1 . What accounts for Deutsche Brauerei’s (DB) rapid growth in recent times? What tactical choices were made? The Ukraine account expand rapidly inside the recent years. The strategic is just expanding, more focus on the sale/volume, certainly not on how to convert the so that it will money.
It can be understood the fact that local suppliers need a lot of policy support from DEUTSCHE BAHN, because that they just commence, still at the start of capitalization period. The current credit rating policy applies for the starting phase, but long-term it needs being adapted (e. g annual bounce for the pay on time accounts).
Meanwhile because of fast expansion, even more investments around the Assets in Ukraine is necessary. The monetary plan includes a 7 , 000, 000 euro investment in new plant and equipment for the Ukrainian operations in 2001, and then a six. 8 million euro expense in 2002 for a new Ukranian warehouse and syndication center. Which can be reasonable, nevertheless need more details plan/business circumstance before decide. I would say, half of the volume should be financed by Ukraine team on its own, if they are capable of turn the account receivable to money. 2 .
What is the credit policy pertaining to DB intended for distributors in the Ukraine? What makes it different from other sales? Is it appropriate (examine the business designs in both instances). The credit insurance plan for Ukranian distributors coming from 2 percent 10, net 40 to 2 percent 10, net 80 (clients could take a 2% discount if repayment was made within just 10 days from the invoice, or else payment was due fully within eighty days). The credit plan for Ukranian distributors differed because Ukrainian entrepreneurs, who have are driven to develop but with no support from the bank such as Germany.
The credit coverage for the Ukranian distributors is applicable, that may support the distributor to expand, purchase new equipment, and required more time than usual to pay. Also is a great investment for DB to build up the partnership with the distributor and in the mean time invest for the futurn. But on the other hand, long payment turn cost bad cash flow. In Ex1, the account receivable increase a lot, which 3. Why does this profitable organization need elevating amounts of personal debt? If the company wants to increase, they need cash.
It seems that DB is profitable, but because of the big consideration receivable, which cause actually cash tie-up. In order to still continue to keep expanding, DIE BAHN have to elevating amount of debt pertaining to investing. 4. Something about payouts: The quarterly dividend proposed is 698, 000 euro, an amount equal to 25% of the projected 2001 dividends (2, 793 k). However , this dividend increase is based on forecasted earnings, and lots of factors affect whether these earnings. Better to reserve an integral part of money till end from the year.. What should Greta do with respect to: the suggested raise for Pinchuk, the quarterly dividend and the economic plan for 2001? Regarding the credit policy to get Ukranian vendors, Oleg argues that this procedure is profitable for the company. Actually, Ex1 in the bottom case shows accounts receivables in the Ukraine increased thirty percent from 1999 to 2150, and is projected to increase for 2 years (50% then 30% based on the previous year). Possessing a large amount of cash tied up in receivables is risky.
My idea will be brief the payment to forty days, spend in 10 days will have even bigger discount 3-4%, meanwhile, if the account will pay all the invoice on time (40 days), can get annul jump (tbd). To get the purchase, I will be even more careful, Even though the data should the growth of sale and assent is not hand in hand. Although because of the excessive debt/equity rate, I will be even more careful around the investment, prevent to have way too high debt. We could try to interact with one or two local disctributors (e. g. Kiev, Odessa) to have JOINT VENTURE project.
Regarding the dividends, I will maybe go for 60% of earning, which mean 15% of the projected annual dividends for the quarterly pay. Just in case, if the actual data is not as good while predicted info, we still have enough funds to run the business enterprise. 6. Several observation of Ex4. Earnings: low go back Leverage: danger (high debt) Asset usage: receiveables development rate substantial longer repayment. Difference among sale growth and property growth. Deal Growth is significantly higher than assent growth, have to consider expenditure. Liquidity: short-run financial dedication. Quick ratio is too excessive.
