Case ID: 4017
Solution ID: 12169
Words: 1553
Price $ 60

Ceres Gardening Company Funding Growth in Organic Products Case Solution

Case Solution

An English-language PDF of this Brief Case in an academic course pack will allow the students with the opportunity to buy an audio form as well. Ceres is a top of line competitor in the fast developing organic gardening industry, retailing seeds, small plants and associated products. Their supply is dependent primarily in retail transactions via autonomous plant markets and garden centers. Since the smaller contractors are unable to provide funds for building an extensive stock and inventory, Ceres has designed its Get Ceres™ program, which offers lucrative concessions and retailer sponsoring and funding options. Ceres expects to increase its presence at newer retail outlets and accounts as well as to motivate contractors to consent to build a larger inventory in view of seasonal sales and demand. A central emphasis of the case lies in the relation it develops and presents between the marketing planning and strategy building and the company’s credit policy. The case encourages the students to evaluate a series of different financial data and give way to financial projections and predictions; a spreadsheet for use by students (product 4019) is available for free. 

Excel Calculations

Projected Balance Sheet 

2005, 2006E, 2007F, 2008F

Projected Income Statement

2005, 2006E, 2007F, 2008F

Calculation of Operating Cash Flows

2006E, 2007F, 2008F

Calculation of Dealer's Sell-through in 2006

Analyses of Covenants

EBITDA

Required Debt to EBITDA ratio

Maximum Allowable Debt

Fixed Interest Charges

EBITDA / Fixed Financial Charges

Questions Covered

How has the company grown?  What is its basic strategy, and how has this evolved?

What potential financial risks does Ceres face as it crafts its strategy for 2007?

Prepare a presentation to the bank.  How would you forecast cash flows in 2007-2008?   

How would you evaluate Ceres’s marketing efforts?  Should the GetCeres program be expanded?  Why or why not?