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Bill Thurmond Pig Farm

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Submitted By wangdan
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Case 3
“Bill Thurmond Pig Farm” After reviewing the study, we feel Bill and Walt Thurmond cannot sustain their business as a family pig farm. Before a detailed analytical examination of the case, we want to review the current conditions surrounding the family farm. The first negative element the farm faces is a consistent decrease in pig sales from 1995 to 1998. In these 4 years, the farm experiences a 90.23% decline in total pig sales. Increased competition from corporate pig farms have taken market share and will ultimately bring the market price of the meat down. In addition, environmental requirements are expected to increase expenses in the future. The farm has no free cash flow available for any market uncertainties or expenses as well. In contrast, the pig farm has some positive catalysts. From 1995 to 1998, total expenses have decreased 71.22% benefiting the farm with less overall overhead. Also, the average weight of the pigs in lbs. has increased 6.48% in the four years. The pig farm has assets in 5,000 pigs ready for market and land in which they can sell. The land has timber which could be profitable if Bill Thurmond wants to sell before the holiday season. Here is a chart of the financial data we created based on the trends of the business:

The chart shows the farm has done a great job in their cost cutting and expense portion of their business. Total expenses have decreased greatly in the four years. In contrast, the revenue side of their business has a negative trend to the downside. Each year, total revenues decrease greatly which is very concerning from a financial standpoint. As a general target, we wanted to calculate the number of pigs the farm would need to sell in order to breakeven. We took the current price in November of 1998 of 18.8 cents per pound minus transportation costs (5 cents) and maintenance costs (3 cents) to calculate

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