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Twin Peaks Building Supplies

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Submitted By rosyacuna
Words 3113
Pages 13
Rosy E. Acuna
ACCT. 500
October 20, 2013
BUSINESS CASE # 2
Twin Peaks Building Supplies
The business environment has dramatically changed in the last two decades. Competition has severely intensified. The instant access to information via computers, smart phones, tablets, etc. allow consumers to compare prices and purchase merchandise from anywhere in the world. In addition, we have witnessed a considerable growth in retail chain companies such as Home Depot, Wal-Mart, Costco, etc. These big chains command the power and the volume to offer low prices and a vast variety of products. Offering consumers not only low prices, but in many cases a one stop shop. The arrival of these big chain companies in many cases has been the demise of small privately own business that cannot compete in price, volume, and number of products offered. Furthermore, the recent recession has left consumers cautious about their spending. Twin Peaks Building Supplies is facing major financial problems, which have forced the owners to immediately take action and identify current major issues, contributing factors, and possible solutions.
Twin Peaks Building Supplies has operated under new management for nine months, of which only the first six were profitable. The owners must identify and address the major problems the company is facing and bring it to a profitable level. They need to evaluate the company’s financial worth. How much of the company’s purchase price consisted of goodwill? Goodwill, being an intangible asset, can be hard to measure and/or justify. Prior to the sale, the company had been in operation for 25 years at the same location in Lewisporte, Newfoundland & Labrador, Canada. The last two years Twin Peaks Building Supplies was already showing a small drop in profits. The reduction in profits could have been due to the company losing customers and therefore,

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