Submitted by: Submitted by holland38
Views: 114
Words: 1080
Pages: 5
Category: Business and Industry
Date Submitted: 12/03/2014 04:00 PM
In this case study, there is Milton Walter Group; this is a group of investors that make purchases of small firms throughout the Midwest. The group controls over $20million that can be used for the purchase of small businesses that sell packaged goods or foodstuff. A candidate being looked at, is Molly McClellan’s Foods. Eric Miller and Ashley Johnson have been chosen to analyze Molly McClellan’s Foods on if this company is a good purchase and if it’s a reasonable price.
Molly McClellan’s Foods only started with tomato soup based salad dressing and barbecue sauce, and have expanded in the condiment production. In order for them to expand, the McClellan’s and five other friends and relatives formed a partnership and raised $600,000 in equity financing. Over the years, some of the original partners have sold their shares back to the McClellan’s. The most recent buy-out was in 2012, and the McClellan’s borrowed $400,000 to purchase the shares. The financial ratios will show the strengths and weaknesses of the firm, along with whether or not the current selling price is a reasonable price to purchase at.
2012 2011 2010
Current Ratio 2.90 3.09 3.01
Fixed asset turnover 3.63 6.8 5.00
DSO 40.01 37.35 36.67
Inventory turnover 2.61 2.50 2.34
Total asset turnover 1.88 1.70 1.54
Net Profit Margin 2.17% 3.2% 3.72%
Return on assets 4.07% 5.45% 5.71%
Return on equity 7.02% 7.75% 7.41%
Debt Ratio .42 .30 .23
Times Int. Earned 8.67 178.5 0
P/E ratio 18.19 12.08 20.48
After looking at table 1-2 and calculating the firm’s ratio, I was able to see some strengths and weaknesses from this firm. The current ratio rose from 3.01 to 3.09 in 2011, but fell in 2012 to 2.9. The average current ratio for 2012 is 2.22, causing it to be lower than all three years. 2011 was a stronger year for the company, and although the current ratio in 2012 isn’t much lower than 2010, the overall current ratio for the firm is low. The DSO shows the...