Haefren Baum has a good short-term operational outlook, but its long-term projection is negative because of its consistently negative sales growth output from The sluggish sales in the furniture industry can account for the Haefren baum case in inventory days.
During the early months ofthe German furniture market continued to display weaknesses even though the overall economy began to recover. The longer period that they are holding inventory is increasing their cost of goods sold. Their cash flow problems are evident when analyzing their account payable days.
Their account payable days have increased to 66 days. They carry a debt account for notes payables for employees. The positive cash flow from investments reflects the addition of the three new outlets.
Nevertheless, the timing of a legitimate recovery is unpredictable. The account payable ratio that ranges from In order for them to drive up net income they need to find a way to decrease their inventories.
The income statement clearly demonstrates that Haefren Baum has a cash flow problem as its period ending cash balances were in and in Funding needs increased due to the addition of 3 new outlet stores.
Total cash flow from operations is positive, however, they appear to be driven by depreciation. Even if they have to sell it at a discount, if they do not lose money on it, the lower revenue would be more beneficial. Why are they borrowing from employees. This decision added to the slowing down of their income and to the extension of their account receivable days.
They expanded at the wrong time, right when the economy went sour. Inventories and receivables are also driving down operating margin. They could potentially benefit from sending inventory from their retail store to the outlet sooner.
The credit term that Haefren Baum received allowed them to maintain their desired level of personal sales volume while the weak market demand for furniture threatened to over-extend Wiegandt retail credit position.
The retail industry also began introducing outlet stores in suburban areas, hoping to entice consumers back with low prices and wide selections.
It is taking them twice as long to repay their current liabilities. Their sales growth revenues cannot support the addition of the outlets. Although the number of outlets has grown to five times its size within a 2-year span, growth in sale volume remained stagnant.
Their negative net income net lossis not driving operations cash flow in a positive direction. Their quick ratio is increasing from year to year, but it is being driven by inventories.
Cash flows from operations are unhealthy and the total cash on hand has declined over the three years in question. Fixed asset turnover decreased for Haefren from It appears that Haefren might be experiencing problems with human resources as well. The slow down also forced Haefren Baum to extend more favorable credit terms to its customers because they wanted to keep their sale volume up as well.
Haefren inventory in stayed on the floor for around days before it was sold. Competition intensified as other European furniture retailers entered the German market and several larger domestic retailers announced heavy losses. They also need to handle their inventories and accounts receivable in order to avoid further cash flow problems.
Order now Perhaps, they should even consider increasing the down payment required to establish credit. More Essay Examples on Business Rubric However, the presence of high interest rates still threatens Wiegandt current business strategy.
The interest being paid on the current debt in was 3. Although they appear to going in the right direction, it is not a good sign for Haefren. They are also carrying a great deal of inventory which is consuming their cash.
This account reflects loans that have been made from the employees, or their relatives, to the company. Free Essay: Marketing analysis: Located in downtown Cologne Haefren Baum is a high end retailer, which recently expanded its operations by opening three.
Page 1 of 6 SAMPLING OF CASES RE STEVEN BAUM Case Index County/Court Order/Disposition Deutsche Bank v McRae. Haefren Baum’s business to business, distribution network with Wiegandt includes a 2% 10, net credit term, which is consistent with competitors in the industry.
Haefren Baum’s business to customer relation started to dwindle when consumer confidence and demand slipped due to negative percentage growth of real GDP in Haefren Baum GmbH Marketing analysis: Haefren Baun GmbH’s primary product is furniture.
The company became incorporated inand has been purchasing from the German manufacturing company Wiegandt since then.
According to the background case information, in consumer confidence was greatly diminished for the furniture. In the case of Haefren Baum, the company does not seem to be excelling financial. The company is funding itself through long-term debt and the deferment of payable and expense accounts.
Funding from the bank can be seen as the liability account Notes Payable (Bank) increases. Essay Cologne Haefren Baum Case Marketing analysis: Located in downtown Cologne Haefren Baum is a high end retailer, which recently expanded its operations by opening three retail outlet stores in nearby Rhineland suburban areas.Haefren baum case