Finance Case Study
Im studying for my Business class and dont understand how to answer this. Can you help me study?
For the Tire City Case you may work in groups to analyze the case, but I want you to submit written answers to the following items on your own.
1. What type of company is Tire City? Will it be financially healthy in 1995? How about in 1997? Why or why not?
2. How much money does Tire city really need to borrow from the bank. You will need to develop a two-year pro forma income statement, balance sheet and cash flow statement for Tire City to prove your answer. Obviously the cash flow Schedules will be the most important piece. Please include these pro forma statements in your work.
3. As a lender would you grant Tire City the loan amount in #2 above? Why or why not? Derive the key financial ratios, and the most important years you need to examine these ratios for, prior to making your decision. What debt service coverage you think you need to obtain? Can Tire City sustain your required DSC?
I have also posted some hints in the PDF file on how to tackle an HBS case for your benefit