More Vino Spring 2024-2

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School

Washington State University *

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100

Subject

Economics

Date

Feb 20, 2024

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docx

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Uploaded by UltraAtomOctopus42

Case Analysis More Vino There are 2 parts to this pre-work. Part 1: Case Analysis Template Step 1: The Facts Summarize the key information from the case and the current situation. WHO is the decision maker? Christian and David Stone, two brothers. WHAT is the business decision we are trying to make? What are some of the underlying issues? WHY has this a decision that needs to be made? How do we know this? What led to the current situation? WHEN does the business decision need to be made? Is it urgent? Why?

Step 2: In-Depth Analysis - Questions related to the case: Use your analysis of the current situation to identify the relevant criteria that should be considered in deciding among the alternatives/options related to the key decision. To help you identify the relevant criteria/factors that should be considered, think about the following questions ( you do NOT have to answer these questions, just think about them to help you think of criteria/factors for Step 3 ): 1. What business decision are we trying to make? 2. Consider: What factors should be considered in deciding among the alternatives? 3. Consider: What are the constraints / considerations for the alternatives? (Things you have to manage – things you have to take into account when making decision) 4. What data are provided in the case (use Statement of Earnings - Exhibit 2, balance sheets - Exhibit 4, and financial ratios - Exhibit 5) and how might they help you assess the situation? Use your analysis of the current situation based on the above questions to identify the relevant criteria in Step 3: Step 3. Relevant Criteria Use your analysis of the current situation to identify at least 5 relevant criteria – 4 of which are financial criteria - that should be considered in deciding among alternatives related to the key decision. For “Meaning/Measurement”, use what you know from More Vino’s financial statements and ratios about the criteria you chose. CRITERIA MEANING/MEASUREMENT WHY SELECTED? Return on equity Net sales COGS Net Income (Loss) Quick Ratio

Part 2: 5C Analysis Review the More Vino case and the 5Cs (character, capacity, capital, conditions, collateral) that are explained in the “Introduction to Finance” video. Imagine you are Arthur Greenway and you are trying to decide whether to lend More Vino more money. Using information from the case, conduct a 5C analysis by assessing each of the “C”s below for More Vino based on data from the case. Then, describe whether you would lend more money to More Vino or not based on your analysis. More Vino Character Christian aspired to be an entrepreneur and has graduated university with honors degree in business administration. David also acquired a degree through university; however, his degree was in economics. Capacity The business had loans to pay off, however the estimated growth and considerably high retail market will accommodate for the rising costs their company needs. Capital Greenway funded over TT$1.5 million, and split 2/3 controlling ownership with Moore. The Stone brothers then invested their own money to take ownership of the remaining 1/3 of the company. Conditions There are few retail companies that specialize exclusively in imported wine and other related products. The current retail market in their region for their wine is estimated to TT$48 million, and continued growth expected within the next 5 years. Collateral Rented building near fine restaurants, with a large garden area that was renovated into an outdoor patio.

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