/11CASE 1
Financial Analysis and Forecasting

Garden State Container Corporation

Garden State Container corporation manufactures boxes and other containers primarily for farm products. More than 85 percent of the company’s sales come from the northeastern part of the United States, especially Pennsylvania, New Jersey, New York, and Maryland, although the company’s patented egg cartons are distributed throughout the United States. Jim Jackson, the founder and president, recently received a call from Martha Menendez, vice president of Atlantic First National Bank. Menendez told him that a negative report had been generated by the bank’s computerized analysis system; the report showed that Garden State’s financial position was bad
As he started to reflect on what could be done to correct the problems, it suddenly to reflect on what could be done to correct the problems, it the bank imagined. Jim had recently signed a firm contract for a plant expansion that would require an additional $12,750,000 of capital during the first quarter of 2004 as a result of the expansion. In his view, once the new production facility went on line, the company would be able to increase output in several segments of the shipping container market. It might have been possible to cut back on the expansion plans and to retrench, but because of the signed construction contracts and the cancellation charges that would be imposed if the plans were canceled, Jim correctly regards the $12,750,000 of new capital as being essential for Garden State’s very survival.

Questions

1. Complete the 2003 columns of Table 3 through 5. If you are using the Spreadsheet model, use it to complete the tables. Be sure you understand all the numbers, as it would be most embarrassing (and harmful to you career) if you were asked how you put a particular number, and you could not give a meaningful response.

2. Based on the information in the case and on the results of your calculations in Question 1, prepare a list of Garden State’s strengths and weaknesses. In essence, you should look at the common-size statements and