Baldwin Bicycle Company

Problem identified Baldwin Bicycle Company (Baldwin or the Company), a small mid-market ride manufacturer, had a private label prospect 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 unify of pecuniary, marketing, and strategic implications of the Challenger deal. Financial analysis Current financial smudge With an annual ROA of 3.15% in 1988, Baldwins veritable financial situation is not favorable at all ( identify record 3 for dimension analysis). First of all, the society had poor additions management. The luxuriously inventories and accounts receivables, which account for 62% and 31% respectively of total current assets, substantially vitiate the financial liquidity (see video display 4 -balance sheet). As the currency balance is merely 9.83% (see reveal 3), the friendship is extremely gyp of cash flow and at the hazard of illiquidity. The low arsenal turnover of 2.9 times per year signals that the partnership 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 pay. 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 advantageousness 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 asset turnover, low return on sales and high D/E ratio, is flash compared to the cost of funds. Challenger deal lucre analysis (see exhibit 1) The Challenger deal will contribute 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 germ arrived at the numbers. A definite deficiency. If you cant explain how you got the numbers, whats the head say? If you want to get a full essay, order it on our website: OrderEssay.net

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