Case Summary of Tire City Inc.

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Name ________Zihao Chen_________    Case ___Tire Case Inc.____    Section __03840__   

Case Background (who, what, when, where?):

In 1995, Jack Martin, Chief Financial Officer at Tire City Inc. is preparing for a meeting with the company’s bank MidBank. Martin plans to request a loan over five years to finance anticipated growth in the company and expansion of the company’s warehouse facilities. Martin plans to build a new warehouse that would dramatically affect the income statement and balance sheet of the company for the years to come.

Primary Problem and Precipitating Issue(s):

Martin’s main problem is predicting the income statement and the balance sheet for the firm at the end of the years 1996 and 1997 and assessing the financial health of the company before and after the warehouse is completed.

Case Perspective (audience for the case analysis):

From the bank’s perspective, Tire City Inc. seems like a profitable business with a promising future. It already has some history with Tire City Inc. and already has a line of credit. It would require its own analysis of the company’s situation to give Tire City Inc. the amount of money they’re asking for.

Decision Alternatives:

The decision for Martin is to determine the number of external funds needed.

The decision for how Martin will forecast the balance sheet and income statement.

The decision for how Martin will assess the health of the company before and after.

The decision to do or not to do the project.

The decision to get a bank loan and how to repay it.

Analyses and methodologies (how will you evaluate the problem?):

Using historicals and assumptions, forecast the income statement and balance sheet. This would best assess the financial health of the company before and after the project and it would give us a great deal of information to make an informative decision for the growth and future of the company.