Finances

Executive Summary

The purpose of this report is to analyze D’Leon’s financial situation in response to the expansion project initiated on 2007 and the resulting financial struggle that followed the expansion, deliver recommendations and solutions for the future which would ultimately help addressing these issues. Ratio analysis of the financial statement from 2007, 2008 and the forecast for 2009 are of the essence to affirm these recommendations and solution presented in this report. This ratio analysis is divided into five parts: profitability, asset efficiency, liquidity, solvency and valuation. The main objective of this report, after drawing conclusions regarding the expansion, is to direct some financial recommendations, and what other actions beyond the financial perspective, to D’Leon’s management in hope to help them draw conclusions to solve the company’s financial crisis and finally bring the company back into a healthy financial condition.

Section I complies of a brief overview of D’Leon’s as a food company and its decisions regarding the expansion project initiated in 2007. It also explains the purpose for this report as to address all the questions that were brought by the management in face of the financial crisis the company was put under following its expansion strategy.

The financial analysis and conclusions regarding the impacts of this expansion plan started in 2007 are presented in Section II of this report where there is a complete calculation, explanation and comparison of the main financial ratios of the company to the industry, correspondingly. The analysis indicates the extreme amount of debt undertaking by the company during its expansion period as a mjor problem and points out what action must the company take in order to reduce its outstanding debt and costs, increase its cash balance and sales and whether or not to issue new securities.

Section III of this report contains tactics and recommendations for D’Leon’s head management...