Baldwin Bicycle Company

Problem identified Baldwin Bicycle Company (Baldwin or the Company), a small mid-market ride manufacturer, had a private label fortune with Hi- Valu Stores, Inc. ( Hi- Valu), which operated discount part chain stores in the Northwest. Baldwin had to make a decision whether to take back the Hi-Valus contender deal or not. To make an informed decision, the partnership should exam a intermix of pecuniary, marketing, and strategic implications of the Challenger deal. Financial analysis Current financial military position With an annual ROA of 3.15% in 1988, Baldwins latest financial situation is not favorable at all ( identify display 3 for dimension analysis). First of all, the society had poor pluss management. The senior high school inventories and accounts receivables, which account for 62% and 31% respectively of total current assets, substantially vitiate the financial liquidity (see endanger 4 -balance sheet). As the currency dimension is merely 9.83% (see show up 3), the community is extremely gyp of cash flow and at the risk of infection of illiquidity. The low arsenal turnover of 2.9 times per year signals that the play along should take footprint to improve its asset management (see exhibit 3). Furthermore, the company is veneering a high risk of insolvency in the future callable to its highly leveraged financing. The high Debt to Equity ratio of 1.6 may be a barrier for further financing at a reasonable cost (see exhibit 3). Besides, the companys lucrativeness is not promising at all. The annual dispel on sales of 2.49% provides the company little room for growing (see exhibit 3).
Return on equity, driven by the low asse! t turnover, low return on sales and high D/E ratio, is flash compared to the cost of funds. Challenger deal sugar analysis (see exhibit 1) The Challenger deal will postulate an additional $577,250 contribution boundary line to Baldwin. Selling at $92.29/unit, the Challenger... None of the attachments are connected to this essay, so you cant see how the causality arrived at the numbers. A definite deficiency. If you cant explain how you got the numbers, whats the head interchange? If you want to get a full essay, order it on our website: BestEssayCheap.com

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