Alliance Case Study Final
Alliance Case
Executive Summary:
In 2006, National Industrial Supplies purchased Alliance Concrete. Alliance Concrete encounters financial projection issues and CFO Martin Harris must make an executive decision whether to making a principal repayment to the bank, making capital investments, or making the dividend payment to the Capital. If Alliance does decide to refrain from making principal payments or paying dividends to National puts the company in risk of not being able to grow. We recommend that Alliance should make capital investments in order to avoid refute the risk. Deep analysis of the company’s financial data and financial ratios will be used in order to persuade senior management that capital investment would be the best choice for the company to make at this point.
Analysis:
No.2. I would recommend Alliance Concrete to make an appropriate repayment to the bank. First of all, maintaining a good relationship with banks, especially when the market of real estate is in bad times. So getting the trust from banks is a good option for long run. On the other hand, some stakeholders are more concerned about their dividends like National, but not the development. It’s important for managers to see the larger picture. Even though we get the fondness from National now, we would collect the fund from bank hardly; and National would give up Alliance Concrete in the end. Most importantly, the accruing interest will become a huge burden for Alliance Concrete. It would be very hard to pay back the principal at that time because Alliance Concrete have a huge amount of interest to pay. And the stable company like Alliance Concrete would drive into bad circle.
I also don’t think Alliance Concrete need make capital investments because it has already spent a capital expenditure of 16 million dollars for the accident of collapse of mixing drum, which influence Alliance Concrete’ normal processing and make it lose lots of money. Although big money was
Executive Summary:
In 2006, National Industrial Supplies purchased Alliance Concrete. Alliance Concrete encounters financial projection issues and CFO Martin Harris must make an executive decision whether to making a principal repayment to the bank, making capital investments, or making the dividend payment to the Capital. If Alliance does decide to refrain from making principal payments or paying dividends to National puts the company in risk of not being able to grow. We recommend that Alliance should make capital investments in order to avoid refute the risk. Deep analysis of the company’s financial data and financial ratios will be used in order to persuade senior management that capital investment would be the best choice for the company to make at this point.
Analysis:
No.2. I would recommend Alliance Concrete to make an appropriate repayment to the bank. First of all, maintaining a good relationship with banks, especially when the market of real estate is in bad times. So getting the trust from banks is a good option for long run. On the other hand, some stakeholders are more concerned about their dividends like National, but not the development. It’s important for managers to see the larger picture. Even though we get the fondness from National now, we would collect the fund from bank hardly; and National would give up Alliance Concrete in the end. Most importantly, the accruing interest will become a huge burden for Alliance Concrete. It would be very hard to pay back the principal at that time because Alliance Concrete have a huge amount of interest to pay. And the stable company like Alliance Concrete would drive into bad circle.
I also don’t think Alliance Concrete need make capital investments because it has already spent a capital expenditure of 16 million dollars for the accident of collapse of mixing drum, which influence Alliance Concrete’ normal processing and make it lose lots of money. Although big money was