Haefren Baum Business Analysis Essay

785 Words Jan 28th, 2015 4 Pages
Business Analysis
Last Four digits of student ID: 1491
Name of Business: Haefren Baum
Nature of Business: High-end furniture retailer
Marketing Analysis:
Haefren Baum is a furniture retailer, established in 1965 and was incorporated in 1970. Haefren Baum receives its merchandise from Wiegandt GmbH Cologne, a nearby manufacturer, whose business relationship equals over twenty-seven years. The company has one retail location in Cologne, Germany and three recently constructed outlet stores in nearby suburban areas. Demand and product sales are influenced by consumer discretionary income. In 1993, an economic bust in the German economy resulted in a major dip in GDP. Demand for the industry is cyclical and is influenced by the overall
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Inventory days show and increase from 103 in 1993 to 129 in 1995. Such a dramatic change shows that the firm is getting less efficient in managing its inventory, which could be a result of increasing competition throughout the industry. The average collection period has also shown significant increases, going from 53 days in 1993 to 77 days in 1994 and 1995. It seems that Haefren Baum has had difficulty obtaining capital due from customers. The overall operations of the company seem to be lacking proper efficiency due to the increase in inventory days and average collection period. The negative values for net income and results from the previous sentence conclude why the firm has seen a decrease and negative values for ROE and ROA.
Financial Analysis:
Haefren Baum’s strategy of selling product at lower prices seems to be ineffective in generating profits. The firm’s operating activities can be misleading, although it seems that it’s improving, the net figures are still negative. The increase in investing activities is explained by the recent construction of outlets, and is shown in the buildings and equipment account. The recent buyout from the other investors is shown in the payables from stockholders. Financing activities seem to be the source of funding for the firm.
Haefren Baum’s…

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