Monforte Dairy
MONFORTE DAIRY
This Case meets the conditions of my signed Academic Honesty Statement with the instructor.
Critical Issues
The main critical issue for Monforte is to grow its revenues to 10-million dollars while allowing Klahsen to retire within the next 10 to 15 years. Monforte would not be able to reach its goals if it does not fix following issues: * How to increase the revenues from existing market(specialty cheese) and how to decrease its dependency on just cheese products. * Ways to attract investors( increasing the equity) and increase Monforete's capital. * How to identify and solve current financial position in order to increase the chances of potential growth in future. * How to balance Klahsen's personal and work life so that she spends more time with her children.
Analysis
Monforte Dairy Company was established in January 2003 as a partnership shared by Ruth Klahsen and Sebastiano Monforte. Six months later, Sebastiano decided to leave the company and the burden of running the business was taken by Klahsen alone. With the growing demand and weak competition of specialty cheese market, Klahsen was able to reap the benefits in terms of increasing profits through past years. Recently, Monforte found itself in unstable financial position when it lost almost a full year of production due to time period of building construction for operations. Monforte currently facing large debt accumulated from past years. Monforte's current debt to equity ratio is 11.49 which shows that company's main source of financing its assets is through loans. It is mainly due to huge loan acquired from the bank($1.85 million) at 7.5% interest rate. This has not only put the company in huge debt but has also increased the interest expense to over 500 % within 1 year. (2.1%in 2008 to 14% in 2009). Moreover, Monforte does not have enough cash on hand to pay off its current liabilities. It is known through low acid-test ratio (0.9) which means Monforte is
This Case meets the conditions of my signed Academic Honesty Statement with the instructor.
Critical Issues
The main critical issue for Monforte is to grow its revenues to 10-million dollars while allowing Klahsen to retire within the next 10 to 15 years. Monforte would not be able to reach its goals if it does not fix following issues: * How to increase the revenues from existing market(specialty cheese) and how to decrease its dependency on just cheese products. * Ways to attract investors( increasing the equity) and increase Monforete's capital. * How to identify and solve current financial position in order to increase the chances of potential growth in future. * How to balance Klahsen's personal and work life so that she spends more time with her children.
Analysis
Monforte Dairy Company was established in January 2003 as a partnership shared by Ruth Klahsen and Sebastiano Monforte. Six months later, Sebastiano decided to leave the company and the burden of running the business was taken by Klahsen alone. With the growing demand and weak competition of specialty cheese market, Klahsen was able to reap the benefits in terms of increasing profits through past years. Recently, Monforte found itself in unstable financial position when it lost almost a full year of production due to time period of building construction for operations. Monforte currently facing large debt accumulated from past years. Monforte's current debt to equity ratio is 11.49 which shows that company's main source of financing its assets is through loans. It is mainly due to huge loan acquired from the bank($1.85 million) at 7.5% interest rate. This has not only put the company in huge debt but has also increased the interest expense to over 500 % within 1 year. (2.1%in 2008 to 14% in 2009). Moreover, Monforte does not have enough cash on hand to pay off its current liabilities. It is known through low acid-test ratio (0.9) which means Monforte is