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Jackson Automotive Systems Case Solution
| Solution Id | Length | Case Author | Case Publisher |
|---|---|---|---|
| 2099 | 462 Words (4 Pages) | William E. Fruhan, Wei Wang | Harvard Business School : 914505 |
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The company needs a new loan to finance the purchase of equipment. It was necessary to make an investment in new equipment purchases as some essential components of its machinery had worn off, and it had become crucial for the business to replace them as soon as possible or else its production will be disrupted, resulting in further delayed order fulfillment. The additional borrowing is urgent but not on an immediate basis as it will be until August when Jackson Automotive System will purchase the machinery.
Case Analysis for Jackson Automotive Systems
The cash budget of the company for the four months period is as follows:
|
Cash Budgets for the Months |
||||
|
|
June |
July |
August |
September |
|
Opening Cash Balance |
4,994 |
5,087 |
10,791 |
11,672 |
|
Add: Sales Receipts |
3,744 |
11,679 |
6,868 |
6,121 |
|
Less: Material Purchased |
2,876 |
5,200 |
5,200 |
5,200 |
|
Less: Operating Expenses |
750 |
750 |
750 |
750 |
|
Less: Interest Cost |
25 |
25 |
37 |
37 |
|
Closing Cash Balance |
5,087 |
10,791 |
11,672 |
11,806 |
The pro forma Income Statement and the Balance Sheet for the four months period are as follows:
|
Income Statement for the Months Ended June-September |
|||||
|
In 000s |
June |
July |
August |
September |
Total |
|
Sales Revenue |
10,779 |
6,268 |
6,121 |
6,285 |
29,453 |
|
Less: Cost of Goods Sold |
5,810 |
5,810 |
5,810 |
5,810 |
23,240 |
|
Gross Profit |
4,969 |
458 |
311 |
475 |
6,213 |
|
|
|
|
|
|
|
|
Operating Expenses |
750 |
750 |
750 |
750 |
3,000 |
|
Depreciation and Amortization |
120 |
120 |
130 |
130 |
500 |
|
Interest Expense |
25 |
25 |
37 |
37 |
124 |
|
Interest Income |
100 |
102 |
216 |
233 |
651 |
|
Profit before Tax |
4,174 |
(335) |
(390) |
(209) |
6,239 |
|
Less: Income Taxes |
1,419 |
(114) |
(133) |
(71) |
1,101 |
|
Net Income |
2,755 |
(221) |
(258) |
(138) |
2,138 |
|
Dividends |
|
|
|
1,200 |
|
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