Management of Working Capital Case Study

In: Business and Management

Submitted By married122007
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Pages 4
Management of Working Capital Case Study: George’s Trains
BUS650: Managerial Finance
Stanley Atkinson
Khrista Richards
May 4, 2015

In this assignment I will be looking at the business that George started. He is coming to us for financial advice on his working capital practices. I will describe his working capital practices, including his methods of capital budgeting analysis techniques. Also I will analyze the potential pitfalls in his capital budgeting practices that George should be aware of. Then I will develop a simple statement of cash flows for George’s Trains using any information gleaned from the video. I will also look at what areas of improvement that I recommend.
George started a model trains business with his sons. It started off as a hobby for him and grew from there into a business that does minor repairs for customers and hobby shops. George had no capital to invest in the business since he has worked for another company for so long. He only had a good relationship with his bank and was able to purchase the business from someone else and buy additional inventory. The bank found that they needed to make a capital investment in George’s Trains. The building for the shop was owned by someone who wanted to terminate the lease but George was able to buy the building for himself. He did not want to lose his customers that he had acquired while at this shop. To get this loan from the bank, George needed to make sure he was watching his spending in order to maintain the loan. ” A small business person today can find not only someone willing to lend, but a lender who at once is efficient, knowledgeable, generous, supportive, protective, patient, accessible, instructive, reasonably priced, and an active small business advocate.” (Mamis, 1996)
When George found out that the main product, Lionel Trains dropped, he needed to stock new product lines in…...

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