Case ID: 187038
Solution ID: 1029
Words: 1471
Price $ 45

Hanson Ski Products Case Solution

Case Solution

Hanson Ski makes brilliant ski gear in Colorado. Hanson works in an emphatically developing top of the line section of the business sector, and is among the ten biggest firms when measured by incomes. The way of the business is very occasional in nature. Orders for ski hardware are typically assumed control summer season (March to July), though shipments occur from ahead of schedule fall till December. The organization fabricates the hardware consistently and as a rule conveys a lot of stock amid off-season periods. Additionally, the deals are made using a loan and the credit terms are in accordance with the business tradition of upto three months. In this manner, the organization conveys a high measure of current resources amid the period going from September to November. Naturally, the organization needs to fund this working capital through some type of financing.

Excel Calculations

Hanson Ski Products - Yearly Balance Sheets

Yearly and Projected

Questions Covered

  1. Using the information in the balance sheet for March 31, 1986 (Exhibit 2), and the   fiscal year 1987 budgets (Exhibits 3 and 4), prepare a projected balance sheet for Hanson Ski Products for March 31, 1987. (To do this, you will need to estimate   the size of the commercial bank loan—“Notes-bank”—on that date.) Does your   balance sheet tell you whether or not the plans on which the budgets are based are feasible?
  2. Project the size of the commercial bank loan at the end of each quarter of FY 1987. Can Hanson stay within the commercial banks’ line of credit of $4.2 million? Will the company have sufficient collateral?
  3. Prepare quarterly balance sheets for Hanson Ski Products for June 30, 1986;   September 30, 1986; and December 31, 1986. What do the four balance sheets you   have prepared tell you about the financial structure and strength of Hanson Ski   Products?

Denny Hanson was particularly concerned that the stockholder loans be paid off in November1986 when they were due, and he asked Dave Snyder, treasurer, to prepare a cash budget by months for the third quarter of FY 1987 (Exhibit 5). Do you see any problems in paying off the loans on time?What could Hanson do to be sure the loans can be paid?