325.4.1: Enhancing Organizational Communication – The graduate communicates effectively within an organizational setting.
326.1.5: Budgets – The graduate utilizes budgets and a variety of pro-forma statements for planning and control purposes including analyzing cash flows to assure adequacy of funds for capitalizing on business opportunities.
326.2.1: Capital Budgeting – The graduate uses capital budgeting to analyze business opportunities and applies risk mitigation concepts to capital budgeting situations.
326.2.2: Financial Goals – The graduate considers risk and the potential value added for all stakeholders when balancing risk and return and the tradeoffs between competing financial goals.
326.2.3: Capital Structure – The graduate considers the costs and the advantages and disadvantages of equity financing versus debt alternatives while designing the capital structure that balances risk and reward.
326.2.4: Working Capital – The graduate demonstrates the use of working capital management and working capital acquisition concepts to balance the related trade-off between profitability and risk.
326.4.4: Risk Evaluation and Mitigation – The graduate evaluates internal and external risks and recommends risk mitigation strategies and techniques to an organization.

Introduction:

In this task; prepare a presentation for the chief financial officer (CFO) to present to a bank vice president. The bank vice president will decide if the bank will approve a $1,000,000 funding request for the European expansion of Custom Snowboards Inc. currently under consideration. The bank has not confirmed it is willing to make the loan and is waiting for your presentation to either confirm or deny the loan. Assume the bank is willing to make the $1,000,000 loan with a 5-year term at 6.75% interest, but with a $300,000 compensating balance. The bank will make its assessment of the risk associated with the loan after your presentation. You will prepare another presentation to present directly to the chief executive officer (CEO) of Custom Snowboards Inc. The presentation will include a recommendation on how to proceed with the expansion plans.

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A. Create a presentation for the chief financial officer in which you do the following:

1. Summarize the key points of the company’s financial picture that could impact the bank officer’s decision.

2. Explain how any risks pointed out by the bank loan officer could be mitigated by the company.

3. Analyze the ratios that will indicate the ability to repay the principal and interest on the 5-year loan.

B. Create a presentation with your recommendations on the European expansion of Custom Snowboards Inc. for the chief executive officer (CEO) by doing the following:

1. Present a historical analysis of past performance.

a. Analyze what the historical analysis indicates about future performance.

2. Discuss how the current operations can be improved through better cost controls.

3. Custom Snowboards, Inc. has the opportunity to enter the European market by building a production plant, merging with European SnowFun, Inc., or acquiring European SnowFun, Inc. outright. Licensing the European SnowFun, Inc. technology is also a possibility for the U.S. product and the European line if expansion occurs. After analyzing the data provided select the best option then discuss the internal and external risks that Custom Snowboards, Inc. will face with the plan you chose.

a. Recommend strategies and techniques that can be used to mitigate those risks.

4. Based on your selection in #3 discuss the potential returns that must be presented to and considered by the CEO and company board in your presentation.

5. Summarize expansion options for the new operations in Europe.