Reference no: EM133491619

Introduction

This assignment requires you to produce a professional report that utilizes what you have learned in the lessons in Ratio analysis in this course. You will work in a team of five to calculate ratios, analyze the findings and draw conclusions and a recommendation from the analysis work your team will do. The team will be determined by your professor. Please read through the rest of this document to learn the specific requirements of this report along with the case to be analyzed.

The case
Stripe Supply Ltd. is an industrial supply company. Stripe primarily supplies finishing products to condominium, apartment, and industrial building construction companies. A new customer, Wendel Enterprises Ltd., would like to make a $550,000 purchase of paint and related supplies. This is a large order for Stripe which would be close to 15% of all average current sales for Stripe Supply for a year. You have been asked to provide a recommendation on whether or not to extend credit (essentially a short-term loan) to Wendel Enterprises.
Wendel's CFO has also proposed two other potential investment options. One option would be to grant long-term credit to Wendel. Another option is to provide the funds by having Stripe purchase shares in Wendel. You are to consider and conclude on all three issues. You are reporting to the CEO of Stripe Supply Ltd.

See Wendell's Financial information in the Appendix to this document.
Video Presentation Format

The presentation will be based on the financial information extracted from Wendel Enterprises Ltd. financial information enclosed. The requirements are as follows:

Your group is a consulting firm (make up your own company name), and your firm has been hired by the CEO of Stripe Supply Ltd. to provide a presentation. The CEO is the user of the Presentation, not your professor. Stripe Supply Ltd. is considering three possible ways to be involved with Wendel Enterprises Ltd.:
• grant them short-term credit
• grant them long-term credit
• purchase shares of Wendel
Your task of this project is to analyze the financial data and conclude on all three options. You need to recommend the BEST option and give your reasons. You have been provided industry information to be used as an industry benchmark. Analysis (maximum 6 minutes) (30 marks) - Five sections need to be addressed: Profitability, Asset
Utilization, Liquidity, Debt Utilization, and Other Items. You should present high level analysis for
each one, based on the ratios you are presenting in your Appendix.
• You will likely want to discuss and highlight:
o the trend of the ratios from year to year and compared to Industry
o what the ratios tell us about the company in general or its financial management.
o any inter-relationships between ratios that might be important.
o HINT: you need to go beyond simply commenting on increase/decrease or better
or worse than prior years or industry. Consider how the ratios relate to the
financial statement accounts. For example, if the current ratio is increasing
because inventory is increasing, is that an advantage or disadvantage? If the ratios
indicate any problem areas or good financial management, provide your
observations and comments. Conclusion and Recommendations (Maximum 3 minutes) (15 marks) - Based on your analysis,
state and explain why Stripe should or should not:
(1) grant short-term credit to Wendel
(2) grant long-term credit to Wendel, and/or
(3) consider purchasing shares in Wendel

TIP: If you had to pick just one option, which one would it be? Make sure that is clear to the audience.