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. Jones Electric Distribution is challenged to increase its bank’s funding as a result of steady expansion in its sales. Students are to decide the reasons for the increasing dependence on bank debt, compute the amount that needs to be borrowed, and evaluate the lucrativeness of the loan for the bank. Encourages the students to get hand-on practice for ration-analysis, financial predictions and forecasting and assessing financing options.
Ratios for Year
1. How well is Jones Electrical performing? What must Jones do well to succeed?
2. Why does a business that has profit of $30,000 per year need a bank loan?
3. What drove the increase in Jones’s accounts receivable and inventory balances in 2005 and 2006?
4. Is Nelson Jones’s estimate that $350,000 line of credit is sufficient for 2007 reasonable?
5. When will Jones be able to repay the line of credit?
6. What could Jones do to reduce the size of the line of credit he needs?
7. What are the implications for Jones’s lifestyle of accepting a new, larger line of credit?