Maria Hernandez Case Write Up

1. Decision Maker
A: Maria Hernandez.
2. Issue Identification
A: Maria is concerned whether she will be able to pay her father interest on his loan of 6% per year. A challenge Maria realized she is facing is the fact that the equipment and software she had purchased had a technological life of no more than 3 years from the time that she had purchased them. She is also facing a problem in drafting meaninngful reports to present to her father. Last, she is concerned of the reasons behind the fact that cash in the bank has decreased $5,400. An oppurtunity would be hiring a book keeper that would help Maria draft financial and business reports that could aid her in the upcoming months.
3. Alternatives
A: 1- Borrow money 2- sell assets 3- do nothing
4. Decision Criteria
A: 1- Solvency 2- Quality 3- Business risk (See next tab)
5. Analysis
A: evaluating each alternative against the decision criteria in the next sheet clearly identified the best alternative. While selling assets will give Maria some cash to work with, it will reflect negatively on the quality of the work she will deliver. Therefore, losing future clients and eventually leading to the close of her business. The second alternative of raising money by borrowing, whether from a financial institute or from family and friends, will definitely pump up the solvency/cash criteria. Which will lead to enhancement in the quality of work delivered, due to the fact that that money will allow her to keep all her employees and keep the space she's renting - providing the employees a stable environment to work in. However, there's a risk here of Maria losing control of the business if she doesn't use that borrowed money in the best way she can. otherwise, she won't be able to pay back the money borrowed or the interest, and will have to close down her business eventually. The "do nothing" alternative only shows that Maria will have to close down her business soon enough, due to the fact that she doesn't have enough cash to go on and will not be able to pay her father his money back with interest. 6. Evaluation/Decision
A: Accoring to the scores on the next sheet, alternative 2 has the highest points. Therefore, the decisions
Maria has to make is to raise capital through borrowing from a bank of family/friends. It is the best solution under the current circumstances. The cash she borrows should act as a positive push for her business to switch into the right track.
7. Implementation
A: Apply for a loan from a bank or contact friends and family explaining her business status and asking for financial support. She may face some challenges like lenders asking her for business reports and accounting reports for the past period- which she doesn't have.
8. Questions
See next tab
9. Self Assessment Disclosure
Working on this write up before class seemed difficult espicially that I'm doing this kind of work for the first time in my life. However, after reviewing it in class, it went smoothly and seemed more simple than I had thought. Thank you.