edf40wrjww2CF_PaperMaster:Desc
PROBLEM STATEMENT
Mr. Richard McKinnon, President of Miami Car Care has requested a loan from our organization (Business Development Bank of Canada) for the sum of one million dollars to finance expansion of his company. Our organization must determine whether credit should be granted to Miami Car Care by evaluating the inherent risks of foreclosure against the potential rewards if successful. Furthermore, if credit is granted, will the company require an extended line of credit to meet the obligations of a second location?
COMPANY OVERVIEW
In the spring of 2004, Mr. McKinnon, a longtime car enthusiast with an extensive business management and technology career, undertook the risks of becoming an entrepreneur. He established Miami Car Care in an attempt to fulfill his dreams of a family run car care business. The company enlisted the assistance of his wife, daughter and son into the business venture. The philosophy of the company is to meet or exceed customer expectations and provide premium products for use in their car wash facilities. The company, while still in its infancy, already wishes to expand to another geographic area of London, Ontario. This expansion will enable the business to capitalize on its short-term reputation and its premium facilities, in an area that they consider remains an underrepresented market. We are therefore forced to base our decision on one year's financial statement and his limited entrepreneurial experience.
INDUSTRY ANALYSIS
The North American Car Wash Industry has annual revenues of 272.7 million dollars with 2040 businesses in operation. The profitability is highly dependent on weather conditions, location and the quality of th ...