Financial Analysis and Forecasting of Garden State Container Corporation
Garden State Container Corporation
Financial Analysis and Forecasting
Prepared By Team MA3:
Case 36
March 18, 2013
Garden State Container Corporation manufactures boxes and other containers for farm products. 85 % of the company’s sales come from the northeastern part of the United States, although their patented egg cartons are distributed throughout the United States. Jim Jackson, the founder and president of the company recently received a call from Martha Menendez, vice president of Atlantic First National Bank telling him that a negative report had been generated by the bank’s computerized analysis system. The report showed that Garden State’s financial position was bad and getting worse. Menendez is worried that the company will not be able to repay the two outstanding loans it currently has with her bank and needs to decide if calling the loans is necessary. Menendez will need strong and convincing evidence that the company’s present difficulties are only temporary. Therefore it must be shown that appropriate actions to overcome the problems have been taken and that the chances of reversing the adverse trends are realistically good. Between the recession that hit the United States in the early 1990’s and disastrous droughts that lasted two straight summers, Jim Jackson is tasked with the challenge of proving that Garden State’s financial problems are only temporary. In the following report financial ratios will be used to describe the company’s financial state. Historical financial statements as well as pro forma financial statements based on Jackson’s business plan will be used as well. In the case that the bank calls the loans, alternative sources of raising capital are presented, and finally the bank’s decision will be discussed in detail.
Financial Ratios
The Garden States future completely relies on its performance in 1993 and 1994. By looking at their past statements and making some adjustments we can forecast future statements and ratios, which will
Financial Analysis and Forecasting
Prepared By Team MA3:
Case 36
March 18, 2013
Garden State Container Corporation manufactures boxes and other containers for farm products. 85 % of the company’s sales come from the northeastern part of the United States, although their patented egg cartons are distributed throughout the United States. Jim Jackson, the founder and president of the company recently received a call from Martha Menendez, vice president of Atlantic First National Bank telling him that a negative report had been generated by the bank’s computerized analysis system. The report showed that Garden State’s financial position was bad and getting worse. Menendez is worried that the company will not be able to repay the two outstanding loans it currently has with her bank and needs to decide if calling the loans is necessary. Menendez will need strong and convincing evidence that the company’s present difficulties are only temporary. Therefore it must be shown that appropriate actions to overcome the problems have been taken and that the chances of reversing the adverse trends are realistically good. Between the recession that hit the United States in the early 1990’s and disastrous droughts that lasted two straight summers, Jim Jackson is tasked with the challenge of proving that Garden State’s financial problems are only temporary. In the following report financial ratios will be used to describe the company’s financial state. Historical financial statements as well as pro forma financial statements based on Jackson’s business plan will be used as well. In the case that the bank calls the loans, alternative sources of raising capital are presented, and finally the bank’s decision will be discussed in detail.
Financial Ratios
The Garden States future completely relies on its performance in 1993 and 1994. By looking at their past statements and making some adjustments we can forecast future statements and ratios, which will