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What Is The Hampton Machine Tool Case

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What Is The Hampton Machine Tool Case
Hampton Machine Tool Case
Group 5: Laura Lafitte, Joe Loden, Chris Ingham, Keenen Leake, and Humberto Maldonado

Hampton Machine Tool Company was founded in 1915 and began supplying parts to military and automobile companies. Beginning in the 1960’s, heavy increases in defense spending prompted by the Vietnam War in conjunction with a blossoming automobile industry allowed Hampton Machine Tool Company to experience a period of high growth and increased profitability. By the mid-1970’s, defense spending was slashed at the conclusion of the conflict and there was a severe downturn in the automobile market resulting in a significant decline in sales for Hampton Machine Tool. In December of 1978, Hampton Machine Tool was approved for a $1 million loan to repurchase stock. The loan was to be repaid by September of 1979 with monthly interest payments at 1.5% of principle. Due to a backlog of unfilled orders summing to $16.5 million, Hampton Machine Tool was unable to repay the loan. …show more content…
Mr. Cowin of Hampton Machine Tool Company has incorporated the company’s financials in the loan request letter sent to the bank. Using this information we have prepared Hampton Machine Tool Company’s financial statements including a projected cash budget, pro forma income statement, and pro forma balance sheet. After conducting an analysis of theses financial statements, we do not believe Hampton Machine Tool Company would be able to repay $350,000 in the necessary time frame due to a lack of projected cash flow in the month of
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