Financial Analysis and Forecast of Sweet Dreams Inc
Dreams M.I.A. Consulting | Financial Analysis and Forecasting of Sweet Dreams Inc.
Sweet Dream Incorporated (SDI) is a manufacturing company focused on mattress and box spring production for large retailers and hotel chains. With two facilities at their disposal, SDI manufactures over 20 different styles of bedding for their consumers. SDI’s founder and president, Douglas May, has contacted our consulting firm with regards to current financial problems between himself and SDI’s bank, First International Bank. Due to the spike in bank failures in the early 1990’s First National has become extremely sensitive to problem loans (loans which show ratio performances below the industry standard). Unfortunately, SDI has had poor liquidity and debt ratios for the past three years which has caught the banks attention.
After a phone call from the bank Doug has realized that SDI is in even worse trouble than the bank thinks. He has just signed a 9.5 million dollar contract to expand the business which was allegedly being loaned from the bank. Seeing as how the bank is debating closing Doug down it doesn’t look likely that they would want to front him another 9.5 million.
Following a brief meeting with his senior managers, Doug and his team decided that this 9.5 million dollar loan from the bank is the only way to keep their business alive. They have decided to reverse their current policy of aggressive price drops and easy credit, reduce their administrative, selling and miscellaneous expenses, not acquire any new fixed assets or sell common stock, decrease accounts payable, stop paying dividends, and freeze executive salaries. All this is an attempt to prove to the bank that Sweet Dreams Inc. is taking their financial situation very seriously and that the bank should strongly consider giving SDI the 9.5 million dollar loan.
Doug has asked us to verify the bank’s evaluation of his company, predict the expected performance of Sweet Dreams Inc. for 1996 and 1997,
Sweet Dream Incorporated (SDI) is a manufacturing company focused on mattress and box spring production for large retailers and hotel chains. With two facilities at their disposal, SDI manufactures over 20 different styles of bedding for their consumers. SDI’s founder and president, Douglas May, has contacted our consulting firm with regards to current financial problems between himself and SDI’s bank, First International Bank. Due to the spike in bank failures in the early 1990’s First National has become extremely sensitive to problem loans (loans which show ratio performances below the industry standard). Unfortunately, SDI has had poor liquidity and debt ratios for the past three years which has caught the banks attention.
After a phone call from the bank Doug has realized that SDI is in even worse trouble than the bank thinks. He has just signed a 9.5 million dollar contract to expand the business which was allegedly being loaned from the bank. Seeing as how the bank is debating closing Doug down it doesn’t look likely that they would want to front him another 9.5 million.
Following a brief meeting with his senior managers, Doug and his team decided that this 9.5 million dollar loan from the bank is the only way to keep their business alive. They have decided to reverse their current policy of aggressive price drops and easy credit, reduce their administrative, selling and miscellaneous expenses, not acquire any new fixed assets or sell common stock, decrease accounts payable, stop paying dividends, and freeze executive salaries. All this is an attempt to prove to the bank that Sweet Dreams Inc. is taking their financial situation very seriously and that the bank should strongly consider giving SDI the 9.5 million dollar loan.
Doug has asked us to verify the bank’s evaluation of his company, predict the expected performance of Sweet Dreams Inc. for 1996 and 1997,