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Peak Roofing Case

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by

Raj M

on 30 January 2013

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Transcript of Peak Roofing Case

Peak Roofing Company Group 6:

Rheez Pilaspilas
Penny Sangha
Raj Mangat
Sue He
Chuan Wei
Emily Liu Products and Services:
Sells everything related to roofing

95%: distribution of roofing supplies
5%: manufacture of specialty roofing supplies

Target Market:
Smaller, independent contractors (family owned businesses)
“do-it-your-selfers” Marcel semi-retired in 1994

Day-to-day decisions are made by:
Pierre, president and day-to-day running of the stores
Marie, manager of administration and Accounts Receivables / Accounts Payables
Manages 95% of A/R at less than 90 days A family business; founded in 1973 by Marcel Lemieux

One of the largest independent roofing materials suppliers in the Greater Montreal region Agenda Case Overview Case Overview Case Overview Case Overview
Critical Issues
Porter’s Five Forces
SWOT Analysis
5 Cs’ of Credit
Financial Analysis
Alternatives
Decision Criteria
Recommendation
Questions/Comments Case Overview Double digit growth consistently over the past 15 years Future Growth Strategy Critical issues Should the Peak Roofing Company be granted the $6 million loan? Group 6:

Rheez Pilaspilas
Penny Sangha
Raj Mangat
Sue He
Chuan Wei
Emily Liu Peak Roofing Company Expand sales and distribution system to the United States
Expand roofing supplies sales business into the South Shore Montreal market

Need:
$2 million
To open another location 5 C'S OF CREDIT Character Marcel Lemieux
Reliable
Knowledgeable
Conservative
Personal contact with many of its largest and most loyal clients Character Pierre Lemieux
Confident
Bold

Marie Betrand
Eager
Hard working CAPACITY CAPACITY Collateral Buildings and land (60-65%)


Margins for Inventory (50%) and A/R (75%) Capital Marcel Lemieux has significant stake in the business

Loaned his son & daughter “necessary” money to purchase 50% of firm’s equity Conditions Must notify the bank before making further expansions & seek approval

Loan granted will be used for the new store only RATIO ANALYSIS Decision Criteria Plan to manage risk

Sufficient cash in-flow Alternatives Accept the new customer and grant the loan


Don’t grant the loan Recommendation Accept the new client and grant the loan based on the following stipulations:

Liquidity Ratio at B grade (minimum)
No additional debt
No sale of PPE & Land Recommendation $ 6 million total amount

Mortgage : $2 million at 6.625%

Operating Loan: $2 million at 6.5% QUESTIONS? Porter’s 5 Forces SWOT ANALYSIS Collateral
Full transcript