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Horton Building Supplies
Final Project
Horton Building Supplies
Final Project
Presented To:
Professor Eeshah Tariq
Group Members:
Atif Arif L1f09bbam0232
Zain Latif
Jaffer Khalid
M. Zeeshan Younus
Course:
Financial Analysis
Date:
9th January, 2014
Presented To:
Professor Eeshah Tariq
Group Members:
Atif Arif L1f09bbam0232
Zain Latif
Jaffer Khalid
M. Zeeshan Younus
Course:
Financial Analysis
Date:
9th January, 2014
Horton Building Supplies - Working Capital
Introduction
Horton Building Supplies (HBS) is a company located in Millsbaugh County located a few miles south of Kansas City. With opportunity that arouse from Kansas Nebraska Act in 1854, Thomas Horton (a land-owing farmer in Indiana) moved to Millsbaugh in 1858. Horton started his own business that that dealt in:
* Retail Lumbaryad Selling to local contractors and townspeople
* Paint
* Hardware lines
* Finished and Semi-finished Lumber items like deck flooring and fencing
HBS has been continuously run by five generations and all the important position is occupied by a family member. Since, the company sales are seasonal, the company slows down in colder months. January is regarded as the low point of the year and then the sales starts to build. Labor is employed in peak season.
Issues with Horton Building Supplies
One of the most important or critical aspect of the company is that they uses the conservative approach for the working capital management. Huge cash is piled in the off-peak seasons and in peak seasons the cash levels are reduced and account receivables are increased due to longer collection period. Since the company is about to grow in 3 to 5 years, Abigail Horton is thinking about the expansion and need for financing. They are considering options between short term financing and long term financing.
Problems
Q1. (a)
HBS’s Cash Cycle for the Fourth Quarter
From the case:...