Essays24.com - Term Papers and Free Essays
Search

Case Analysis on Lobo Mill Products Company

Essay by   •  November 20, 2017  •  Case Study  •  552 Words (3 Pages)  •  1,653 Views

Essay Preview: Case Analysis on Lobo Mill Products Company

Report this essay
Page 1 of 3

Xavier University – Ateneo de Cagayan

School of Business and Management

Department of Business Administration

Case Analysis on Lobo Mill Products Company

Submitted by:

Abad Jude Harvey

Abuga, Nikki Winslet

Amila, Kareen Chris

Bucio, Fatima

Catipay, Darlene

Dango, Mark Gil

Gannaban, Alden Mae

Pahuyo, Cyra Elloise

Submitted to:

Ms Deaza Mae Pabatao


Background of the Case

  •  Mr Enrique (Harry) Lobo
  • Most of the profits were retained in the business.
  • The firm had borrowed nearly $125,000 from South Valley State Bank in Albuquerque, New Mexico, at the beggining of 1998 but found that its cash shortage emerge again a month or so later.
  • Mr Lobo and a partner named Mr Andrew Murphy
  • He bought out Mr Murphy in 1994 and started again as a sole proprietor.
  • Mr Lobo competed vigorously on price by watching operating expenses and by making quantity purchases at large savings.
  • The bank special attention to the firms debt ratio and current ratio.
  • The rate of inventory turnover was high and losses on bad debts in past years have been quite small.

Point of View

  • The Credit Investigator/Analysts

Problem

  • Mr Lobo’s sluggish liquidity of his financials and his increasing of inventories and liabilities. They financed or leveraged their operations more on debts.

Objective

  • To whether accept or reject the loan request of Mr Lobo.
  • To lessen his debts
  • To shorten the payable period
  • To sell a 75% of their inventories.

Alternative Course of Actions

  1. Accept the 100% amount of loan request of Mr Lobo, and make it sure that he can pay within the deal period.

Advantages: Mr Lobo will get the amount he want, and new client on the part of the loan company.

Disadvantages: There’s a chance that Mr Lobo will be default and maturity risk on the part of the loan company.

  1. Accept the 50% of the loan of Mr Lobo.

Advantages: compared to the full amount of his request it is much lower, lower to collect, bigger chance that the loan company would be paid at the deal period.

Disadvantages: there’s a chance that Mr Lobo will pullout from his request, also the loan company will lose a client.

  1. Accept the 100% amount of loan request of Mr Lobo with a higher interest rate.

Advantages: more profit on the part of the loan company, Mr Lobo will get his desired amount of loan.

Disadvantages: There’s a chance that Mr Lobo will be default and pullout his loan request because of higher interest rate, and maturity risk on the part of the loan company.

...

...

Download as:   txt (3.6 Kb)   pdf (110.9 Kb)   docx (746.3 Kb)  
Continue for 2 more pages »
Only available on Essays24.com