Case 2
Case study
BIGGER ISN’T ALWAYS BETTTER!
Andres Pires opened his automobile parts store, Quickly Auto Parts, 5 yrs ago, in a mid-sized city located in southern Mindanao. Having worked for an automobile dealership, first as a technician, and later as the parts department manager, for over 15 yrs, Andres had learned the many nuances of the fiercely competitive automobile servicing business. He had developed many contracts with dealers and service technicians, which came in really handy when establishing his own retail store. Business had picked up significantly well over the years, and as a result, Andres had more than doubled his store size and Andres was confident that his sales would keep growing or above recent levels.
However, Andres had used up most of his available funds in expanding the business and was well aware that future growth would have to be funded with external sources of funds. What was worrying Andres was the fact that over the past two years, the stores net income figures had been negative and his cash flow situations and gotten pretty weak( see table 1 and 2). He figured that he had better take a good look at his firm’s financial situation and improve it, if possible, before his suppliers found out. He knew fully well that being shut out by suppliers would be disastrous!
Andres knowledge of finance and accounting, not unlike many small businessmen’s , was very limited. He had often entertained the thought of taking some d financial management courses, but could never find the time. One day, a his weekly bridge session, he happened to mention his problem to tom Andrews, his long time friend and bridge partner. Tom had often given him good advice in the past and Andres was desperate for a solution.
Andres hired an MBA student who had an undergraduate degree, in accountancy and was interested in concentrating in finance. When Juan started his internship, Andres explained exactly what his concerns were. “I’m going to have to raised funds for
BIGGER ISN’T ALWAYS BETTTER!
Andres Pires opened his automobile parts store, Quickly Auto Parts, 5 yrs ago, in a mid-sized city located in southern Mindanao. Having worked for an automobile dealership, first as a technician, and later as the parts department manager, for over 15 yrs, Andres had learned the many nuances of the fiercely competitive automobile servicing business. He had developed many contracts with dealers and service technicians, which came in really handy when establishing his own retail store. Business had picked up significantly well over the years, and as a result, Andres had more than doubled his store size and Andres was confident that his sales would keep growing or above recent levels.
However, Andres had used up most of his available funds in expanding the business and was well aware that future growth would have to be funded with external sources of funds. What was worrying Andres was the fact that over the past two years, the stores net income figures had been negative and his cash flow situations and gotten pretty weak( see table 1 and 2). He figured that he had better take a good look at his firm’s financial situation and improve it, if possible, before his suppliers found out. He knew fully well that being shut out by suppliers would be disastrous!
Andres knowledge of finance and accounting, not unlike many small businessmen’s , was very limited. He had often entertained the thought of taking some d financial management courses, but could never find the time. One day, a his weekly bridge session, he happened to mention his problem to tom Andrews, his long time friend and bridge partner. Tom had often given him good advice in the past and Andres was desperate for a solution.
Andres hired an MBA student who had an undergraduate degree, in accountancy and was interested in concentrating in finance. When Juan started his internship, Andres explained exactly what his concerns were. “I’m going to have to raised funds for