Crazy Eddie
CRAZY EDDIE ANALYSIS
In 1969, Eddie Antar, a 21-year-old high school dropout from Brooklyn, opened a consumer electronics store with 150 square feet of floor space in New York City. In spite of this modest beginning, Antar would eventually dominate the retail consumer electronics market in the New York City metropolitan area. Crazy Eddie Inc. was a retail consumer electronics store in New York City, by 1987; Crazy Eddie Inc. had 43 retail outlets, sales exceeding $350million, and outstanding stock with a collective market value of $600 million. Doubling in the four-year period from 1981 to 1984, sales in the consumer electronics industry exploded. Eddie Antar, the owner of the Crazy Eddie, Inc. converted his stores into consumer electronics supermarkets. Antar stocked the shelves of Crazy Eddie's retail outlets with every electronic gadget he could find and with as many different brands of those products as possible. The Inventory turnover rate steadily declines from 1984-87, which could indicate, lost sales. Misstatements of inventory or cost of goods sold could be possible. It also indicates employee strikes or, in Crazy Eddies' case, employees leaving their jobs. In 1986 the A/R turnover rate was extremely high which is unusual because in that year the consumer electronics industry boom days had ended. Competition in the New York area was high. Inventory turnover rates had been decreasing. How was Crazy Eddie receiving all this money if sales were down? It turned out that he was committing Fraud; he was stealing thousands of dollars. He started by changing the books so the company looked better than it really was to garner market share. Once he knew how to commit the fraud really well and cover his tracks, “he took the company public “and that is where he and his family really started to make some serious money. There was only one major problem: they had set a pattern, he had to commit a larger fraud every year in order to maintain the frauds he had already
In 1969, Eddie Antar, a 21-year-old high school dropout from Brooklyn, opened a consumer electronics store with 150 square feet of floor space in New York City. In spite of this modest beginning, Antar would eventually dominate the retail consumer electronics market in the New York City metropolitan area. Crazy Eddie Inc. was a retail consumer electronics store in New York City, by 1987; Crazy Eddie Inc. had 43 retail outlets, sales exceeding $350million, and outstanding stock with a collective market value of $600 million. Doubling in the four-year period from 1981 to 1984, sales in the consumer electronics industry exploded. Eddie Antar, the owner of the Crazy Eddie, Inc. converted his stores into consumer electronics supermarkets. Antar stocked the shelves of Crazy Eddie's retail outlets with every electronic gadget he could find and with as many different brands of those products as possible. The Inventory turnover rate steadily declines from 1984-87, which could indicate, lost sales. Misstatements of inventory or cost of goods sold could be possible. It also indicates employee strikes or, in Crazy Eddies' case, employees leaving their jobs. In 1986 the A/R turnover rate was extremely high which is unusual because in that year the consumer electronics industry boom days had ended. Competition in the New York area was high. Inventory turnover rates had been decreasing. How was Crazy Eddie receiving all this money if sales were down? It turned out that he was committing Fraud; he was stealing thousands of dollars. He started by changing the books so the company looked better than it really was to garner market share. Once he knew how to commit the fraud really well and cover his tracks, “he took the company public “and that is where he and his family really started to make some serious money. There was only one major problem: they had set a pattern, he had to commit a larger fraud every year in order to maintain the frauds he had already