CASEJED Jones Electrical Distribution After several years of rapid growth, in the spring of 2007 Jonl's Electrical Distribution tlnticipatl'd a furthl'l' substantial increilse in sales. Despite good profits, the company had experk'ncl'd il shortagl' of cash and had found il neccssnry to incre,lse its borrowing from Metropolitan Bnnk-a local onc branch b,mk-to $250,000 in 2006. The maximum loan that Metropolitan would makl' to any onc borrower was $250,000, and Jones had been able to stay within
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Jones Electrical Distribution Part I: Describe the Situation Jones Electrical Distribution is a rapidly growing company expecting further rise in sales in the future. However, a low cash flow was causing the company to increase its borrowing from the local Metropolitan Bank. The past year, Jones Electrical Distribution had to borrow $250,000 from the bank, which is the maximum loan that Metropolitan will allow to any one borrower. Therefore, Nelson Jones, owner and president of JED, was looking
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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
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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
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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
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Mr. Jones, A recent evaluation of Jones Electrical Distribution has occurred in request of a loan. An assessment of your financial health shows that your company 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 falls at the end of March, past patterns show that your company
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1. Overall, Jones Electrical Distribution had an increase in ROE from 2004 to 2005 and right after it started slowly decreasing in 2006 until its steep drop in 2007. The primary reasons for this sluggish performance is primarily due to a drop in operating efficiency and asset use efficiency. In order to measure operating efficiency, profit margin was used. Starting in 2004, profit margin was at 0.85%, peaked at 1.50% and fell to a trough at 0.78%. In order to measure asset use efficiency, total asset
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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
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Devin Carr Cases in Finance 9/13/11 Jones Electrical Distribution In the case of Jones Electrical, after running pro-forma financial statements for the year 2007, Mr. Jones should forgo taking the trade discounts. Although it would seem advantageous to pay suppliers within the discount period (2/10/net 30), the amount of capital required is beyond the capability of the business and the extent that Southern Bank & Trust was willing to provide. As it can be seen from Exhibit 1, the amount
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Current Position Jones Electrical Distribution (hereinafter Jones Electric) is currently facing an issue with cash flows, which will ultimately affect the overall profitability and growth potential for the company. The owner, Nelson Jones, is diligent in paying his suppliers within ten days in order to capitalize on a two percent early pay discount, but in doing so, has over-extended cash flows. Though the company has been profitable and growing over the past three years, its current lender, Metropolitan
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