Pending Legislation: Company is currently asking for an increase in their line of credit form 1.6 million to 2.2 million.
Seasonal and cyclical sales patterns:
- Retail sales were slowest during the winter months, particularly in January and February. Peak periods occurred in May and June, with highest sales in May.
- Retail sales were not adversely affected by economic swings.
- Industrial market remained strong during the period of May to November.
- A deepening recession worsened the firm's sales and receivables position, and company suffered three consecutive years of losses.
- Canadian Tire is the only mass merchandiser in Chicoutimi with two locations in the area.
- Hardware and building materials companies in Chicoutimi faced intense competition due to the numerous competitors in the area.
- Seven local hardware and building supply companies competed through intense price wars, especially on most traditional materials and big ticket items.
Social Trends (changes in market and in customer buying behaviour)
- By 1989 the economic climate also began to deteriorate.
- Father was well-respected client of the Crow Bank of Canada.
- Francois was 27 years, getting his MBA at Toronto.
- Very familiar with all aspects of the hardware industry, having worked in the family business in various positions for many years.
- Eager to devote all his attention to the firm's operations.
- The Lachapelles did not have similar equity to place in the business and the loan was renegotiated from 3.2 million to 1.6 million..
- Age of payables seem a little high. (93 days) -increasing
- Return on Equity ratio has jumped 9.0% - Making money back at 11.0%.
- Acid Test is very low - not very stable. High risk..
- Interest coverage is low, therefore there is a higher risk for lenders.- Going
...