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Colin Quinn

Finance
Tire City II

1. How much money will Tire City need to borrow from the bank in 1996?
$193,000

2. How much money will Tire City need to borrow from the bank in 1997?
$622,000

3. What kind of financial health will Tire City be in at the end of 1997?
They will have a quick ratio of 1.62 and 1.68 in 1996 and 1997 respectively. This
is lower than an investor would like.

4. What would happen to Tire Citys borrowing requirements if inventory is not
reduced by the end of 1996?
It would need to borrow an additional $1,054,000

5. How can Tire City reduce its borrowing requirements, while still building a new
warehouse?
a. Reduce any kind of expense
b. Change dividend policy
c. Collect accounts receivable more efficiently
d. Sell some stock- This is likely the best option. The company is growing
but cannot necessarily take on too much debt. Equity financing will
hopefully

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