Ivey Business Case
You will use the case titled 'High Performance Tire' for the group project. To purchase the case, please click on the link below:
Price is $2.65
Note: For copyright reasons, each student needs to buy the case from the publisher.
A) Prepare the following financial exhibits for 2001, 2002 and 2003
· Ratio table (see Note 1) (12 marks)
· Vertical analysis of income statements and balance sheets (7 marks).
· Horizontal analysis of income statements and balance sheets using 2001 as the base year (7 marks).
· Statement of cash flows (2002 and 2003 only) (14 marks).
B) Assume the position of Jenny Chen and prepare a two-page memorandum that analyses the financial condition of HPT and makes recommendations for the future. Specifically, the memo should be divided into sections describing liquidity, profitability and solvency. A final recommendation should discuss what Jane Wallace should do to address the problems at HPT and what might be done in the longer term relating to the management of the company (60 marks).
1. Calculate these ratios: cu
ent ratio, average collection period, days in inventory, debt to total assets, times interest earned, gross profit margin, profit margin, asset turnover, return on assets and return on shareholders’ equity.
*Assume that the accounts receivable, inventory, total assets and shareholders’ equity balances as of December 31, 2000 were same as the balances as of December 31, 2001.
2. For investing activities, cash spent on purchasing property, plant and equipment in 2002 and 2003 was$1,574,200 and $2,469,600 respectively.
3. The memo must not exceed two pages.
4. Thoroughness of analysis
· Liquidity – 14 marks
· Solvency – 12 marks
· Profitability – 18 marks
· Recommendation (Minimum of four) – 12 marks
* Make sure you use case facts as well as the ratios to do a critical evaluation of the company’s financial health.
5. Memo layout – 4 marks
6. The memo should be a Word document while the financial exhibits should be put in an Excel file.
7. One person from each group should hand in a Word document and an Excel file containing your answers to the requirements by the due date.