ACC- The Hobby Horse Company Case 2014

Group Case Study 1

Financial Statement Analysis

INSTRUCTIONS

Process of working with your Group solving the Case:

Be respectful, responsible and responsive to your group members.

Working as a team requires consideration and cooperation with others.

1.Establish your Group Name (can be a professional/ business name, or a combination of letters of your names)

2.Discuss the case and divide the work.

3.Schedule a meeting for analysis and drawing conclusions

4.Assure submission of professionally looking presentation of the case solution.

5.Submit a typed nicely formatted solution. The Case cover page must include all students that had worked on the case..

6.Hand in the Case Solution signed by all students. You must sign the case to get a mark.

7.In Addition, each student is encouraged to fill-in Peer Review Form for group participation evaluation. Peer Review Form can be found on Clew at theAssignments tool.

8.Submit Peer Review onAssignments tool on Clew by due date.

Marks may be deducted from a student, if average Peer Review by all group members is 1 or 0.

Group Case Study 1

Financial Statement Analysis

Group Name: ____________________________

MembersName and ID Signature:

1. ____________________ ____________________

2. ____________________ _____________________

3. ____________________ _____________________

4. ____________________ _____________________

The Hobby Horse Company Case

Burchetts Green had enjoyed the bank training course, but it was good to be starting his first real job in the corporate lending group. Earlier that morning the boss had handed him a set of financial statements for The Hobby Horse Company, Inc. (HH). “Hobby Horse,” she said, “has a $45 million loan from us due at the end of September, and it is likely to ask us to roll it over.

The company seems to have run into some rough weather recently, and I have asked Furze Platt to go down there this afternoon and see what is happening. It might do you good to go along with her. Before you go, take a look at these financial statements and see what you think the problems are. Here's a chance for you to use some of that stuff they taught you in the training course.”

Mr. Green was familiar with the HH story. Founded in 1990, it had rapidly built up a chain of discount stores selling materials for crafts and hobbies. However, last year a number of new store openings coinciding with a poor Christmas season had pushed the company into loss. Management had halted all new construction and put 15 of its existing stores up for sale.

Mr. Green decided to start with the six-year summary of HH's balance sheet and income statement (Table 4.10). Then he turned to examine in more detail the latest position (Tables 4.11 and 4.12).

Group Case 1:

Discuss, solve and present:

A. Calculate all Financial ratios for all years. What appear to be the problem areas in HH?

B. Do the financial ratios suggest questions that Ms. Platt and Mr. Green need to address?

C. As part of your solution, you may use current Market Information (from web), or utilize the material studied in the course.Graph to describe trends can be helpful.

D. As needed, you may look at Chapter 4 in textbook for ratios analysis and industry comparison.

E. Include in your solution analysis of the past and current situation and suggest actions for the future.

F. Format of Submission:

·Format your solution to be easy to read

·The Executive Summary:

Once the group completed the analysis and discussed the recommendation, then write the Executive Summary for the case: It should include a brief description of the Problem, highlights of Analysis, your Conclusions and Recommendation.

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·Present the Executive Summary on the first page. The analysis should be presented on subsequent pages.

·No more than 6 pages: Do not attach the case itself.

·Add the Group Name to Header. Number the pages.

·The order of stapled pages should be as follows:

1) Cover page with students signatures.List the Name of your Group on top of the cover page.

2) Executive Summary - maximum one page

(written only after analysis results are reviewed and discussed by group. see above)

3) Analysis of case

4) Appendix if needed

G. Grading the case