Dynashears case

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[Dynashears case study] | |

EXECUTIVE SUMMARY Dynashears, Inc. is a scissors and shears manufacturing company that has recorded stable sales and growth rates since 1958. On April 1991 Dynashears, unable to pay liquidate a $1 million loan, acquired from the Wellington National Bank in the previous months to complete a plant modernization and cover their fall funding requirements, the firm requested an extension. Evidence supports Dynashear’s president’s claim that the company 's decreased liquidity and increased absorption of cash is due to the decrease in sales caused by a recession. As of March 1991, the average inventory turnover ratio variance is 28 days over the pro-forma projections due to a 16% decline in sales
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* The Cash Conversion Cycle has fallen by over 40 days off the projected CCC for the past three months, due mainly to a large increase in inventory turnover and days sales outstanding.
Financial Leverage Ratios (reference ex. C) * The debt-to-assets ratio is 36% for the pro-forma, which indicates a fairly low amount of financial leverage. When viewing the actuals for the same time period, the ratio stays constant at 37% on average. This is