Key Issues & Risks/Mitigating Factors
The company is growing continuously in domestic market as well as in international market. Nature of the business is highly seasonal and in order to meet its seasonal cash needs company manage a line of credit of 4.2 million dollars. It is expected that this line of credit is sufficient in order to meet current cash needs. But looking at the current growth in foreign market which is significantly higher than the domestic market company could face the shortage of cash in order to meet high seasonal sales demand which is highly uncertain.
In addition to this company have to repay its stockholder loan in the month of November. Hence the company is facing a significant risk regarding future uncertain cash flow needs therefore in order to estimates the future cash needs, management of the company should perform series and trend analysis and should conduct forecasting analysis by generating different scenarios in order to mitigate the expected risk.
Request
Henson Ski Boot business is extremely seasonal and characterized in two phases ordering and shipment. In ordering phase Henson manufactures stock and places orders. In order to meet its cash needs Henson requested its commercial loan providers to grant revolving credit facility.
Industry & Business
Hanson Ski productsfounded in 1973by Alden Denny Henson. Company is situated in Boulder, Colorado. Company is dealing in Ski products and is leading manufacturer of specially designed high quality boots. Due to its special design company has a clear advantage over its competitors and it help the company to grasp greater market share within no time after its foundation.
Due to its unique design company also achieve an award of one of the best designed product among 25 special design products across America which also provide an edge to company in order to attract greater number of customers.
Boots industry is really competitive and there is an intense competition within the US ski industry as many multinational ski companies are operating in US ski industry like Colombia, Nordica, Canada Goose and Blizzard therefore Henson Ski is dealing with four models of adult boot and it is expected that due to intense competition and increased in customer awareness Henson company is been consistent in presenting new designs of boots in order to attract more number of customers and in order to remain competitive over its competitors.
Management
Management of the company is highly efficient and skillful. Currently the company has 123 employees in its production force, and among these 50% are highly skilled and loyal to the company as they are being there from many years. Due to sufficient level of expertise, highly educated and skillful staff are running the company’s manufacturing department with so much excellence that they could produce 60% of the forecasted sale before receiving the final order.
In addition to this management of the company has managed the internal cash needs effectively and arranged a low interest rate line of credit of worth 4.2 million which is expected to be sufficient in order to meet fluctuating cash needs of the company...........
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