Page 3 Financial Analysis…………………………………Page 4 Recommendation and Conclusion…………. Gaining Familiarity Please refer to the Case Context above. The decision that is being taken should be justified and viable for solving the problems. Ms Pundir as the owner should hire an accountant or at least assign the book keeper the task of preparing the forecast. Initial reading is to get a rough idea of what information is provided for the analyses. The manage director to prevent over production and over stocking has resulted to a sequence of hiring and layoffs each year.
This situation has impacted negatively on the company's ability to repay its earlier loans and customers are upset because of delayed delivery. In January 2001, the chief executive of this small yarn-production company in India must resolve a surprising cash shortage. Since the credit term is of 80 days, it can put an unfavorable effect on the business. The demand for synthetic yarn peaks during the mid-summer months. Time line can provide the clue for the next step in organization's journey.
Pundir should also refocus the shareholder dividend structure as this is a huge detriment to the organizations cash on hand. Corporate Finance: Text and Philippine Cases 1st Edition ed. Management paid high dividends to shareholders for many years under the misapprehension that reinvesting in it in the business was necessarily riskier. Examine the exhibits in the case. Therefore, in-depth understanding f case guidelines is very important. It is a 3 or 4 digit number appearing on the front or back of your credit card. Examine the exhibits in the case.
Kota has a line of credit with Bank of India but no other type of debt. The… 3343 Words 14 Pages Management: Kota Fibres, Ltd. One is duplicating that is direct imitation and the other one is substituting that is indirect imitation. Pundir had to intervene by assuring him that payments would be cleared in two months time. This difficulty arises from two classical reasons: 1 the secular growth of the , and 2 the decrease in profitability. In essence, the company is unable to liquidate a seasonal working-capital loan for the requisite 30 days each year. However, do not limit yourselves to these questions only, but rather allow yourselves to expand your thinking and analysis of this case.
Contemporary Corporate Finance 11th Edition ed. Be very slow with this process as rushing through it leads to missing key details. You should try to understand not only the organization but also the industry which the business operates in. Delivery of customer orders had to be postponed as it had to pay excise duty on a cash basis, before the loaded trucks can leave the company gates. Refer to Figures 11 and 12. In this paper, we will assist Pundir to figure out the issues Kota Fibres is confronting, and to workout a plan to deal with the issues by cutting inventories, reducing account payable, gaining new sales revenue, and the most important of all, to work out a reasonable cash receipts and disbursements schedule and balance sheet to convince the bank to grand additional loan.
The scope of the recommendations will be limited to the particular unit but you have to take care of the fact that your recommendations are don't directly contradict the company's overall strategy. It is reported that the company had previously declared high dividend payments to its shareholders because Pundir believed that it was risky to leave excess funds to the company. Consult line and senior managers to identify human resources needs 4. It is important to note that the yarn manufacturers like Kota Fibres do not receive any credit from their suppliers. The synthetic-textile market in India within the time frame of the case was driven by competitions in price, service and credit. In the fiscal year at the end December 31, 2001 Gross sales were projected to. Pham Case Study Description This is a Darden case study.
Because of these peak seasons, the need for various financial structures throughout the year is present. The task for the student is to evaluate the causes of this shortage using a completed ''base-case'' forecast given in the case and assess the usefulness of various possible remedies suggested by managers in the company. However, problems were emerging at the company given that it had overdrawn from its bank account for three times in a row. Net profit was reduced by 60 percent in 2001. Though the industry is growing, it needs highly skilled workers where the products cannot be replicated with the current technology but the company focuses on local markets.
There may be multiple problems that can be faced by any organization. There are several factors leading to this performance:- i Its gross profit margin is on downtrend, from 18. Recommendation and Conclusion Currently Kota Fibres is facing a cash shortage which it desperately needs to resolve quickly in order to pay bills, excise taxes and overdue loans. This is an example of how the company is increasing its operating costs which has contributed to its current liquidity challenges. Changes in these situation and its effects.
Refer to Table 6, Figure 22. In preparing the forecasts for Kota Fibres, Mr. Kota Fibres has been run as a family business by Ms. Takahe Ltd has come up with a proposal on a new business venture, I will highlight the reasons and aspects that are concerned with this ventured and discuss the key points to be considered, including, relevant costs, other financial issues and costs and other non-financial issues. Basic Justifications of Decision The large dividend distributions that Mrs. Pundir introduced a new quality control unit and hired two sales representatives and three nephews with the objective of creating commitment to the Pundir family. In 1989 he hired Thomas Lindop, a recent graduate of a prominent eastern technical institute, as This case was prepared as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.