Caceres Semilla Case Study

CACERES SEMILLA S.A. de C.V. Case PROBLEM STATEMENT: After assessing the situation of Caceres Semilla S.A. de C.v., what should the company do in order to present financial information accurately making its payment obligations on time? OBJECTIVES: 1. To pay obligations on time. 2. To practice faithful representation in their financial information. AREAS TO CONSIDER: CACERES COMPANY • Limited Liability Company • Variable capital • Specialized in selling corn seed COMPANY’S FINANCING • Long Term mortgage Loan • Bank Loan SALES FORECAST • Average Collection Period is 1 month after sales • Purchases are to be paid with a lag of 2 months FINANCIAL STANDING • Increase In Accounts Receivable, inventories, Fixed Assets EXECUTIVE SUMMARY: Prudencio Jimenez, chief administrative and financial officer of Caceres Semilla S.A. de C.V., was concerned about forthcoming negotiations with the company’s bank, Banco Popular de Santa Fe. To renew a lending arrangement,he has to present a financial plan to the bank for fiscal year 2000. In July 2008, during the past fiscal year, the company had overdrown its account and Jimenez had received a reprimand from the general manager of the bank, Carlos Fernandez Cristobal, with whom the company has done business for a number ofyears. The problem arose because of inefficient bookkeeping at the company, together with a big account delaying payment beyond a promised date. As the fiscal year just ended was February 28, 1999, negotiations over lending arrangements take place in March.

TIME CONTEXT •1888- the company was founded by Jaime Caceres in Esperanza, Argentina •1924- the old plant was constructed w/ add-ons every year •1960s- began to contract for and sell alfalfa seed •1970s- some equity capital was raised from extended family members •1980s- sale grew rapidly in keeping w/ an aggressive marketing effort •1987- contract growers accounted for only 47% of seed purchases •1993- the company completely rebuilt its plant •1998,March- company was out of bank debt •1998,August- the company has overdrawn its account. Senior Jimenez sent in a loan note of slightly above 5 million pesos •1999,March- Prudencio Jimenez was required by the bank to prepare pro forma statements for fiscal year 2000 SWOT ANALYSIS: Strengths (S) • Good relationship among customers and staff of the company • Limited liability company Weakness (W) • Inefficient bookkeeping at the company • Big account delaying payment beyond a promised date Opportunities (O) • The company has a great chance of expanding their business. • Competitors might not have high quality products specializing in corn seeds like the Caseres Threats (T) • Competitors in the business • Unstable price of the product • Taxes in products • Unstable weather conditions

Caceres Semilla S.A. de C.V. Pro forma Income Statements FY2000

FY1999 Net sales Cost of goods sold Gross profit Depreciation Procession & storing exp. Selling & delivery exp. General & admin. exp. Profits before taxes Income taxes Profits after taxes

April

May

June

July

Aug.

20,538 12,198 8,340

1,680 1,008 672

1,260 756 504

1,260 756 504

1,680 1,008 672

1,680 1,008 672

2,400 1,440 960

378

31

31

31

32

32

32

2,454 2,598 1,818 1,092 378 714

150 216 151 124 96 28

150 162 158 3

204 162 185 (78)

288 216 200 (64)

396 312 202 18

3

(78)

204 216 199 21 110 (89)

(64)

18

Dividends

Sep.

Mar.

120

Oct.

Nov.

120

Dec.

3,300 1,980 1,320

3,000 1,800 1,200

1,320 792 528

2,100 1,260 840

3,000 1,800 1,200

2,520 1,512 1,008

25,200 15,120 10,080

FY2000 Common Size 100% 60% 40%

32 360 432 201 295 110 185

33 156 390 192 429

33 252 174 175 (106)

34 300 390 171 305

35 240 330 164 239

429

(106)

34 360 276 174 (4) 110 (114)

305

239

390 3,060 3,276 2,172 1,182 426 756

2% 12% 13% 9% 5% 2% 3%

240

1%

120

Jan.

Feb.

FY2000

Caceres Semilla S.A. de C.V. Pro forma Balance Sheets for FY2000

FY1999 Cash Accounts receivable Inventories Total Current Assets

Mar.

April

May

June

July

Aug.

138 2,106 3,408

200 1,626 5,877

200 1,206 6,888

200 1,206 7,434

200 1,626 7,728

200 1,626 7,557

200 2,346 6,954

5,652

7,703

8,294

8,840

9,554

9,383

9,500

4,404 654 10,710

4,385 654 12,742

4,366 654 13,314

4,479 654 13,973

4,459 660 14,673

4,439 660 14,482

4,419 670 14,589

Accounts payable Accruals Current portion, LTD Bank loan Total Current Liabilities

2,202 1,176 120

4,713 1,059 120

4,794 954 120

2,619 1,059 120

2,154 1,164 120

1,68 9 1,326 120

1,224 1,723 120

900

510

1,103

3,910

5,239

5,415

5,572

4,398

6,402

6,971

7,708

8,677

8,550

8,639

Long-term debt Common stock Paid-in capital Retained earnings Total Liabilities. & Equity

1,440 192 534 4,146

1,440 192 534 4,174

1,440 192 534 4,177

1,440 192 534 4,099

1,380 192 534 3,890

1,380 192 534 3,826

1,380 192 534 3,844

10,710

12,742

13,314

13,973

14,673

14,482

14,589

Net fixed assets Other assets Total Assets

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

200 3,246 5,811 9,257

200 2,946 4,848 7,994

200 1,266 4,893 6,359

200 2,046 4,935 7,181

200 2,946 4,437 7,583

200 2,466 4,692 7,358

4,399 670 14,326

4,498 680 13,172

4,597 680 11,636

4,695 680 12,556

4,793 680 13,056

4,770 680 12,808

759 1,885 120 5,427 8,191

387 1,408 120 4,693 6,608

852 1,176 120 3,030 5,178

1,689 1,583 120 3,000 6,392

2,154 1,688 120 2,625 6,587

2,619 1,455 120 1,906 6,100

1,380 192 534 4,029 14,326

1,380 192 534 4,458 13,172

1,380 192 534 4,352 11,636

1,320 192 534 4,118 12,556

1,320 192 534 4,423 13,056

1,320 192 534 4,662 12,808

FY2000

200 2,466 4,692 7,358 0 4,770 680 12,808 0 2,619 1,455 120 1,906 6,100 0 1,320 192 534 4,662 12,808

FY2000 Common Size 2% 19% 37% 57% 37% 5% 100% 20% 11% 1% 15% 48% 10% 1% 4% 36% 100%

Stragetic Financial Management FIN 9

CASE STUDY

Caceres Semilla S.A. de C.V.

Submitted by: Joyce Anne M. Renacido BSBA Fin IV-6

Submitted to: Mr. Seballe