Kimet Inc Case Study

Executive Summary

Kismet Inc. began operation on February 1st, 2002 and has continued to operate for 6 months now. It is being managed and operated by a young, inexperienced staff. The company wished to sell tools and hardware throughout Ontario and Quebec within the next year. The long-term goal is to reach sales across Canada and in the United States. The Company owns a small retail store and competes against companies as Princess auto, who also targets the small industry methods. Competitors like Home depot and Canadian tire target are also an influence, but the both generate in a larger scale industry. The economy is rising and is said to rise in the future. This can inly hope to help the small inexperienced company grow with it. Kismet Inc. needs money to finance $43,000 in net fixed assets and increase working capital loan to $100,000

Problem Statement

The financial institution faces a major decision whether to loan money to Kismet Inc. for additions to fixed assets ($43,300) as well as increasing their working capital loan from $5,000 to $100,000.

Problems

Kismet is a young company/ owners are young and inexperienced.

Financial position/ need for a loan.

Industry competitors.

Problem Analysis

Kismet Inc. is a young company that started on February 1st, 2001 and has only been operating for six months. The the small partnership was ignited by the president: Stuart Triers and the treasurer: Aaron Anticic. Trier who had minimal business experience by operating a painting contacting and Anticic who has only managed a small restaurant and an resort in Europe. Together they hired a man named Mitch Chiba who had little or no working experience since he graduation of university. Together this business team upholds a lot of inexperience and lack work experience and this alone may and will affect the teams judgment when it comes to making critical decision making.

ALthough the short period of Kismet Inc. success has shown sales increase it will still be difficult for a bank institution to grant the young organization a loan, because it is really hard to analyze their financial history. A bank institution must decide the probability of Kismet Inc. making their sales projections and determining whether they would get paid back. The bank wont be able to make the appropriate judgement and wont know the risk level of a establishment of an loan.