Reference no: EM132257300
Alliance Concrete Case Questions
Please answer the following questions on Alliance Concrete. List each question followed by your answer below the question. Note that question 1 requires you to do a financial projection of Alliance Concrete's 2006 financial statements (using Excel). Teamswill be selected at random to lead the class discussion on this case and present their 2006 financial projections.
1. What is your best estimate of the 2006 financial statements?
As a starting point assume:
(a) Alliance makes the expected $3 million dividend payment to National
(b) Alliance makes the $16.0 million capital expenditure
(c) Hence, the balance sheet will be balanced by adjusting the amount of the bank loan.
(d) Note: State your forecast assumptions in detail so I can understand how you arrived at your forecast.
2. Suppose the bank will not allow you to skip the $4 million principal payment and the bank will also not allow you to seek external financing of any kind (i.e. no debt or equity issuance). You still need to make the $16.0mm capital expenditure and pay the $3 million dividend. What balance sheet actions would you consider taking to get the balance sheet to balance in 2006?
3. Assume you chose to renegotiate with the bank - how would you approach the bank, and what arguments would you put forward?(I.e. make a financial argument using financial data in your negotiation)!
4. Assume you choose to skip the dividend - how would you approach National, and what arguments would you put forward? Make a financial argument using financial data to convince National that Alliance has been underinvesting in PP&E and, therefore, needs to skip the dividend to make the $16.0 CAPEX payment.
Attachment:- Case- Alliance Concrete.rar