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Maple Leaf Hardware

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Submitted By amandacane
Words 604
Pages 3
Problem Statement
In the case of Maple Leaf Hardware ltd, the evident problem arises from the owner of the company, Robert Patrick’s, request to increase his existing line of credit that he has with the Central Canadian Bank. With a goal of increasing the existing line of credit of $100,000 to $160,000, Stuart Foreman of the Bank has a big decision to make. With the company having an obvious inventory problem, the bank is cautious when looking at Maple Leaf’s financial statements as well as their current position. Going forward, improvements in many aspects of the business must happen in the near future for the bank to even consider Patrick’s request.
Sub-Problems/Issues/Concerns
* Robert Patrick and Les Harrison have had disagreements on how the business should be run and operated * The company has a major problem in terms of inventory and converting it into cash. The inventory turnover ratio is too high which causes a problem in paying the company’s creditors * Maple Leaf Hardware which is a relatively unknown hardware store is in direct competition with well-known names such as Pro Hardware, Home Depot and Home Hardware * 2001 is the first year the company has realized a profit which means that they have to make a plan for future years to insure they have continued success

Analysis
In the case of Maple Leaf Hardware, to truly hold a grasp on whether or not to grant the company an extension on their line of credit, many aspects of both the company’s financial records in the past, present and future must all be taken into account and looked at piece by piece.

Ratio Analysis and Implications
When the financial statements of the current year are looked at, many important and crucial ratios can be derived from the information to give the reader a clear idea of what went right as well as what went wrong. For the sake of our analysis,

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