Mark X Paper
Executive Summary:
Mark X Company is the maker of farm and specialty trailers. The company has fallen on difficult times and wants their bank, Wells Fargo, to extend a loan for working capital and an expansion of their current facilities. Mark X feels this will help the company increase sales and therefore improve their financial situation. Wells Fargo is leery of extending any additional funds to Mark X based on their current financial situation and their most recent liquidity and debt ratios.
For the background of this case we have used anticipated ratios to complete forecast tables and also some pro forma financial statements. These tools should help us to analyze the position and sensitivity of the company. We also will use several ratios to discuss the standing of the company and how those ratios could vary as some of the relevant input data changes.
In this case, we looked at how sensitive the company’s results are in accordance to changes in the sales growth rate, the cost of goods sold percentages and the administrative expenses. To help to show these relationships and sensitivity analysis we will model graphs to see the effect of the changing information along with evaluating several other factors in our decision. We believe the bank should extend the additional short term loan to Mark X.
Despite the fact that certain variables do show some sensitivity to each other, most of them appear to be faintly sensitive to changes, we believe that Mark X will still be able to sufficiently pay off the short term loan that they already have through the bank and the loan they are requesting and still maintain sufficient cash reserves. It is also our position that the company will need to be monitored more closely and it would be in their best interest to more efficiently manage their assets and strive to achieve the goals that they have projected.
Problem Statement:
Mark X is trying to convince Wells Fargo Bank to extend a short term loan of
Mark X Company is the maker of farm and specialty trailers. The company has fallen on difficult times and wants their bank, Wells Fargo, to extend a loan for working capital and an expansion of their current facilities. Mark X feels this will help the company increase sales and therefore improve their financial situation. Wells Fargo is leery of extending any additional funds to Mark X based on their current financial situation and their most recent liquidity and debt ratios.
For the background of this case we have used anticipated ratios to complete forecast tables and also some pro forma financial statements. These tools should help us to analyze the position and sensitivity of the company. We also will use several ratios to discuss the standing of the company and how those ratios could vary as some of the relevant input data changes.
In this case, we looked at how sensitive the company’s results are in accordance to changes in the sales growth rate, the cost of goods sold percentages and the administrative expenses. To help to show these relationships and sensitivity analysis we will model graphs to see the effect of the changing information along with evaluating several other factors in our decision. We believe the bank should extend the additional short term loan to Mark X.
Despite the fact that certain variables do show some sensitivity to each other, most of them appear to be faintly sensitive to changes, we believe that Mark X will still be able to sufficiently pay off the short term loan that they already have through the bank and the loan they are requesting and still maintain sufficient cash reserves. It is also our position that the company will need to be monitored more closely and it would be in their best interest to more efficiently manage their assets and strive to achieve the goals that they have projected.
Problem Statement:
Mark X is trying to convince Wells Fargo Bank to extend a short term loan of