Last four digits of student ID#:4981
Name of the business: Bodie Industrial Supply, Inc
Nature of the business: Retailer of equipment for the construction, utility and farming markets.
Bodie Industrial Supply, Inc is a full service distributor of top line, brand name, new and used certified machine tools, maintenance parts and related equipments for the construction, utility and farming markets. The demand for equipment is relatively cyclical, with Bodies having a slight increase in sales to farming markets in the summer. Bodie’s has seen a huge sales growth increase in 2003-2004 of 72% and 29% in 2004-2005. This is mostly due to an increase in net sales and keeping a constant level of costs of goods sold.
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Looking at the increase in debt ratio from .92 in 2004 to 1.12 in 2006 we notice that BIS has increased their risk leverage. From the debt to equity ratio we see that it is staying pretty much consistent in 2004 and 2006. However, in 2005, their ratio was at 25.31, this is primarily due to the fact that BIS expanded by purchasing land and building. Their times interest earned increased from a negative 1.08 to 2.72 in 2006 which confirms that Bodie’s has been improving its repayment in interest expense. If given the $200,000 loan and increasing interest expenses in 2007 and 2008, calculations show that the increase in times interest earned will continue to dramatically increase and will adversely affect profitability. Bodie’s has been increasing profitability for each of the three years. Their operating expenses have decreased from 33.9% in 2004 to 24.1% in 2006. Net profit margin grew from -6.1% in 2004 to 2.8% in 2006 due to the increase in net sales and maintaining cost of goods sold. Another indication of profitability is the change from a negative return on assets of -.032 in 2004 to a positive .055 in 2006. Overall, sales continue to increase and produce profitability for the company. BIS does not pay dividends because they have no shareholders. All income is