Micro tiles ltd'

1
Micro tiles ltd.

• Analysis and Company Walkthrough

2
Agenda

• Introduction to Micro Tiles
• Case 1 Financial Analysis 2004 2008
• Case 2
• Cs of Credit
• Sources of Financing
• Case 3 Financial Analysis 2009 2011
• Conclusion

3
What is Micro Tiles?

• Founded by Bill Madden
• Was incorporated in 2001, moving from a hobby
  business to a full-time operating entity
• In 2008 Bills son Robert had joined the company
  to implement major changes
• Both Bill and Robert are considered honest and
  hardworking by their peers

4
Financial Statements Income(Revenues and
Profits)
5
Financial Statements Income(Costs and Expenses)
6
Financial StatementsBalance Sheet
7
Financial RatiosLiquidity Ratios
8
Financial RatiosLiquidity Ratios
9
Financial RatiosLiquidity Ratios (Cont.)
10
Financial Ratios Debt/Coverage Ratios
11
Financial RatiosAsset Management Ratios
12
Financial RatiosAsset-Management Ratios (Cont)
13
Financial RatiosProfitability Ratios
14
Financial RatiosProfitability Ratios (Cont)
15
Weighted Average Cost of Capital

• Stakeholders can expect 11.48 return on their
  investment
• Return on Invested Capital Ratio is 23.37
• The company is creating 11.89 cents of value for
  every dollar it invests into capital
• Investors should consider putting investments in
  the company.

16
6 Cs of Credit

• Character
• Collateral
• Capacity
• Capital
• Circumstances
• Coverage

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Character

• Bill Madden
• A man thought of in positive light
• Honest
• Dedicated
• A competent businessman
• 10 years of experience as an artist
• Lack of Managerial skills - filled by the hiring
  of Robert.

18
Collateral

• Accounts Receivable
• Inventory accounts

19
Capacity

• Weighted Cost of Capital - 11.48
• The company has capacity to facilitate its
  financial obligations
• Should the company not produce any extra income
  from the assets purchased, they should still be
  able to finance the new responsibilities.

20
Capital

• Increase in debt and equity ratio
• 2008 - 1.13 times
• 2009 - 2.02 times
• There is a large proportion of debt used
  compared to equity to finance the assets
• Increased usage of internally generated cash flow
  - less leveraged

21
Circumstance

• Trend in demand is high for higher quality
  products
• Memorabilia market is in a upward climb
• Size of the market
• Demand
• Substantial growth in sales revenue throughout
  2006 up to the present time
• Mark-up nearing 200 and a margin of 60
• Competition is considered slim
• Government involvement in this industry is minimal

22
Coverage

• The community has a strong view of Bill and
  Robert as competent business men.
• The company has acquired a strong position in a
  growing niche market
• The banks have deemed the company as a safe risk
  investment

23
Short-term financing

• Supplier-credit (Trade financing)
• Working Capital Loan (Line of credit Trade
  Credit)

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Intermediate/Long-term Financing

• Equity Financing
• Common Shares

25
Liquidity Ratios
26
Debt/Coverage Ratios
27
Asset-Management Ratios
28
Profitability Ratios
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Conclusion

• Micro Tiles is a safe investment decision
• Their placement in a Niche Market promotes
  security at this time
• Although several ratio values decreased from 2008
  to 2009 with the addition of the project, many of
  them significantly improved to values greater
  than they had been previously