Stirling Home Corporation

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CASE NO. 1: STIRLING HOMEX CORPORATION POINT OF VIEW: The Chief Financial Officer (CFO) of Stirling Homex Corporation (SHC) as he/she will be the one to be of best knowledge to analyze the financial statements of SHC. He/she will also have the authority to make decisions/recommendations and influence the CEO in making management decisions. CASE CONTEXT: In the late 1960’s the US Department of Housing and Urban Development (HUD) launched the Operation Breakthrough, a project that aimed to “revolutionize” the housing industry, which attracted various housing companies to seek for means to construction technology. One of which is the Stirling Homex Corporation (SHC), founded in 1967 which pioneered the concept of modular housing, making possible the construction of large number of houses at a fraction of a time for an average of $16,000 to $25,000 per house. From what started as a small Suburban Rochester project with housing 275 units in 1967, the company was able to expand through the development of system of jacks that gave way for SHC to supply a 2000-ft long train of modules to Mississippi. In 1971, the Company went public and sold Rochester housing (1/2 of which are bought by Homer investors) earning $1M sales of $10M for 1969. Stocks more than tripled for the February to March 1970 period ($16.50 to $51.75 a share). At the same year SHC also won a HUD contract for construction of 13-storey apartment in Memphis, had a tentative understanding with Mississipi Greater Gulf Coast Housing Development Corporation (MGGCHDC) to build a $100 M worth of modular housing, and also planned to diversify by leasing a 350 sq ft. plant in Gulf Port to be financed by industrial revenue funds to be approved by local voters. In 1971 SHC also revealed its plan to widen its target market by catering not only to public housing projects. It doubled its manufacturing facilities and created US Shelter Corporation, a subsidiary for construction and financing of its customers. As noted...
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