Ajax

The following excerpts from a response to credit Inquiries sent out by Mr. Clark. . . “The firm inquestion appears to have a good market for its products and always appear busy…Their availablecapital has always been small resulting in slow payments to their suppliers… From time to timewe have had to ship orders on a COD basis”.By these statements and the analysis below (Exhibit 1), my suggestion to Mr. Roberts to put themoney to where his company is the most inefficient with a negative impact on cash and thebottom line in general, account payable cycle. The figures below (just for the year 2012) and thebenchmarks (approximation) suggests that the Company is within the average 10% to 30% salesgrowth. The Account receivables is within rage and more importantly the profit margins arehovering around the average for the industry average range of 25-35% at 37% for Ajax.All things being equal, Mr. Roberts should pay attention on improving accounts payable cycle

Roberts plan is to use the loan to pay of the current loan with Webster Bank, and use the remaining $61k as working capital. However, aFer analyzing Ajax ±nancials and calculaTng key raTos to compare with the industry average (see below), I don’t think Mr.Clark should approve the loan. While Ajax has a pro±table product, the business is lacking proper management ²rom a ±nancial perspecTve. I believe that i² the proper policies are put in place along with a steady and strong management o² the ±nancial, Ajax should be able to meet its objecTves and increase its working capital without the need to make any loans. Sales Growth – I² we look at the percent change in sales over the years, Ajax salesgrowth was 6% in 2001, 43% in 2002, 16% in 1999 and 8% in 1998 – as we can see it has been below the industry average o² 10%-30% twice in 1998 and 2002 and only in 2002 was above average at 43%. We can say that even with the issueAjax is ²acing on cash management, it conTnue to show growth year over year.