Financial Management

FINANCE PORTFOLIO Renu Gill Table of Contents FINANCE PORTFOLIO ........................................................................................ 1 Financial Analysis of Business Case Studies ................................................. 1 INTRODUCTION ............................................................................................................ 1 ASSIGNMENT 1 ................................................................................................. 2 CASE STUDY: DRUTHERS FORMING LIMITED .................................................................... 2 ASSIGNMENT 2 ................................................................................................. 8 CASE STUDY: CERES GARDENING COMPANY .................................................................. 8 ASSIGNMENT 3 ............................................................................................... 12 CASE STUDY: GUNA FIBRES, LTD ................................................................................... 12 ASSIGNMENT 4 ............................................................................................... 18 CASE STUDY: JACKSON AUTOMOTIVE SYSTEMS ............................................................ 18 ASSIGNMENT 5 ............................................................................................... 22 FINANCE PORTFOLIO ii Renu Gill FINANCE PORTFOLIO Financial Analysis of Business Case Studies ASSIGNMENT 1 CASE STUDY: DRUTHERS FORMING LIMITED Q1 Sales and customers - Druthers Forming Limited (Druthers) sells poured concrete foundations and holds 35% of the local Barron area market. The company is relatively small with annual sales between $150K - 500K. During times of economic growth, demand for single-family homes increases, as does business with Druthers’ primary customer, Sheppard Homes. Importantly, Druthers enjoys the beneﬁt of being somewhat insulated from economic slowdowns as it serves both the multi-residential and single home markets. When the economy slows, multi-unit housing becomes more popular, thereby increasing Druthers’ sales to other construction ﬁrms. FINANCE PORTFOLIO 1 Operations - Sales are not overly seasonal. Production is on demand while sales are dependent on the economy, competition and scale of project. Management and personnel - Druthers, founded in 1987, is owned and managed by the three Sheppard brothers, Garrett, Norm and Jack, who also own Sheppard Homes. The brothers are eﬃcient managers and possess complementary skill sets. The number of employees is unknown. As demand ﬂuctuates, Druthers controls its labour costs via layoﬀs. Of note, the brothers consider the operation of Sheppard Homes as their main business focus. Strategy - The company’s relationship with Sheppard Homes allows Druthers a signiﬁcant and largely consistent customer in the single home market. Druthers’ ability to serve both the single home and multi-residential markets helps ensure it is able to weather economic downturns. Additionally, the good reputation of Druthers has been a key component of its success. One strategic disadvantage of the company is the reluctance of other builders to use the services of Druthers due to its aﬃliation with Sheppard Homes, which they view as a competing building ﬁrm. Q2 Cash Flow from Operations - Despite the decrease in net income in recent years, cash ﬂow from operations has improved. Druthers has gone from - $4000 cash ﬂow from operations in 2006, to a positive cash ﬂow from FINANCE PORTFOLIO 2

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