Cash and marketable securities
$ 14
$ 72
Receivables
176
194
Inventories
479
203
Total cu
ent assets
$ 669
$ 469
Fixed assets
Property, plant, and equipment
$1,077
$ 910
Less accumulated depreciation
154
130
Net fixed assets
$ 923
$ 780
Total assets
$1,592
$1,249
Liabilities and Shareholders’ Equity
Mar. 31, 2019
Mar. 31, 2018
Cu
ent liabilities
Debt due for repayment
$ 484
$ 222
Accounts payable
94
58
Other cu
ent liabilities
102
85
Total cu
ent liabilities
$ 680
$ 365
Long-term debt
$ 236
$ 159
Stockholders’ equity
Common stock and other paid-in capital
$ 155
$ 155
Retained earnings
521
570
Total stockholders’ equity
$ 676
$ 725
Total liabilities and stockholders’ equity
$1,592
$1,249
Note: Column sums subject to rounding e
or.
What appear to be the problem areas in HH? Do the financial ratios suggest questions that Ms. Platt and Mr. Green need to address?
Case Analysis
-
Chapter 4
Start Assignment
·
Due
Sunday
y
11:59pm
·
Points
25
·
Submitting
a file upload
Due: Sunday
Complete the Mini Case from Chapter 4 (Ho
y Horse Company, Inc.).
To upload your completed work, click on the
Submit Assignment
utton.
R
u
ic
Mini Case Study
Case Analysis - Chapter 4
Start Assignment
Due Sunday by 11:59pm
Points 25
Submitting a file upload
Due: Sunday
Complete the Mini Case from Chapter 4 (Ho
y Horse Company, Inc.).
To upload your completed work, click on the Submit Assignment button.
Ru
ic
Mini Case Study
BUS3710 Hints for the MiniCases
*indicates using Excel or building a table of the financial information could be helpful in your analysis
Case #4*
Your role is as Burchetts Green in this case. Review the three tables of financial data to get a clear picture of the financial status and trends. It may be helpful to do some ratio analysis on some key areas on things related to liquidity, debt and assets. Consider other items that could be an area of concern.
Case #5
You can consider seeing where Mr. Road is today which would give you nominal income. You can then use the TVoM calculation to consider time and the cost of living adjustments needed for inflation (now estimated at 4%). You will want to consider cu
ent living expense, cu
ent travel and how these costs will increase. There is no indication that the investments or savings account figures will change, assuming no withdrawing so the amount those will earn stay the same. Will this work long-term based on life expectancy, can you offer any suggestions to Mr. Road?
Case #7
You need to value the company under both investment plans and choose the best strategy.
Rapid-Growth Scenario & Constant-Growth Scenario are your choices so familiarize yourself with what this means. Then determine the valuation based on each of the two scenarios and choose the best one.
Case #9
The best way to