John M. Case Company: Strategic Financial Plan for Acquisition

John M. Case Company I. Statement of the Problem The John M. Case Company was established in 1920 by Uriah Case and was the largest manufacturer of business calendars in the United States. The company was then handed off to John M. Case, and continued to prosper. John M. Case controlled a large amount of the market share in this industry along with an increasing number for sales. Then, John M. Case decided it was time to retire and sell the company. Anthony W. Johnson, an employer of John M. Case Company, was interested in this purchase.

After coming up with $500,000 within the management group, Johnson still faced a dilemma of raising $10 million without giving up control to outside investors. With this, Johnson needed to come up with a strategic financial plan in order to successfully obtain such a company. II. Statement of Facts and Assumptions With a large amount of the market share in favor of John M. Case Company, the business risk was relatively low for this industry. John M. Case owned 60-65% of the market share causing the risk to be substantially lower than other industries. Manufacturing for this company had many advantages.

As Case Company had a subsidiary in Puerto Rico, it allowed them to be tax exempt from U. S taxes. With these tax exemptions, it provided low income tax rates for Case Company. Case Company also did not have problems in regards to their customers. With 95% of their customers being loyal to their company by re-purchasing orders annually. Company finances were also a positive for John M. Case. The company did not need to part take in seasonal buying in approximately 10 years, but strategically kept $2 million lines of credit. By looking at the different components to John M.

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Case Company, the outlook for future endeavors seems to be profitable. III. Analysis By looking at the different components to John M. Case Company, the outlook for future endeavors seems to be profitable. Johnson’s decision to purchase this company would be a smart move financially. As the company has seen prosperous growth throughout its years, its part in the market seems to show low risk and high levels of profit. IV. Recommendation As the issue continues in coming up with the additional $10 million, Johnson should look into more resources to obtain the additional funding.

The financial state of this company is in top shape looking at the current ratio and inventory turnover in Exhibit 1 below. As the current ratio is well above 1, it secures the idea that John M. Case Company is able to pay back its short-term liabilities and assets. Having a confident number for their current ratio assures the company can handle financial issues that may come their way. With their loyal customers, low-cost manufacturing and large market share, the profits of John M. Case Company are endless. Exhibit 1 Current Ratio in 1984$8, 998/$1,266 = 7. 107 Inventory Turnover$9,740/$588 = 16. 565

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