Issues
Due to the fact that Tire City already has an outstanding loan that is still in the process of being paid off, the main issue arises. Already bearing financial obligations towards MidBank, as well as other everyday business obligations, can Tire City afford to expand? If so, how much can be internally financed? How much external financing will Tire City need in the form of a bank loan from MidBank? Lastly, can Tire City reduce their inventory and still function properly?
Analysis
TCI’s future financials look fairly stable for the most part. Using management’s projections, a growing TCI is revealed with great sales growth and stable ratios.1 The management case reveals slight decreases in Current and Quick ratios as well as slight increases in Total Liability to Total Assets and Total Liability to Equity do to the increase in Bank Loans Payable from the forecasted loan for the warehouse.2 Accounts