...Mr. Jones, A recent evaluation of Jones Electrical Distribution has occurred in request of a loan. An assessment of the company’s financial health shows that it is profitable. The shortage in cash flows regards managerial attention. Since Jones opened in 1999 the company has seen rapid growth in a highly competitive field. General contractors and electricians have preferred Jones for their business. The request for this loan also has occurred at the end of March; past patterns show that your company is seasonal, with most sales occurring in spring and summer months. Previously stated facts estimate that sales will gradually increase. If managed properly Jones has potential to develop, grow, and add additional sites in the future. Internal and external references about Jones engineering have been beneficial in consideration for a loan. II. Problem Statement Recently the continued growth in sales has raised accounts receivable and inventories considerably. This decrease in inventory turnover has caused accounts payable to rise due to heavy reliance on credit from suppliers. There are many ways in which you can lower the size of the line of credit needed. Good management can lower the credit line needed by lowering the inventories and accounts receivables, which grew in 2005 and 2006 because Jones is trying to increase production and growth by pushing the products to the customers. In 2003 Nelson Jones was involved in an argument with his partner Dave Verden and...
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...Jones Electrical Distribution Electric Suppliers Finance Essay Introduction Jones Electrical Distribution is an Electrical company which has predicted that sales for the company will increase. However, over the years the company has experienced some difficulties in its cash flow and decided that in order to keep the company in operation, it was evident that additional financing would be needed in the form of a loan. However, the loan limit for borrowing could not have exceeded $250,000.00. This amount was the maximum limit their local bank, Metropolitan would offer to any company. It must be pointed out that from the inception of Jones Electrical, Metropolitan Bank was the only financial provider used by the company. In light of the foregoing, Jones had to seek alternative financial assistance from another bank - Southern Bank and Trust. The credit line offered Jones Electrical a loan would be in the amount of $350,000.00, $100,000.00 more than what Metropolitan would have offered. Jones Electrical needed to decide which loan will be more beneficial, less risky and the least expensive for the company. They needed to consider the proposition of receiving the loan from Southern Bank Trust as opposed to remaining with Metropolitan Bank. Another issue arising from the case is the way in which Jones Electrical did its operations. He had over 100 suppliers from which he credited inventory, and he paid his accounts within the 10-day period in order to benefit from a 2% trade discount...
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...Jones Electrical Distribution Introduction Jones Electrical Distribution is an Electrical company which has predicted that sales for the company will increase. However, over the years the company has experienced some difficulties in its cash flow and decided that in order to keep the company in operation, it was evident that additional financing would be needed in the form of a loan. However, the loan limit for borrowing could not have exceeded $250,000.00. This amount was the maximum limit their local bank, Metropolitan would offer to any company. It must be pointed out that from the inception of Jones Electrical, Metropolitan Bank was the only financial provider used by the company. In light of the foregoing, Jones had to seek alternative financial assistance from another bank - Southern Bank and Trust. The credit line offered Jones Electrical a loan would be in the amount of $350,000.00, $100,000.00 more than what Metropolitan would have offered. Jones Electrical needed to decide which loan will be more beneficial, less risky and the least expensive for the company. They needed to consider the proposition of receiving the loan from Southern Bank Trust as opposed to remaining with Metropolitan Bank. Another issue arising from the case is the way in which Jones Electrical did its operations. He had over 100 suppliers from which he credited inventory, and he paid his accounts within the 10-day period in order to benefit from a 2% trade discount. The industry being large, fragmented...
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...Jones Electrical Distribution Electric Suppliers Finance Essay Introduction Jones Electrical Distribution is an Electrical company which has predicted that sales for the company will increase. However, over the years the company has experienced some difficulties in its cash flow and decided that in order to keep the company in operation, it was evident that additional financing would be needed in the form of a loan. However, the loan limit for borrowing could not have exceeded $250,000.00. This amount was the maximum limit their local bank, Metropolitan would offer to any company. It must be pointed out that from the inception of Jones Electrical, Metropolitan Bank was the only financial provider used by the company. In light of the foregoing, Jones had to seek alternative financial assistance from another bank - Southern Bank and Trust. The credit line offered Jones Electrical a loan would be in the amount of $350,000.00, $100,000.00 more than what Metropolitan would have offered. Jones Electrical needed to decide which loan will be more beneficial, less risky and the least expensive for the company. They needed to consider the proposition of receiving the loan from Southern Bank Trust as opposed to remaining with Metropolitan Bank. Another issue arising from the case is the way in which Jones Electrical did its operations. He had over 100 suppliers from which he credited inventory, and he paid his accounts within the 10-day period in order to benefit from a 2% trade discount...
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...The Jones Electric Case utilizes the major learnings to date, analysis of financial statements and the use of ratios to project future performance. You are the financial analyst or banker who has to decide if Mr. Jones can increase his loan level. Note use the annual data for the following questions, the single quarter for 2007 presented should not be used. * Question 1. * How does Jones Electric compare to other electrical distributors? * Prepare ratio, common size and cash flow analysis. * See the file attached with industry ratio data. Use just the Data from the highlighted column. * You can assume I know how to calculate the ratios and their definition. Your answer should be more than the ratio is more or less than the past or industry, please go beyond the numbers and tell me what the numbers are telling us. * Question 2. * Project 2007 using ratios and identities. Assume the new sales will be the $2,700 he told the bank. Use the annual data not Quarter 1 to do the projections. * Determine if the line of credit offered is adequate. (This is what we are solving for!) * Determine if Jones should or should not take the cash discount from suppliers. * Question 3 * Based on questions 1 & 2, do you recommend any changes in the way Mr. Jones is running his business? Assignment deliverables * Case analysis write-up no more than 5 typed pages with imbedded tables and charts. (Tables and charts...
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...BRIEF CASES THOMAS R. PIPER JEFFREY DEVOLDER Jones Electrical Distribution -HARVARD ~BUSINESS \g7 PUBLISHING 4179 APRIL 6, 2010 After several years of rapid growth, in the spring of 2007 Jones Electrical Distribution anticipated a further substantial increase in sales. Despite good profits, the company had experienced a shortage of cash and had found it necessary to increase its borrowing from Metropolitan Bank-a local onebranch bank-to $250,000 in 2006. The maximum loan that Metropolitan would make to anyone borrower was $250,000, and Jones had been able to stay within the limit only by relying very heavily on trade credit from the manufacturers from whom Jones purchased the electrical products it sold to its customers. Nelson Jones, sole owner and president of the company, was therefore looking elsewhere for a new banking relationship that would allow him to negotiate a larger loan. Jim Lyons, a homebuilder who was a friend of Jones, introduced Jones to Rachel Montrose, Lyons's relationship officer at the local branch of Southern Bank & Trust-a large, regional bank. Southern had a 7-year relationship with Lyons, including a current loan balance of over $3 million. Jones and Montrose tentatively discussed the possibility that Southern might extend a line of credit to Jones up to a maximum amount of $350,000. Jones thought that a loan of this size would more than meet his needs for at least the next year, and he was eager for the flexibility that a line of...
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...1. How well is Jones Electrical Distribution performing? What must Jones do well to succeed? Jones Electrical is performing well. The company is not a smaller company that had a net income of around $30,000 with net sales of around $2.4 million. Although the company is not to large they have continued to have growth year after year. Recent forecasts show sales might begin to slow down. The success of the company will depend on doing what the company is doing currently since they have continued to grow. Selling electrical devices is an extremely competitive market. The company has been able to build up high sales volume through cheaper pricing than its competitors and through a strong sales force. The company has also been able to keep prices down by maintaining a strict budget with tight control over operating expenses, including paying its sales team on commission and keeping overhead low. Financing is another key in a business and is a large factor that will determine the success of Jones Electrical is their financing. Jones Electrical needs to take out larger loans in order to build up inventory and increase sales. Also by taking loans the company is able to take advantage of the 2% purchase discounts that its manufacturers provide. The company’s financials show that with an increase in its line of credit the more sales it has, resulting in growth and a higher net income. 2. Why does a business that has a profit of $30,000 per year need a bank loan...
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...ones Electrical Distribution Case Analysis Financial Management-Huaihai Cohort- Team 9 This analysis is based on the 5 questions to the case. We believe that answering them builds a rather exhaustive and clear picture of the state of Jones’ business and its strengths and issues and offers a good analysis of its current state. Question A) How well is “Jones Electrical Distribution” performing? What must Jones do well to succeed? Jones Electrical Distribution is electrical supplying company. Since it was established in 2004, the sales have been growing steadily on a year to year basis from $1624000 in 2004 to $2224000 in 2006, and furthermore a projected $2.7 million in sales for the current financial year of 2007.In the same time profit has been inadequate for the quantity of sales. This data is backed by the very low Profit Margins experienced by the company, most recently only 1,3% (and only 0.8% for the first quarter of 2007).As of late, the company has faced a cash shortage and the results of that are becoming evident on its financial statements. Accounts payable have increased dramatically comparing 2006 and 2007. The same situation is with accounts receivables, showing that less of Jones’ clients are willing to pay cash for goods delivered. As a result the use of a discount thanks to fast payment to suppliers has become improbable. Further study of the increase in important components such as accounts receivables and inventory will be discussed in the 3rd section of this...
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...4179 APRIL 6, 2010 THOMAS R. PIPER JEFFREY DEVOLDER Jones Electrical Distribution After several years of rapid growth, in the spring of 2007 Jones Electrical Distribution anticipated a further substantial increase in sales. Despite good profits, the company had experienced a shortage of cash and had found it necessary to increase its borrowing from Metropolitan Bank—a local onebranch bank—to $250,000 in 2006. The maximum loan that Metropolitan would make to any one borrower was $250,000, and Jones had been able to stay within the limit only by relying very heavily on trade credit from the manufacturers from whom Jones purchased the electrical products it sold to its customers. Nelson Jones, sole owner and president of the company, was therefore looking elsewhere for a new banking relationship that would allow him to negotiate a larger loan. Jim Lyons, a homebuilder who was a friend of Jones, introduced Jones to Rachel Montrose, Lyons’s relationship officer at the local branch of Southern Bank & Trust—a large, regional bank. Southern had a 7-year relationship with Lyons, including a current loan balance of over $3 million. Jones and Montrose tentatively discussed the possibility that Southern might extend a line of credit to Jones up to a maximum amount of $350,000. Jones thought that a loan of this size would more than meet his needs for at least the next year, and he was eager for the flexibility that a line of credit of this size would provide. After discussion, Montrose...
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...Jones Electrical Distribution Nelson Jones is the sole owner and president of Jones Electrical Distribution. Jones is experiencing a shortage of cash, which is needed to sustain anticipated growth in sales for the coming year. The company is in need of a new bank relationship because its current lender, Metropolitan Bank, is unwilling to provide Jones with the proper loan amount to maintain growth. Jones is introduced to Rachel Montrose, the relationship officer at the local branch of Southern Bank and Trust. Montrose discusses the possibility of extending a line of credit to Jones up to a maximum amount of $350,000. After being inspected by the credit department of Southern Bank and Trust, Montrose sets out the standard covenants applying to the loan. If Jones decides to enter into a deal with Southern Bank and Trust, then he must severe his relationship with his previous lender, Metropolitan Bank. Jones is a sole proprietorship that sells electrical components and tools to general contractors and electricians (ex. Controllers, breakers, signal devices, and fuses). Jones purchases from nearly 100 different suppliers. Jones sales followed the seasonality of its customers’ businesses, which had their busiest time during summer and spring when the weather is ideal for construction work. Its market is large, fragmented, and highly competitive. Jones competes on price and by employing an aggressive direct sales force, often visiting customers on job sites. He relies on tight...
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...Solutions or Recommendations Jones should accept the loan from Southern Bank and Trust, since he will be receiving more funding. The funding from Southern Bank and Trust was more that what the company would have received from Metropolitan Bank. Although, the requirements of Southern Bank and Trust Bank seem to be rigid, the more monies that he receives can however be used in the firm’s expansion as well as paying off some of the company’s liabilities. As a result, Jones will be allowed more flexibility in the operations of the business. He will then be able to increase his assets in the form of inventory and capital, which in turn will result in his business being in a better position to finance its operations. In addition, Jones Electrical will be able to benefit from the trade discounts which are offered by his suppliers because this arrangement would allow him to pay his creditors. With respect to the early payment discount of only 2%, it is advisable that the Company, continue to credit its supplies and make alternative arrangements with respect of repayment to its suppliers. The company needs cash and the discount of the 2% does not put the company in a better financial position. It is always important to inject equity so that your company will be able to increase its assets, which will eventually lead to an increase in sales and revenue. Another issue is that with respect to the proposed growth of the company, Jones had predicted forecasting in sales to increase significantly...
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...Kelsey Breathitt Travis Zulfer Grygorii Tykhonovskyi Luo Robert Ratliff Jones Electrical Distribution 1.) Jones Electrical Distribution sells electrical components and tools to general contractors and electricians. The products that we sell include controllers, breakers, signal devices and fuses and they are purchased from nearly 100 different suppliers. Jones customers use the products in the construction and repair of commercial and residential buildings. The company’s sales depend in many ways on the seasonality of its customers’ businesses which have their highest activity during the spring and summer when weather is most suitable for construction work. The market in which Jones competes is large and highly competitive; we have to face significant competition from national distributors. To be able to compete, we have built up sales volume by successfully competing on the price and using an aggressive direct sales force. In turn, to be able to compete on the price, we have to maintain tight control over operating expenses, including paying our sales force primarily on commission and keeping overhead to a minimum. In addition, as part of the company’s expense management effort, we have historically paid suppliers within 10 days of the invoice date in order to take full advantage of the 2% discounts the suppliers have offered for quick payments. 2.) According to the Balance sheet (see exhibit 1 for details), there is about a 5% decrease in cash balance from the years 2005-2006...
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...this course, students should understand and be able to do the following: 1. Estimate the cost of capital for corporate investment decisions; 2. Make corporate investment decisions using discounted cash flow method; 3. Manage working capital and corporate long-term growth. Supplemental Learning Outcomes: While not assessed, it is anticipated that students will develop the following: 4. Understand the importance of corporate governance for achieving long-term corporate financial objectives and valuation; 5. Understand some unique features of Chinese capital markets. TEACHING AND LEARNING The course will be a mixture of lectures, case discussions and individual and group practices. Students are expected to do the following. 1. 2. 3. 4. Read the assigned textbook chapters BEFORE the classes. Prepare for cases BEFORE case discussions, and submit case work as required. Do homework. Actively engage in class discussions. METHOD AND WEIGHTING OF ASSESSMENT In this course, students are evaluated by the following means of assessment: In-class participation (10%) Participation in class discussion, group discussion,...
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...Portland State University School of Business Administration FIN 565: Cases in Corporate Finance Case Descriptions and Suggestions Fall 2010 As you review the case descriptions and read the cases, develop a plan for your analysis. The case report and presentation should include, but not be limited to, the suggested questions I have provided. Do not submit or present the case a simply a numbered series of answers to the questions. The case analysis must be a narrative report that includes the information needed to answer the questions. Financial Statement Analysis Identify the Industry – 2007 Substantive Issues This case provides financial statement data for 10 companies from 10 different industries from Thomson Banker One – Analytics. Using knowledge of the industries’ financial characteristics and financial rations, you are asked to match each of the 10 financial statement data sets to an appropriate industry. You are provided with common-sized income statements (all items scaled by revenues), common-sized balance sheets (all items scaled by total assets) and selected financial ratios. All data are averaged over three years – 2004 – 2006 – to smooth out one-time items. Pedagogical Objectives This case illustrates the difficulty of identifying a company in an industry since do few companies operate in a single homogeneous industry. It also serves to get each class member engaged with team members in an effort to determine the strengths of each member...
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...Introduction For the purpose of this assignment I have chosen to review a client with atrial fibrillation in a primary care setting. I will discuss the patient’s original presentation, including analysis and interpretation of his 12 lead electrocardiogram (ECG), diagnosis and subsequent management. Throughout the assignment I will discuss local and national guidelines and the evidence behind the chosen management for this client. For the purpose of this assignment the client will be referred to as Mr. Jones. Cardiac arrhythmias affect more than 700,000 people in England is one of the top ten reasons for hospital admission (Department of Health 2005). Atrial fibrillation (AF) is the most common and important cardiac arrhythmia, it the most common of all the arrhythmias seen in general practice. AF affects 5% of the UK population over the age of 65 years, rising to 10% in those over 75 years of age (Kirby 2005). The principal significance, both to the patient and the healthcare system is the increased risk of embolic stroke. Atrial fibrillation is associated with 15% of all strokes and with 36% of strokes in patients over the age of 60 (Hobbs 1999). Having a diagnosis of AF increases the risk of stroke five fold. It is an arrhythmia associated with serious morbidity, mortality and health service utilisation. AF and its complications now consume 1% of the United Kingdom National Health Service budget (Watson, Shanstila, and Lip 2007). Despite this it is an area that frequently...
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