Financial analysis and pro forma case study examples


This Memorandum consists of terms and conditions set by the bank that will provide $5, 730 thousand loan to the Carlton Polish Company. The bank will access and evaluate the company performance to see whether it worth the loan. In conducting the analysis the bank comes to realize that the company has significant strengths since it was active in all areas of the country due to a key responsibility of the sales managers. The managers help in training the distributor organizations in selling the Carlton products. Due to this responsibility of the managers the company improves in its field of competitive position.
The role that the bank should play in meeting the company needs include evaluating and assessing the company’s performance. Evaluating the company brings a general perception in the market and what the company is worth. The analysis includes variance analysis, key performance indicators, customer satisfaction measurements and the employee satisfaction. Assessing allows for longer-term and more strategic planning, which is necessary to optimize business and market opportunities.
The steps include Assess business efficiency, Assess staffs, profit and loss statements; balance sheet shows assets, liabilities, and shareholders’ equity and the liquidity ratios which gives a measure of how readily a company can meet its obligations. The three fundamental liquidity ratios that can provide insight into short-term liquidity: current, quick, and cash ratios. These work as follows: current ratio in our case the ratio is above 1 therefore the current assets exceed current liabilities thus the company is able to meet debts as they fall due. The quick ratio should be at least 1, which indicates that quick assets exceed current liabilities.
In spite of the Carlton’s relatively modest market share of the national market, the company occupied a strong competitive position. Due to the training of the company’s distributors, the distributions in each area of the country were perceived as being strong. The company tries to increase the market share by increasing the distributors own market share. The company expands it efforts in selling direct to end-users including contract cleaners. The company has the strength to expand and improve its product line through internal means or by acquisition.
In financial performance, the company uses a policy of paying relatively large salaries to its top executives. This acts as motivation which improved supervision and management. The company leases its principle manufacturing facilities and equipment to be more economical. In 2002, the company had an excess cash estimated $500, 000 of which $230, 000 was paid as tax to IRS and the rest was used to help finance the buyout of the partner’s shares.
In the operating plan the company had a great deal where Jim Miller who did a recommendable job of managing the company and the future was bright. This became a stepping and a firm foundation of the company despites the differences that out came later. In long range plans Carlton had a number of ideas to improve the operating performance of the company. The first idea was to sell shares to public stockholders which created a liquid market for Carlton stock. These are the strengths that hold Carlton Polish Company to its current position.
The company has also experienced some weakness that depresses its performance. Sales at Carlton had been influenced more by competitive changes than changes in overall economy. Due to this, the company has lost some distributors to the competition. In expansion of the geographical region served, there was hindrance caused by lack of manufacturing facilities. In financial performance the company had a weakness in legal expenses where it had to pay expenses of $200, 000 to compensate the battle between Jim miller and Charlie Carlton. In late 2002 the company had a disagreement with the international revenue service audit over the company’s tax returns where the company paid $230, 000 in taxes.