scroll to top
Stuck on your essay?
Get ideas from this essay and see how your work stacks up
Word Count: 1,442
Problem identified Baldwin Bicycle Company Baldwin or the Company a small mid-market bicycle manufacturer had a private label opportunity with Hi- Valu Stores Inc Hi- Valu which operated discount department chain stores in the Northwest Baldwin had to make a decision whether to accept the Hi-Valus Challenger deal or not To make an informed decision the company should exam a blending of financial marketing and strategic implications of the Challenger deal Financial analysis Current financial situation With an annual ROA of 315 in 1988 Baldwins current financial situation is not favorable at all see exhibit 3 for ratio analysis First of all the company had poor assets management The high inventories and accounts receivables which account for 62 and 31 respectively of total current assets substantially impair the financial liquidity see exhibit 4 -balance sheet As the cash ratio is merely 983 see exhibit 3 the company is extremely short of cash flow and at the danger of illiquidity The low inventory turnover of 29 times per year signals that the company should take measure to improve its asset management see exhibit 3 Furthermore the company is facing a high risk of insolvency in the future due to its highly leveraged financing The high Debt to Equity ratio of 16 may be a barrier for further financing at a reasonable cost see exhibit 3 Besides the companys profitability is not promising at all The annual return on sales of 249 provides the company little room for growing see exhibit 3 Return on equity driven by the low asset turnover low return on sales and high DE ratio is shabby compared to the cost of funds Challenger deal profit analysis see exhibit 1 The Challenger deal will bring an additional 577250 contribution margin to Baldwin Selling at 9229unit the Challenger bicycle has unit contribution margin of 2309 9229 per unit price less 692 per unit variable cost The relevant costs of manufacturing
@Kibin is a lifesaver for my essay right now!!
- Sandra Slivka, student @ UC Berkeley
Wow, this is the best essay help I've ever received!
- Camvu Pham, student @ U of M
If I'd known about @Kibin in college, I would have gotten much more sleep
- Jen Soust, alumni @ UCLA