Surecut Essay

955 WordsJul 15, 20134 Pages
surecut 1.Describe SureCut Shears in terms of its market, competitive and operating characteristics? How risky is SureCut in operating and competitive terms? SureCut Shears, Inc., which manufactures a complete line of household scissors and industrial shears, had made profits in every year since 1958 – sales and profits grew steadily over the years. While it has met competition from overseas companies, whose products were cheaper due to, among other things, possibly lower labor costs abroad, has been able to generate annual profits and issue dividends because possibly of its brand name or existing sales channels. On competitive terms, SureCut is not risky at all – it has been on the market for more than three decades, and based on its historical results, it is expected to continue its financial growth, notwithstanding competition from companies providing for cheaper scissors and shears. On operating terms, SureCut may be risky in terms of liquidity. While the company usually had sufficient capital to cover permanent requirements, i.e., it remains profitable during a 12-year period, the company usually obtains short term borrowings from banks during July to December of each year, when additional working capital was needed to support a seasonal sales peak. 2.What are the characteristics of SureCut’s need for external finance? What is the timing, magnitude and duration of the needs? How certain are you of your forecasts? Can the need for finance be avoided by deferring expenditures? How attractive is the firm at the time of the financing need? The company usually had sufficient capital to cover permanent requirements – it grew over the years, and remained profitable during each 12-month period. The company, however, usually obtains short term borrowings from banks during July to December of each year, when additional working capital was needed to support

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