An analysis of the financial situation of baldwin bicycle company

Get Full Essay Get access to this section to get all help you need with your essay and educational issues. In the given case, Baldwin Bicycle Company is into the business of bicycle since 40 years which introducing the new product range of bicycles to its business. Whereas return on sales is computed by taking net income before interest and taxes to sales which states the efficiency of an entity on generating its profits.

To make an informed decision, the company should exam a blending of financial, marketing, and strategic implications of the Challenger deal. On the other hand, introduction of new products enable a company to grow and develop its business and sustainability in the market structure provided the new product range match as per the quality of the existing product.

To meet the increased annual production, Baldwin should invest at leastin working capital including such as inventories and accounts receivable. In accounting, the most important aspect for a company in the financial statement is assets, liabilities and inventory.

If the existing distributors also want the Challenger products, or the Challenger prices, Baldwin will face the risk of either eroding regular sales or losing existing distributors.

For purely profit maximization purpose, the deal is attractive. To avoid being fascinated merely by the short run profit, Baldwin would better first conduct a thorough demand forecast and then negotiate a better deal with Hi-Valu before accepting the offer. Marketing Risk Taking the Challenger offer, Baldwin may offend existing dealers and retailers because the company charges a lower margin from Hi-Valu.

Overhead cost incurred for the new range of products is partly variable and partly fixed which is based on bicycles. Assets and liabilities of an organization presents a financial position of a company at the end of the accounting year for the useful information for its users.

This is because the fixed cost allocation will spread fromunits tounits, which in turn would decrease the cost per unit as fixed cost for any production does not change Moorthy and Png, In that case, to meet the operational efficiency, the company has to either invest more capital in capacity or forgo the market upturn opportunity.

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On the introduction of new range of products, Baldwin would incur additional assets at related carrying cost which effects the financial position of the company for the year It is provided that the inflation escalation will take place after first year hence the prices are taken before the escalation adjustment.

In case of Baldwin Bicycle Company, there are certain costs to be recorded and reported as one time basis only. Apart from these costs, onetime costs also include loss on revenue due to inflation escalation price, which is reported by the company if the buyer provides such adjustments Dugar and Tripathi, For example, fixed overhead costs, onetime costs for a particular parts of products, registration costs etc.

The return on investment of the Challenger deal is Moreover, inventory is also an important aspect of a financial statement, which is reported on carrying cost, states the value of products remained unsold at the year end.

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The high Debt to Equity ratio of 1. Furthermore, the company is facing a high risk of insolvency in the future due to its highly leveraged financing.Hi-Valu wanted to purchase the bicycles from Baldwin at a lower prices compared from the wholesale prices of the same bikes sold in the usual markets Hi-Valu wanted the challenger bike to be somewhat different in appearance from Baldwin’s other bikes.

Baldwin Bicycle Company (BBC) is a midrange full-line bicycle manufacturing company with 40 years¶ experience BBC produced units for the next three years.

Distributed exclusively through independently-owned retailers and specialty bicycle shops. with an expected Baldwin Bicycle Company B ackground Background Company Analysis Established in the s, Baldwin Bicycle Company (BBC) was a manufacturer of upper mid-range bicycles.

Baldwin Bicycle Company - (HVS) has approached BBC to produce a 'house-brand' of bicycles for them preliminary financial analysis, Suzanne Leister must consider quantitative | PowerPoint PPT presentation "Baldwin Bicycles" is the property of its rightful owner.

Baldwin Bicycle Case MBA Case Study - Free download as PDF File .pdf) or read online for free.5/5(4). As per the given case study, in the strategic deal between Baldwin Bicycle Company and Hi-Value, there are some risks and rewards available to both Baldwin as well as Hi-Value.

In case of Baldwin, the company needs to sale the bicycles to Hi-Value at a lower price if it enters in to the deal/5(14K).

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An analysis of the financial situation of baldwin bicycle company
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