...Hampton Machine Tool Company, a profitable machine tool manufacturer, is trying to renew a 1 million dollar loan due September 30, 1979 until December 31, 1979. Through examination of the case, it is clear that Hampton will be unable to repay the loan; however, at first glance Hampton seems to be a profitable company that would be able to pain the loan on time and would not need more bank financing. Unfortunately, that is not the case. Hampton, by making a stock repurchase for which the loan was taken, forced a major cash expenditure onto the company a year prior- costing Hampton almost a 3 million dollar loss forcing Hampton to push back the date on the loan. Since a whole year went by with less cash on hand, it was nearly impossible for Hampton to be able to pay its loan on time. For example, in the period between November 1978 and August 1979, stock repurchase represented 58% of total expenditures for that period, while inventory purchases represented 42% of total expenditures. Furthermore, Hampton needs more bank financing ($350,00) because they had not been in contact with new equipment since the recession hit; it is important to the success of a company to be up to date on the newest equipment, especially dealing such important equipment. Moreover, Hampton needs more bank financing because of the vast amount of backorders and lack of current cash. Hampton claims the request is vital because it will improve the operational efficiency of the company, but cannot afford the...
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...HAMPTON MACHINE TOOL COMPANY On September 14, 2007, Jerry Eckwood, vice president of the Wellington National Bank was considering a loan request from a customer also located in Wellington, New Zealand. The company, Hampton Machine Tool Company, had requested renewal of an existing $1 million loan originally to be repaid September 30, 2007. In addition to the renewal of the existing loan, Hampton was asking for an additional load of $350,000 for planned equipment purchases in October. Under the terms of the company’s request, both loans, totaling $1.35 million would be repayable at the end of 2007. Since its establishment in 1915, Hampton Machine Tool Company has successfully weathered the server cyclical fluctuations that characterize the machine tool manufacturing business. In the most recent cycle Hampton had experience record production and profitability during the past decade – primarily due to export sales to Australia. While the economy in Australia continues to boom, the increasing value of the New Zealand dollar was significantly eroding the firm’s ability to export. Hampton’s conservative financial policies had contributed to its survival and success in the volatile capital goods industry. The company had traditionally maintained a strong working capital position as a buffer against economic uncertainty. As a result, the company had no debt on its balance sheet during the 10 years prior to December of 2006. In a meeting in early December 2006, Benjamin...
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...On September 12, 1979, Hampton Machine Tool Company (HMTC) requested from St. Louis National Bank a renewal to their loan of $1,000,000 due to be repaid on September 30, 1979 and also to be given an additional loan of $350,000 for new equipment purchases in October 1979. Both loans were to be repaid on December 31, 1979. Hampton M.T. Company wrote a letter to the St. Louis National Bank stating the reasons for the extension of the loan and the need of the additional loan, and giving the current and the predicted future financial position of the company. In order to decide whether to approve the loan extension and the additional new loan, it is most wise to examine the financial position of the company for the following months to come and calculate the forecasted Income Statement and Cash Flow Analysis to find out if the company will have the required cash flows to repay their loan and interest on time. It is important, however, to first examine why HMTC was unable to repay its initial loan. Hampton Machine Tool Company was unable to repay its loan on time due to several factors. One of such factors is the fact that the stock repurchase, for which the loan was initially requested, was a major cash disbursement of $3 million. In the period between November 1978 and August 1979, stock repurchase represented 58% of total expenditures for that period, while inventory purchases represented 42% of total expenditures. They also had a difficult time repaying because of the steep decline...
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...Cases in Finance September 26, 2012 Dr. Thomas McCue Case 1: Hampton Machine Tools Evan Cvejkus Hampton Machine Tools is a company that specializes in the production and manufacturing of machine tools. The company has been in existence since 1915 and weathered all economic and internal struggles where most of their competitors met defeat. In order to purchase new equipment, Hampton requires a new loan of $350,000 and also wants to renew their current loan of $1,000,000 that will soon expire. In this case, we must decide whether or not the bank should give Hampton what it needs to succeed. The bank should renew the loan to Hampton Machine Tools as well as giving them the new loan for equipment purchase. The reason for lag in loan payments is due to the fact that Hampton had purchased a larger amount of raw materials than normal in July and August. Also, there was a small halt in production when the company was awaiting a component for one of the electronic control mechanisms. As stated in the case, they had seven machines totaling $1,320,000 completed with the exception of the control mechanism. This was a onetime hiccup by the supplier and Hampton suffered because of it. Hampton is a very transparent company. They offer up any and all financial statements that they have without even being asked. Benjamin Cowins, who is the president of Hampton, is an honest and trusted man. He is known throughout the community for his upstanding character and honesty within the business...
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...Hampton Case Study Study Case: Hampton Machine Tool Background. Hampton Machine Tool Company, a machine tool manufacturer, was founded in 1915. Hampton's customers are military aircraft and automobile manufacturers in the St. Louis area. Machine Tool Company felt the boom in the 1960`s with record setting profits in the mid- to late- 1960`s. The company slowed down in the 1970`s economic recession caused by Vietnam War and the oil embargo. Hampton stabilized by the late 1970`s and now has a “strong working capital position”. The company also didn`t have a debt during 10 years until December 1978. 1. Why can`t a profitable company like Hampton repay its Bank Loan on time and why does it need more bank financing? The excising $1 million loan was due September 30, 1979, but Mr. Cowins requested to renew it until the end of 1979. The main cause why Hampton can`t repay its Bank Loan on time is that the company made a stock repurchase, for which loan was taken. That was major cash expenditure for the company of $3 million ($1million of loan+ $2 million of excess cash) in December 1978; this was a main reason why company had a delay in repaying of the loan. The president of the company, Mr. Cowins wishes to borrow an additional $350,000 “for planned equipment purchases in October”, they didn`t buy or renew an equipment since the economic recession. He also mentioned this loan in total $1,350,000 will be repaid at the end of December 1979. 2. What major developments...
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...Study Case: Hampton Machine Tool Background. Hampton Machine Tool Company, a machine tool manufacturer, was founded in 1915. Hampton's customers are military aircraft and automobile manufacturers in the St. Louis area. Machine Tool Company felt the boom in the 1960`s with record setting profits in the mid- to late- 1960`s. The company slowed down in the 1970`s economic recession caused by Vietnam War and the oil embargo. Hampton stabilized by the late 1970`s and now has a “strong working capital position”. The company also didn`t have a debt during 10 years until December 1978. 1. Why can`t a profitable company like Hampton repay its Bank Loan on time and why does it need more bank financing? The excising $1 million loan was due September 30, 1979, but Mr. Cowins requested to renew it until the end of 1979. The main cause why Hampton can`t repay its Bank Loan on time is that the company made a stock repurchase, for which loan was taken. That was major cash expenditure for the company of $3 million ($1million of loan+ $2 million of excess cash) in December 1978; this was a main reason why company had a delay in repaying of the loan. The president of the company, Mr. Cowins wishes to borrow an additional $350,000 “for planned equipment purchases in October”, they didn`t buy or renew an equipment since the economic recession. He also mentioned this loan in total $1,350,000 will be repaid at the end of December 1979. 2. What...
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...Student ID#: 285 Firm: Hampton Machine Tool Company Nature of business: Machine Tool Manufacturing Overview Hampton Machine Tool Company was founded in 1915 and experienced record production and profitability throughout the years despite hard economic times for the machine manufacturing business. Sales declined throughout the mid 1970’s from the post Vietnam War demand, the declining automobile industry in St. Louis, and the gas embargo of the early 1970’s. Hampton did eventually recover due to an increase in military sales, the automobile industry rising, an overall improvement in the economy. Hampton is looking to take out a line of credit of $1,000,000 and an additional loan of $350,000 to purchase equipment, and an extend payment an additional three months to December 1979. Suppliers have hampered Hampton’s sales with late deliveries of machine parts. Because of this, Hampton is unable to pay its loan on time, which is due in September. Marketing Hampton Machine has bolstered its sales but is, unfortunately, not able to keep up with demand. This can be attributed once again to supply chain problems. The company currently has unfilled orders of $16,500,000 as of August 31. This accounts for 90% of its forecasted sales and the company is in desperate need to fill these orders by December so as to avoid disappointing its customers or sending a signal to the market that the company has severe management problems. Operations This company could possibly have severe...
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...Problems Facing Hampton • Hampton seeks to renew its current $I million note payable by 3 months, whilst securing an additional $350,000 in loans payable in 3 months. • Some issues faced by Hampton as it seeks the new loan and renews the current loan o Monthly interest rate of 1½ % on the Principal and additional $350,000 (if secured) and ability to repay loan with these interest payment commitments o Old machinery requiring upgrade to effectively meet capacity production. o Limited free cash flow to enable Hampton to fulfill business relevant activities, vital to the company’s success. • In relating and identifying symptoms and problems in this case, a key point noted from studying the case is that Hampton’s lack of idle cash to service its soon due loan payments is a true problem whilst its current inventory procurement practices as well as collection and revenue recognition practices may be symptoms of a similar problem reoccurring in the future, even if this loan is granted. Analysis of the Case • Assumption: Hampton is a resilient machine tool manufacturer which owns majority of the market share in its industry compared to competitors, currently operates in a recovering to thriving economy and also enjoys the business of pretty stable, trustworthy clients who are mainly in the automobile and defense industry in the St. Louis area. Judging my financial statement numbers, Hampton sales numbers look to be at healthy ranges as well. Company currently has limited...
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...Case: Hampton Machine Tool Company Assignment Questions Why can’t a profitable firm like Hampton repay its loan on time and why does it need more bank financing? What major developments between November 1978 and August 1979 contributed to this situation? The main reason why the company cannot repay its loan is because the company bought back 75,000 of shares at a cost of $3m. ($1m from the loan, $2m of cash) The company have also poorly forecasted sales from January to August ($11.9) with actual sales amounting to $8.7m. The company wants to borrow more money because it wants to buy new machinery at a cost of $350k and this is due to no machinery being replaced because of the economic downturn. The company purchased $420k worth of raw materials, which it will use by the end of the year. There was a substantial backlog of orders amounting to $16.5m on 31st August. There was a missing piece of electronic equipment to finish some machines valued at $1,320,000, which was due to arrive and then the orders can be finished. The company needs to stay cash positive on a daily basis in order to finance its operations and business expansion. Based on the information in the case, prepare a projected cash budget for the four months September through December 1979, a projected income statement for the same period, and a pro forma balance sheet as of December 31, 1979. See attached excel spreadsheet below. Review the results of your forecast. Do the cash budgets and pro forma financial...
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...Strayer University Marketing Management Professor Caitlyn Worner 6/1/14 7 Cities Do It Yourself Auto Repair The concept of 7 Cities Do It Yourself Garage did not derive from the passion of an individual repairing their own automobiles, it derived from finding a money saving solution to small auto repairs. Many people do not change their own oil, which is a very inexpensive preventive maintenance cost. Once you get the feel for doing your own oil changes, it will lead to you learning more about vehicle repairs and the amount of money saved in the process. This knowledge will come in handy especially during difficult economic down times, like the economy in 2008. As you learn more about at home car repairs, some required tools and equipment are not available for use in the driveway or garage. Researching a few backyard mechanics you will find the same problems. In addition, many people that rent homes and apartments are not allowed to work on automobiles on the premise, of the rental property; in the city of Norfolk it is illegal and by owner discretion in others. Roderick Williams has been a vendor at a local flea market for over 10 years and through his consumer connections, he was often asked does he know of someone that can fix this or repair that. Another vendor sells stereo equipment, but there is no one to install the equipment, especially on rainy days or inclement weather. This has the potential to be a business. There is a need and want for a facility...
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...Hampton Machine Tool Company (HMTC) is a machine tool manufacturing business whichstarted in 1915 and has been a stable company since its establishment. The company’srevenues rely heavily on military aircraft and automobile manufacturers within the St. Louisvicinity.During 1960’s until end of 1970’s, HMTC experienced highs and lows which were mainly due toincreases and decreases in production. This is influenced by the Vietnam war, economicconditions, expansion of export market and demise of competitors. Though adversecircumstances happened, HMTC has successfully survived these problems. This can beattributed to the company’s conservative financial policies.In December 1978, Benjamin Cowins, President of HMTC, requested a 1M USD loan to St.Louis National Bank to purchase stocks of several dissident shareholders. The interest rate for the loan was 1.5% to be paid monthly and the principal of the loan is to be paid on September 1979. Mr. Jerry Eckwood, Vice President of St. Louis National Bank allowed the loan requestbecause of three reasons: 1) HMTC’s submission of projected sales and forecasted financialstatements; 2) HMTC’s credibility as depositor in St. Louis Bank and 3) Mr. Cowins’ credibility inthe business community. However, in September 1979, Mr. Eckwood received a letter fromHMTC requesting to extend repayment of the loan to December 1979 and a further loan requestof 350,000USD for equipment purchases. Point of View and Problem Definition The point of view to be taken...
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...online trading system. Remington Peckinpaw has several different projects going on simultaneously in addition the internet and real estate investments are proving to have increasing profits. The increasing business has also attracted newer tech-savvy competitors with a host of new tools that has driven RPM management into confusion on how to manage projects to help compete against the new competition. | | Generic Benchmarking—The purpose of generic benchmarking is to identify potential solutions to the problem statements defined in Task A. You will do this by looking at how companies in other industries have dealt with similar issues. | Topic A: Data Reliability | General Electric is a company that operates in many facets. “GE is an advanced technology, services and finance company taking on the world’s toughest challenges. Dedicated to innovation in energy, health, transportation and infrastructure, GE operates in more than 100 countries and employs about 300,000 people world-wide” (General Electric Company, 2011, p. 1). Because the company focuses its time and resources in various areas, data reliability in project management is imperative. Each major department within the company has a leadership or development program to help employees gain hands-on experience with the company’s strategic business initiatives (General Electric...
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...Association. Today, about 1.9 million are Anytime Fitness members--a huge piece of the pie that's getting bigger every year. And it's safe to say that the 24-hour gym's clients, employees and franchisees are among the most enthusiastic people in the fitness industry. That's because the roughly 2,500 anytime clubs focus on people and culture. The company carefully selects its employees and treats them well, committed to the idea that a workplace should develop and challenge, not be stagnant or boring. Clients, meanwhile, appreciate the convenience of 24-hour accessibility to the small gyms--typically 2,500 to 5,000 square feet--whose staff and personal trainers take an interest and encourage them to push themselves. 2 Hampton Hotels Consider Hampton the U.S. ambassador of the hotel business. The company, which counts more than 1,900 units worldwide, has become the hallmark of American friendliness, cleanliness and convenience in the value-price hotel sector, offering free Wi-Fi, hot breakfast and an audacious money-back guarantee. During the recession, when business travelers traded down and vacationers were looking for strong value, Hampton seized the opportunity to draw them in. And many of those customers never left. But most exciting is...
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...M A R C H 2 014 Are you ready for the resource revolution? Stefan Heck and Matt Rogers Meeting increasing global demand requires dramatically improving resource productivity. Yet technological advances mean companies have an extraordinary opportunity not only to meet that challenge but to spark the next industrial revolution as well. Most cars spend more than 95 percent of their time sitting in garages or parking lots. When in use, the average occupancy per vehicle is well below two people, even though most cars have five seats. Roads are likewise extremely inefficient. Freeways can operate at peak throughput (around 2,000 cars a lane per hour) only when they are less than 10 percent covered by cars. Add more, and congestion lowers speeds and reduces throughput. Most roads reach anything like peak usage only once a day and typically in only one direction. For a visualization of these dynamics, see Exhibit 1. The story is similar for utilities. Just 20 to 40 percent of the transmission and distribution capacity in the United States is in use at a given time, and only about 40 percent of the capacity of power plants. The heat-rate efficiency of the average coal-fired power plant has not significantly improved in more than 50 years—an extreme version of conditions in many industries over the past century. Automotive fuel-efficiency improvement, for example, has consistently lagged behind economy-wide productivity growth. Underutilization and chronic inefficiency cannot...
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...HAMPTON UNIVERSITY SCHOOL OF BUSINESS Course Syllabus - FALL 2011 ECON 201-ALL SECTIONS PRINCIPLES OF ECONOMICS (MACRO) SEC | CRN | DAYS | TIME | CLASSROOM | INSTRUCTOR | 201-HR | 21507 | TR | 12:30-1:45PM | ST-321 | Sarki, A | 201-02 | 21509 | MWF | 9:00-9:50AM | BU-122 | Ferdnance, T | 201-03 | 21512 | TR | 11:00-12:15PM | BU-101 | Toney, S | 201-05 | 21513 | TR | 9:30-10:45AM | ST-336 | Sarki, A | 201-07 | 21514 | TR | 2:00-3:15PM | BU-101 | Toney, S | 201-09 | 21516 | MWF | 1:00-1:50PM | BU-122 | Ferdnance, T | PROFESSORS OFFICES OFFICE HOURS PHONE Dr. Ayuba J. Sarki Science & Tech (301C) TBA (757) 727-5868 Dr. Tyrone Ferdnance Buckman (107B) TBA (757) 727-5134 Dr. Susanne Toney Buckman (214C) TBA (757) 727-5760 REQUIRED TEXTS: Case, Karl E., Fair, Ray C., & Oster, Sharon M; Principles of ECONOMICS 10th Edition, Pearson/Prentice-Hall, 2012 ISBN-10: 0132552914; ISBN-13: 9780132552912 0132744856 OR Case, Karl E., Fair, Ray C., & Oster, Sharon M; Principles of Macroeconomics 10th Edition, Pearson/Prentice-Hall, 2012 ISBN-10: 0131391402; ISBN-13: 978-0131391406 AND MyEconLab (Required) (Note that all the required materials can be purchased from Hampton University Virtual Bookstore). CATALOG DESCRIPTION: A first course on modern market economies. Emphasizes the determination of national income, fluctuations, and...
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