Shane Long Final Report

Jitterbug Pty Ltd was established At the beginning of 2008, Shane Long purchased a large Jazz & Jive club called ‘Jitterbug ’, which hosts concerts, master classes and other jazz ‘happenings’. Jitterbug also retails jazz related prints, posters, books and branded clothing. Since Shane acquired the club he has embarked upon a major efficiency drive to reduce costs and has worked hard at increasing the profitability of the business. The business is operated as a private company called Jitterbug Pty Ltd. Shane is an employee of the company as well as being the only shareholder. The company pays Shane a salary of $90,000p.a. The share capital represents 180,000 shares. The shares of Jitterbug Pty Ltd are not listed on the stock exchange as it is a private company and all of the shares are owned by Shane Long. During June 2010 a rival club owner offered Shane $650,000 for 100% of the shares of Jitterbug Pty Ltd. Shane rejected the offer. This offer amount can be used to determine an estimate of the market value of the shares in 2010 only.

Fitzroy Bank assesses loan applications on a case by case basis. It is your task to complete a report evaluating the profitability, liquidity and stability (solvency) of the applicants business. The report is based upon a thorough analysis of the business’ last three years financial reports. Your report should be based upon the applicant’s financial situation before any loan is made. After considering these three characteristics a clear recommendation regarding the loan should be made. The report is then provided to your manager who will usually follow your recommendation. A copy of the report is also provided to the applicant.