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    High Tire Performance

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    Sofía Margarita
    This document provides a SWOT analysis, financial analysis, and cash flow statement for a tire and automotive maintenance business called High Tire Performance (HPT). The SWOT analysis identifies strengths like the family-owned business structure but also weaknesses such as a bad reputation and high staff turnover. The financial analysis shows declining profitability and liquidity ratios compared to industry averages. The cash flow statement indicates a decrease in net cash from operations from 2002 to 2003 driven by increases in accounts receivable, inventory, and prepaid expenses.

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    High Tire Performance

    Uploaded by

    Sofía Margarita
    28 views8 pages
    This document provides a SWOT analysis, financial analysis, and cash flow statement for a tire and automotive maintenance business called High Tire Performance (HPT). The SWOT analysis identifies strengths like the family-owned business structure but also weaknesses such as a bad reputation and high staff turnover. The financial analysis shows declining profitability and liquidity ratios compared to industry averages. The cash flow statement indicates a decrease in net cash from operations from 2002 to 2003 driven by increases in accounts receivable, inventory, and prepaid expenses.

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    HIGH TIRE PERFORMANCE

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    This document provides a SWOT analysis, financial analysis, and cash flow statement for a tire and automotive maintenance business called High Tire Performance (HPT). The SWOT analysis identifies strengths like the family-owned business structure but also weaknesses such as a bad reputation and high staff turnover. The financial analysis shows declining profitability and liquidity ratios compared to industry averages. The cash flow statement indicates a decrease in net cash from operations from 2002 to 2003 driven by increases in accounts receivable, inventory, and prepaid expenses.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    28 views8 pages

    High Tire Performance

    Uploaded by

    Sofía Margarita
    This document provides a SWOT analysis, financial analysis, and cash flow statement for a tire and automotive maintenance business called High Tire Performance (HPT). The SWOT analysis identifies strengths like the family-owned business structure but also weaknesses such as a bad reputation and high staff turnover. The financial analysis shows declining profitability and liquidity ratios compared to industry averages. The cash flow statement indicates a decrease in net cash from operations from 2002 to 2003 driven by increases in accounts receivable, inventory, and prepaid expenses.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 8

    HIGH TIRE PERFORMANCE

    Jia Deng, Elias Eid, Giulia Germani and Sofía Margarita


    SWOT ANALYSIS
    STRENGTHS OPPORTUNITIES
    • Family business • Taking advantage of Jenny Chen’s expertise to improve
    • Long trajectory in the business operations.
    • A high number of outlets offering tires and automotive
    maintenance services.

    WEAKNESSES THREATS
    • Bad reputation among clients lately. • Canadian Tires and other local services stations lowered their
    • High staff turnover. prices and improved customer service.
    • Disorganized management style • Forecasted slowdown in the local economy for 2004.
    • Younger, less experienced staff with much poorer customer • Relationship with Toronto Dominion Bank in jeopardy that
    service skills. could lead to the bank to terminate the line-of-credit and
    • Bad sales & operations planning which resulted in poor affect the long-term debt (Assets are holding up with 75% of
    quality products, alienated customers, and underutilized liabilities).
    outlets.
    • Gross profit 39%, Operating profit 5,5% and Net profit 0,25%.
    (Industry’s ratios 42%, 12% and 6,71%, respectively)
    HPT FINANCIAL CONDITION
    Ratio 2003 2002 2001 Industry Avg.
    Current Ratio 0.93 1.36 1.88 1.9 Liquidity
    Cash ratio 0.04 0.16 0.38 0.51
    Total Assets Turnover 1.07 1.46 1.72 2
    Fixed Assets Turnover 1.34 1.93 2.56 3.19
    A/R Turnover days 13.34 9.70 10.14 30
    Asset
    Inventory Turnover days 96.66 77.95 81.11 60 Management
    A/P Turnover days 40.56 17.79 14.87 15
    Debt Ratio 75.25% 60.53% 35.00% 30.00% Long-term debt

    Times interest earned 0.08 2.06 7.87 14.63


    Gross Profit Margin 39.00% 39.00% 40.00% 42.00% Profitability

    Operating profit Margin 5.53% 8.83% 11.09% 12.00%


    Net Profit Margin 0.25% 3.56% 5.90% 6.71%
    ROI 0.45% 8.68% 16.95% 13.42%

    ROE 1.09% 13.19% 15.65% 19.17%


    HORIZONTAL AND VERTICAL ANALYSIS

    Income Statement Income Statement Income Statement


    For Year ending December 31 Horizontal Analysis Vertical Analysis
    2003 2002 2001 2003 2002 2003 2002 2001
    Sales 6,500,000 € 5,550,000 € 4,050,000 € 160.5% 137.0% 100.0% 100.0% 100.0%

    -Cost of Goods Sold 3,965,000 € 3,385,500 € 2,430,000 € 163.2% 139.3% 61.0% 61.0% 60.0%

    Gross Profit 2,535,000 € 2,164,500 € 1,620,000 € 156.5% 133.6% 39.0% 39.0% 40.0%

    -Depreciation 485,600 € 287,200 € 158,500 € 306.4% 181.2% 7.5% 5.2% 3.9%

    Other Operating Expenses 1,690,000 € 1,387,500 € 1,012,500 € 166.9% 137.0% 26.0% 25.0% 25.0%

    Ernings Before Interest and Taxes 359,400 € 489,800 € 449,000 € 80.0% 109.1% 5.5% 8.8% 11.1%

    -Interest 331,956 € 160,125 € 50,645 € 655.5% 316.2% 5.1% 2.9% 1.3%

    Earings Before Taxes 27,444 € 329,675 € 398,355 € 6.9% 82.8% 0.4% 5.9% 9.8%

    -Income Taxes 10,978 € 131,870 € 159,342 € 6.9% 82.8% 0.2% 2.4% 3.9%

    Net Income 16,466 € 197,805 € 239,013 € 6.9% 82.8% 0.3% 3.6% 5.9%
    HORIZONTAL AND VERTICAL ANALYSIS
    Balance Sheet Balance Sheet Balance Sheet
    For Year Ending December 31 Horizontal Analysis Vertical Analysis
    2003 2002 2001 2003 2002 2003 2002 2001
    Cash 57,000 € 110,000 € 155,000 € 36.8% 71.0% 0.9% 2.9% 6.6%

    Accounts Receivable 95,000 € 59,000 € 45,000 € 211.1% 131.1% 1.6% 1.6% 1.9%
    Inventories 1,050,000 € 723,000 € 540,000 € 194.4% 133.9% 17.2% 19.0% 23.0%

    Prepaid Expenses 42,000 € 36,000 € 25,000 € 168.0% 144.0% 0.7% 0.9% 1.1%

    Total Current Assets 1,244,000 € 928,000 € 765,000 € 162.6% 121.3% 20.4% 24.4% 32.6%

    Property, Plant and Equipment 7,288,800 € 4,819,200 € 3,245,000 € 224.6% 148.5% 119.5% 126.8% 138.1%
    Less: Accumulative Depreciation 2,432,800 € 1,947,200 € 1,660,000 € 146.6% 117.3% 39.9% 51.2% 70.6%

    Net Property, Plant and Equipment 4,856,000 € 2,872,000 € 1,585,000 € 306.4% 181.2% 79.6% 75.6% 67.4%

    Total Assets 6,100,000 € 3,800,000 € 2,350,000 € 259.6% 161.7% 100.0% 100.0% 100.0%

    Accounts Payable 440,556 € 165,000 € 99,000 € 445.0% 166.7% 7.2% 4.3% 4.2%

    Line of Credit 570,638 € 353,000 € 267,435 € 213.4% 132.0% 9.4% 9.3% 11.4%

    Current Portion of Long-term Debt 325,346 € 162,000 € 41,460 € 784.7% 390.7% 5.3% 4.3% 1.8%

    Total Current Liabilities 1,336,540 € 680,000 € 407,895 € 327.7% 166.7% 21.9% 17.9% 17.4%

    Long-term Debt 3,253,460 € 1,620,000 € 414,605 € 784.7% 390.7% 53.3% 42.6% 17.6%

    Equity 1,510,000 € 1,500,000 € 1,527,500 € 98.9% 98.2% 24.8% 39.5% 65.0%

    Total Liabilities and Equity 6,100,000 € 3,800,000 € 2,350,000 € 259.6% 161.7% 100.0% 100.0% 100.0%
    CASH FLOW STATEMENTS

    Cashflow from operations 2002 Cashflow from operations 2003

    Net income 197,805 € Net income 16,466 €


    Adjustment Adjustment
    Depreciation 287,200 € Depreciation 485,600 €
    Increase Acc receivable - 14,000 €
    Increase Acc receivable - 36,000 €

    Increase Inventory - 183,000 €


    Increase Inventory - 327,000 €
    Increase Prepaid expense - 11,000 € Increase Prepaid expense - 6,000 €
    Increase accounts payable 66,000 € Increase accounts payable 275,556 €

    Net cash 343,005 € Net cash 408,622 €


    WORKING CAPITAL

    Ratio 2003 2002 2001

    Working Capital -92540.00 248000.00 357105.00


    THANK YOU!

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