Harper and Reiman LLC Financial Statements Case study Analysis Time roman font size 12 Please follow the instruction provided in the attachment. this wil

Harper and Reiman LLC Financial Statements Case study Analysis Time roman font size 12

Please follow the instruction provided in the attachment.

this will involve problem solving work and writing.

Layout would need to look like:

Introduction summary

copy all question number 1

then talk about Liquidity

then talk about profitability

then talk about risk from debt financing

then talk about rate of return of the business to owners

lastly add a conclusion: Given the firm’s recent financial result, as shown above, evaluate the company’s financial situation as it relates to the owners’ concern. What advice would you give to Harper and Reiman? CASE ANALYSIS
Please note there is a large quantity of opinions and source material on case studies
and case analysis. A simple internet search will get you started if you are interested.
The paragraphs which follow provide guidelines for accomplishing case study analyses.
Please take note of paragraph (2). This paragraph presents the format and content for
case analysis submittals in this course.
(1) Guidelines-1: Prepare for accomplishing the analysis
a. Allow time to have a good understanding of the case. Read carefully, take
notes. It may take several readings to fully grasp the issues of the case.
b. First do a quick reading. Look for
-principles in the case
-the situation or issues; what are the strategies
-timelines for decisions if any
-what decisions are required
c. Look over exhibits and data
d. Look at the case sub-titles
e. Review the case questions
f. Fully understand the assignment requirements
Case analyses follow this generic format. Note that not all cases require the completion
of each of these steps. The steps utilized will be dictated by the particular
case/company situation. The steps are: (1) a summary of the relevant situation in the
case, (2) Internal analysis of the firm, including current corporate and business-level
strategies, (3) external analysis, (4) SWOT analysis culminating in identification of a
problem (which may be in fact an opportunity), (5) proposal of 2 or more alternative
courses of action that will help solve the problem or exploit the opportunity, (6)
evaluation of all alternatives, (7) recommendation of best alternative and (8)
implementation issues that need to be considered.
(2) Requirements: Case Analysis Requirements for this Course – this addresses
primarily the format and minimum content for case analysis submittals.
Page 1 of 3
a. Name and Title – Make sure you include a title page. Place your name and the
course number, the date, and the title of the case on this page.
b. Summary Statement of the Case – Include first a summary statement of the
case. Identify the company, the principals, the situations. You may include in
this some of the pertinent findings from (3), which follows.
c. Address the case questions – First, write the question then write the response
to that question. Repeat this process for each question to be addressed in the
case.
(3) Guidelines-2: Steps for accomplishing the Case Analysis. These are general
statements and may not apply in every case. Depending on the company and the
specific situations, some of these may not be possible.
a. Investigate and Analyze the Company’s History and Growth. Investigate the
company’s founding, critical incidents, structure, and growth.
b. Identify Strengths and Weaknesses within the Company. Make a list of the
value creation functions of the company. Which ones are stronger; which ones
are weaker.
c. Gather information on the external environment. Identify opportunities and
threats. Especially note competition, bargaining power of the company, and the
threat of substitute products.
d. Analyze your Findings. Based on the information gathered, construct an
evaluation. Compare strengths and weaknesses with opportunities and threats.
Is the company in a strong competitive position and can it continue at its current
pace successfully.
e. Identify Corporate Level Strategy. Identify and evaluate the company’s
mission, goals, and corporate strategy. Analyze the company’s line of business,
its subsidiaries, and acquisitions. Debate the pros and cons of the company
strategy.
f. Identify Business Level Strategy. (If the company has a single business, the
corporate and business level strategy are the same.) Identify and analyze
competitive strategy, marketing strategy, costs, and general focus for each
business.
g. Analyze Implementations. Identify and analyze the structure and control
systems that the company is using to implement its business strategies. Consider
organizational change, levels of hierarchy, employee rewards, conflicts, and
other issues important to the company.
Page 2 of 3
h. Make recommendations. Pull together all the information gathered to address
the questions of the case. Remember to be analytical and not descriptive. Allow
yourself enough time to properly write the case analysis.
(4) Summary of Tips and Best Practices
a. Prepare properly for the case analysis – see section (1)
b. Detailed reading of the case; identify the key issues, etc.
c. Allow enough time to properly research and write the case analysis
d. Apply the case analysis steps – see (3)
e. Write the case and put the analysis into the format required – see (2)
Page 3 of 3
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CASE
Harper & Reiman, LLC (continued)
10
Harper & Reiman, LLC
Understanding a Firm’s Financial Statements
Other assets
2012
TOTAL ASSETS
2013
11,500
Changes
$ 12,133,500
1,000
$ 13,717,000
(10,500)
$ 1,583,500
Debt (Liabilities) and Equity
Current liabilities:
Notes payable to bank
Accounts payable
Accrued expenses
Total current liabilities
Long-term debt
Total debt
Stockholders’ equity:
Common stock
Additional paid-in capital
Retained earnings
Total stockholders’ equity
TOTAL DEBT AND EQUITY
$ 1,100,000
1,931,000
920,500
$ 3,951,500
3,614,000
$ 7,565,500
$ 1,192,000
2,238,500
884,000
$ 4,314,500
4,257,000
$ 8,571,500
Harper & Reiman, LLC, is a consulting firm that caters to developed financial management software that centers on
nonprofit organizations. The company is headquartered liquidity analytics and enables nonprofits to shorten cash
in Dallas, Texas, and has recently expanded to include an conversion cycles and strengthen liquidity. They gradu-
office in Amarillo, Texas, Harper’s home town.
ally expanded into other services, including sustainable
The business was founded in 2000 by Brett Harper business solutions, infrastructure consulting, risk manage-
and Anna Reiman, who met in an entrepreneurship class ment, and innovation services.
in college and discovered that they shared a passion for The company has experienced significant growth, with
serving and developing the nonprofit sphere. Following sales approaching $29 million in 2013—far beyond any-
graduation, they both were employed by J.P. Morgan. thing the owners could have imagined. For one thing, the
They frequently worked together on common assign- company distinguished itself in the industry by designing a
ments. On a number of occasions, they worked with non- payment system that allows nonprofits to make payments
profit organizations whose innovative processes allowed for Harper & Reiman services in seasons when dona-
them to “do more with less.” The not-for-profits simply tions are the highest. However, it also required Harper &
were not able to throw a lot of cash at problems, as many Reiman to diversify its client base so that receivables are
large business organizations do, and had to think and act consistently being collected. Essentially, the company has
like entrepreneurs if they were to achieve their missions. applied the advice it gives to clients to itself.
Harper and Reiman soon came to believe that for-profit While the majority of consulting clients are located
businesses could learn from the really good nonprofits. near the two regional offices, the firm’s software has been
After eight years at JP Morgan, Harper and Reiman sold nationwide on a limited basis. Wanting to enter new
decided to start their own consulting firm, Harper & Rei- geographical markets, Harper and Reiman are consider-
man, LLC. At first, they limited their work to financial ing a marketing strategy to increase the firm’s national
advisory services, knowing that many nonprofits needed visibility. However, before beginning a major expansion,
help in managing their financial operations. The company they want to evaluate the firm’s financial health.
$ 92,000
307,500
(36,500)
$ 363,000
643,000
$ 1,006,000
$ 356,000
498,000
3,714,000
$ 4,568,000
$ 12,133,500
$ 391,500
649,000
4,105,000
$ 5,145,500
$ 13,717,000
$ 35,500
151,000
391,000
$ 577,500
$ 1,583,500
Income Statements for Years Ending 2012 and 2013
2012
2013
Net sales
Cost of goods sold
Gross profits
Selling and general and administrative expenses
Operating profits
Interest expense
Interest income
Profits before tax
Harper & Reiman, LLC
$ 27,069,000
(18,880,500)
8,188,500
(6,805,500)
$ 1,383,000
(481,500)
5,500
$ 907,000
(385,000)
$ 522,000
$ 28,911,500
(20,524,500)
$ 8,387,000
(6,953,000)
$ 1,434,000
(535,500)
10,000
$ 908,500
(377,000)
531,500
Balance Sheets for years ending 2012 and 2013
2012
2013
Changes
Income taxes
Assets
Net profits
Current assets:
2013
Cash
$
15,500
Accounts receivable
3,989,000
4,155,000
138,500
Inventory
Prepaid expenses and deposits
Other current assets
$ 218,500
4,428,000
4,678,000
144,000
105,500
$ 9,574,000
$ 203,000
439,000
523,000
5,500
Statement of Retained Earnings for years ending 2012 and 2013
2012
Beginning retained earnings
$ 3,298,000
522,000
Net profits
(106,000)
Dividends
$ 3,714,000
Ending retained earnings
$ 3,714,000
531,500
(140,500)
$ 4,105,000
105,500
(Continued)
Total current assets
$ 8,403,500
$1,170,500
Fixed assets:
Gross fixed assets
Accumulated depreciation
Net fixed assets
$ 7,541,000
(3,822,500)
3,718,500
$ 8,519,000
(4,377,000)
4,142,000
$ 978,000
(554,500)
423,500
663
Case 10 Harper & Reiman, LLC
662
Case 10 Harper & Reiman, LLC
Harper & Reiman, LLC (continued)
Statement of Cash Flows for years ending 2012 and 2013
2012
2013
$ 522,000
$ 531,500
554,500
564,500
$ 1,086,500
$ 1,086,000
$ (464,000)
$
(439,000)
(572,000)
(523,000)
68,500
307,500
(503,500)
(215,500)
(19,000)
(5,500)
(36,500)
87,500
$ 187,500
$
389,500
Operating activities:
Net profits
Depreciation
Profits before depreciation
Increase in accounts receivable
Payments for inventory:
Increase in inventory
Increase in accounts payable
Total payment for inventory
Increase in prepaid expenses
Increase (decrease) in accrued expenses
Cash flows from operations
Investing activities:
Increase in gross fixed assets
Decrease (increase) in other assets
Cash flows from investing activities
Financing activities:
Increase in notes payable
Increase (decrease) in long-term debt
Issued common stock
Cash dividends paid
Cash flows from financing activities
Net change in cash
Beginning cash
Ending cash
Industry norms:
Current ratio
$ (861,500)
$
(978,000)
10,500
$ (861,500)
$
(967,500)
$
625,000
$
92,000
(112,500)
643,000
77,500
186,500
(81,000)
(140,500)
$
781,000
$ 509,000
$ (165,000)
$
203,000
180,500
15,500
$ 15,500
$
218,500
2.2
Return on assets
12.6%
6.3%
Operating profit margin
Total asset turnover
2.00
Debt ratio
40.0%
Return on common equity
15.0%
Question
1. Harper and Reiman are interested in examining four
specific issues: liquidity, profitability, the risk occur-
ring from debt financing, and the rate of return the
business is providing to them as owners. They also
want to have a good sense of the sources and uses of
cash flows in the business. Given the firm’s recent
financial results, as shown above, evaluate the com-
pany’s financial situation as it relates to the owners
concerns. What advice would you give to Harper and
Reiman?
Source: This case was prepared by Lauren Houser, April 2013.
664
Case 10 Harper & Reiman, LLC

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