Lumpkin

measure was form and slowly grew for the first half of the sasss. hearible to rapid business growth in the latter part of the decade, Mr.. limpkin heady to expand on the partys existing building. This magnification was made possible by a $1 50,000 contri scarcelye approved by Ms. Mae Elli from Central National Bank. For the past 5 years limpkin plumbery has been banking with this bank, in magazine this was its first lend. The caller-out regularly provides reports regarding its pass off and Mr.. limpkin keeps In contact with Ms. Elli.This makes them luxuriouslyly applicable for additional loans with this bank. While the forcing outs were underestimated, this Is a positive sign that qualification the loan comprisements should non be a concern. Limpkin plumbing system is a well-managed business with high potential for coming(prenominal) growth and mastery as long as it keeps ope balancens under control and improves projection accuracy. marketing Analysis Limpkin Plu mbings charter is jolly seasonal, with an increase in sales during the stick out and early summer. found on the companys projections, plain they were non expecting the high increase of sales.While the intercommunicate a sales growth was 20%, the actual growth rate was 63. 1%. This increase proves that there was higher take in for Limpkin Plumbings business. Perhaps with the newly added presentment argonas, retail sales will maturation the net sales even more. This could charge the business a competitive return in the proximo. One of the biggest issues I piss with this company is the inaccuracy of its projections especially for the ancestry and accounts due. stock certificate from 1 998 to 1999 increased by 18. % however, the projection for 2000 is save for a 10. 5% increase. If they are expanding to accommodate growth then I think the growth rate for stock-take should have been higher. Operations Analysis As a wholesale distributed, Limpkin Plumbing operates with a high level of enumeration that should be turned over swiftly. The inventory swage rate for 1999 was 3. 80% and 3. 35% for 2000. This decrease Is most likely ascribable to the underestimated amount of purchases and depreciation for 2000. This however Is not necessarily a negative sign.If the demand was there from customers then purchases must be made. With the building expansion, hopefully Limpkin Plumbing can improve the efficiency of ordinances which will lead to a high turnover rate. This high amount of inventory is as well affecting its liquidity based on the quick ratio. Unfortunately, the quick ratio for Limpkin Plumbing has decreased from 1. 73 to 0. 56. companionship should take a look at their credit terms to see if they could collect more from customers. In regards to the companys cash rebirth cycle it has decreased from 106. In 1999 to 83. In 2000. While the average collection uttermost decreased minimally the main number one wood for this is the decrease of the payable period from 45. 1 to 12. 7. Therefore, while customers are give the company sooner, it is taking longer to pay vendors. This could by chance cause problems in the future. When comparing the fixed asset turnover of 1999 to 2000, there is a decrease of 18. 2%. This main argue for this is due to net sales not increasing enough in likeness to the increase of net property and equipment. Mr..Limpkin should taper some of his aid on making s fixed assets for efficient to concede higher revenues. Financial Analysis To empty unnecessary costs by undertake additional space Limpkin Plumbing decided to use debt for the first time which changed their business structure greatly in regards to leverage. One of the most noticeable changes in its financial is the ROE increase of 8. 41 which is great for investors. Another change that deserves attention is the debt to equity ratio changing from 0. 22 in 1999 to 0. 96 in 2000 however, the project ratio for 2000 was only 0. 5. Not only is the new loan driving this ratio to increase but also the accounts payable balance increasing by 494%. For future financing purposes, it may want to pay off some of the vendor accounts in order to help lower the relegate ratio to seem more attractive. stocky Overall, Mr.. Limpkin made the right decisiveness to expand Limpkin Plumbings warehouse by borrowing debt from Central National Bank. Based on the increase in both net sales and net income the company should have no problem repaying the loan and are a good vista for future loans.However, I think they efficiency run into some problems with vendors in the future if they do not start paying their account payable balances a slender more attention. It should also find somebody to provide them with more accurate projections. By having more accurate projections, they will be in a better aspect for not only future loans, but also prospective investors. So far, Mr.. Limpkin has done a great vocation keeping in contact with Ms. Elli and should last out to do so in order to keep a trustworthy affinity for future banking and financing needs.