"Manufactured Homes" Case
16-02-2013 Study year 2012-2013
Prof. Dr. Brendan O’Dwyer Semester 2, Blok 1
Financial Statement Analysis Anahita Farokhi 6041949
Case 3: “Manufactured Homes” (MANH)
Question 1
Manufactured Homes is engaged principally in the retail sale of new and used manufactured single-family homes and targets individuals in the low income category. Manufactured Homes focuses on the lower end of the market, according to the company this has two advantages: 1. Since its customers were seeking to fulfil an essential housing need, its customers were less affected by changes in general economic conditions. 2. Repossession rates were significantly lower than those of the industry, since its customers were likely to work very hard to keep their primary residences, even when times were bad.
The chairman describes in his Letter to Stockholders that Manufactured Homes primarily wants to be a sales and marketing company, with manufacturing and retail financing on a limited basis to support the company’s growth plan. Manufactured homes acquired many retail outlets in the years up to 1987. As competition for market share in the manufactured homes industry increased, Manufactured Homes benefited because of its financial advantages volume buying efforts. That was a reason for many independent dealers to work together to with or to be bought by Manufactured Homes. Besides these retail outlets Manufactured Homes bought Craftsman Homes, which had to serve as a facility to safeguard the company during periods when demand for homes outpaced supply. Craftsman Homes also provides the opportunity to produce especially designed homes in smaller numbers, thereby eliminating the major commitment that would be required by unaffiliated suppliers. Finally Manufactured Homes set up a financial services subsidiary, this new entity is employed primarily to facilitate financing agreements with the company’s banks. It does have mortgage lending capabilities, which will, according
Prof. Dr. Brendan O’Dwyer Semester 2, Blok 1
Financial Statement Analysis Anahita Farokhi 6041949
Case 3: “Manufactured Homes” (MANH)
Question 1
Manufactured Homes is engaged principally in the retail sale of new and used manufactured single-family homes and targets individuals in the low income category. Manufactured Homes focuses on the lower end of the market, according to the company this has two advantages: 1. Since its customers were seeking to fulfil an essential housing need, its customers were less affected by changes in general economic conditions. 2. Repossession rates were significantly lower than those of the industry, since its customers were likely to work very hard to keep their primary residences, even when times were bad.
The chairman describes in his Letter to Stockholders that Manufactured Homes primarily wants to be a sales and marketing company, with manufacturing and retail financing on a limited basis to support the company’s growth plan. Manufactured homes acquired many retail outlets in the years up to 1987. As competition for market share in the manufactured homes industry increased, Manufactured Homes benefited because of its financial advantages volume buying efforts. That was a reason for many independent dealers to work together to with or to be bought by Manufactured Homes. Besides these retail outlets Manufactured Homes bought Craftsman Homes, which had to serve as a facility to safeguard the company during periods when demand for homes outpaced supply. Craftsman Homes also provides the opportunity to produce especially designed homes in smaller numbers, thereby eliminating the major commitment that would be required by unaffiliated suppliers. Finally Manufactured Homes set up a financial services subsidiary, this new entity is employed primarily to facilitate financing agreements with the company’s banks. It does have mortgage lending capabilities, which will, according