Q1. Visually depict in a clear manner on a monthly timeline Aug. 2012 – Sept. 2013 the key financial events in the case. Show ow your timeline. (2 ptsevents pertaining to JAS’ actual or forecasted financial statement above your timeline, and events pertaining to loans and CAPEX bel)
Q0. As of June 2013, who are the two key decision makers in the case? What business decision is each faced with that good FSAV could help improve the quality of? (1 pt)
Q1. Visually depict in a clear manner on a monthly timeline Aug. 2012 – Sept. 2013 the key financial events in the case. Show ow your timeline. (2 ptsevents pertaining to JAS’ actual or forecasted financial statement above your timeline, and events pertaining to loans and CAPEX bel)
Your monthly timeline might have this structure (hint):
Q2. Prepare monthly statements of cash flow for Sept. 2012 – May 2013, and for the nine-month period Sept. 2012 – May 2013. Calculate monthly PELL ratios for Sept. 2012 – May 2013, annualizing where appropriate. Calculate an Altman Z-Score at 5/30/13. (In doing so, if something in the official Z-score formula is not there in Jackson’s financials or in the case, use a proxy of some kind, briefly defending your proxy). Explain how and why the calculations asked for in this question help explain why a profitable company like JAS can nevertheless be in financial distress. (5 pts)
Q3. Prepare monthly income statements, balance sheets and statements of cash flow for the last four months of fiscal 2013 under the assumption that Edwards is able to persuade James to roll over the existing debt, and grant the new loan too. Assume also that Edwards taps the new loan at the end of July 2013. In creating the statements of cash flow, use the indirect method. Separately, prepare monthly cash budgets simply listing cash receipts versus cash disbursements for the same period. Do the statements of cash flow and the cash budgets provide the same information? Why or why not? (6 pts)
Q4. Is Edwards correct in believing that JAS “did not have enough cash to repay its outstanding term loan to MSB by 6/30/13” [case p.2]? How much cash does Edwards’ predict that JAS will have at 6/30/13? Support your answer with clear, numerical evidence. (1 pt)
Q5. Is Edwards correct in being “highly confident that JAS would be able to repay both loans in full by 9/30/13” [case p.3]? How much cash do Edwards’ forecasts predict that JAS will have at 9/30/13? Support your answer with clear, numerical evidence and state any assumptions you make. (1 pt)
Q6. Do you think MSB should extend the maturity of the existing loan? Why or why not? Should MSB approve the CAPEX loan? With regard to each loan, if made by MSB to JAS, what terms and conditions should MSB impose on JAS and why? (2 pts)
Q7. Write down two questions that come to your mind as being important to have answers to vis-à-vis credit risk when you stop and think critically and skeptically of the situation and the people involved in this case. Succinctly indicate why having the answer to each question is important, and to whom. (2 pts)
