Hampton Case Analysis Rev

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CASE ANAL ANALYSIS YSIS:: HAMPTON MACHINE TOOLS COMPANY GROUP 6. RAMOS.RODRIGUEZ.SHUKLA.SIBAL.TANTE NGCO.TIA.

Company Background 

  

Founded in 1915 – Defence and Automobile Machine Tool Manufacturer Record Breaking Profits in 1960-1970 Experienced slowdown after mid-1970’s No debt for the past ten years

Balance Sheet Balance Sheets, 1978--1979 (thousands of dollars) 1978 Nov. Cash $2,520  Accounts receivable, net $1,245 Inventories $2,601 Current assets $6,366

1979 $491 $1,863 $2,478 $4,832

$505 $1,971 $3,474 $5,950

June $1,152 $1,893 $3,276 $6,321

July $1,678 $1,269 $3,624 $6,571

Aug. $1,559 $684 $4,764 $7,007

$4,010 $2,998 $1,012

$4,010 $3,010 $1,000

$4,010 $3,040 $970

$4,010 $3,070 $940

$4,010 $3,080 $930

$4,010 $3,090 $920

$62

$40

$39

$24

$24

$42

$7,440

$5,872

$6,959

$7,285

$7,525

$7,969

Notes payable, bank  Accounts payable  Accruals Taxes payable* Customer advances Current liabilities

$0 $348 $561 $150 $840 $1,899

$1,000 $371 $777 $74 $1,040 $3,262

$1,000 $681 $849 $373 $1,040 $3,943

$1,000 $399 $678 $354 $1,566 $3,997

$1,000 $621 $585 $407 $1,566 $4,179

$1,000 $948 $552 $479 $1,566 $4,545

Common stock ($10 par value) Surplus Net worth

$1,178 $4,363 $5,541

$428 $2,182 $2,610

$428 $2,588 $3,016

$428 $2,860 $3,288

$428 $2,918 $3,346

$428 $2,996 $3,424

Total liabilities and net worth

$7,440

$5,872

$6,959

$7,285

$7,525

$7,969

Gross fixed assets  Accumulated depreciation Net fixed assets Prepaid expenses Total assets

Dec.

Mar.

*Tax payments in 1979 include $75,000 due March 15 on underpayment of 1978 taxes and four equal payments of $181,000 due on the 15th of April, June, September, and December for estimated 1979 tax liability with any underpayment of 1979 taxes due March 15, 1980.

Income Statement Income Statements, 1978--1979 (thousands of dollars)

Net sales Cost of sales* Gross profit Selling and admin expenses Interest expense Net income before taxes Income taxes Net income Dividends

Fiscal  Year Ending 31/12/78 $7,854 $5,052 $2,802

Dec. 1979 1978 Jan. $1,551 $861 $1,122 $474 $429 $387

Feb. $672 $369 $303

Mar. $1,866 $1,362 $504

Apr. $1,566 $1,137 $429

May June $873 $1,620 $567 $1,197 $306 $423

Eight Months Ending July Aug. 31/8/79 $723 $507 $8,688 $510 $276 $5,892 $213 $231 $2,796

$1,296 $0

$248 $0

$103 $15

$61 $15

$205 $15

$172 $15

$96 $15

$130 $15

$87 $15

$66 $15

$920 $120

$1,506

$181

$269

$227

$284

$242

$195

$278

$111

$150

$1,756

$723

$87

$129

$109

$136

$116

$94

$133

$53

$72

$842

$783

$94

$140

$118

$148

$126

$101

$145

$58

$78

$914 $0

$50

$25

$0

$0

$0

$0

$0

$100

$0

$0

$100

* Includes depreciation charges of $150,000 in 1978, $12,000 in December 1987, and $10,000 per month in 1979.

Shipments Shipments at Selling Price (thousands of dollars) $2,500

1979

$2,000

January February $1,500 March  April $1,000 May June $500 July  August $0 Eight months total September October November December

As Forecast Dec. 1978 $1,302 $1,872 $1,635 $1,053 $1,293 $1,479 $1,488 $1,797 $11,919

$1,299 $1,347 $1,311 $2,298

Actual $861 $672 $1,866 $1,566 $873 $1,620 $723 $507 $8,688

As Forecast Sept. 1979

Forecast

Actual

$2,163 $1,505 $1,604 $2,265

Conclusion 

Hampton won’t be able to pay the loan in



December. Extend the forecast.

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