Horniman Horticulture.pptxVIP

Horniman Horticulturecase study presentation ANALYSIS OF GROWTH AND BANK FINANCING :Group Members 1. Ma Yun G1415626 2. Bandia Camara G1422133 3.Abdifatah Jama Ahmed G1422907 4. Saliou Boiro G1515999 2 Outline Company Background Case Analysis Financial Analysis Suggested Solution Recommendation 3 Company Background Bob and Maggie Brown purchased Horniman Horticulture in 2002 for $999,000. Capital sources: Savings Proceeds from the sale of their house Minority-business-development grant Personal loan from Maggie’s farther Company Background(2) 52 green houses and 40 acres of fields 12 full-time and 15 seasonal employees Markets: retail nurseries in mid-Atlantic region Products: woody shrubs (azaleas, camellias, hydrangeas, rhododendrons), annuals, perennials, and trees. Company Background(3) Bob runs the nursery Maggie oversees finances Increased the number of plant species by 40% in the past 2 years Kept tight rein on costs Offered more mature plants for “instant landscape” prefer debt financing, avoided bank borrowing Paid vendors early to obtain trade discounts Bob and Maggie are very optimistic about the future. They plan on closing next month on a neighboring 12-acre parcel of farmland. This expansion will total $75,000 in capital expenditures. Currently, there is no plan to finance the purchase CASE ANALYSIS Growth Analysis ? 2002 2003 2004 2005 Benchmark ? ? ? ? ? ? Revenue growth 2.90% 2.42% 12.46% 15.48% -1.80% Gross margin (Gross profit / Revenue) 48.90% 46.90% 51.81% 52.00% 48.90% Operating margin (Op. profit / Revenue) 6.37% 4.75% 8.61% 9.53% 7.60% Net profit margin (Net profit / Revenue) 4.13% 3.13% 5.73% 5.80% 2.80% Case Analysis The main issue that the company is facing is “WORKING CAPITAL MANAGENT “ CASH INVENTORY ACCOUNT RECEIVABLE ACCOUNT PAYABLE Cash Requirement Analysis YEAR REVENUE CASH REQUIRED CASH 2002 788.5 120.1 63.0 2003 807.6 105.2 64.61 2004 908.2 66.8 72.66 2005 1048.8 9.4 83.91 Breaking