Background of this fictitious company:

* HHG, Inc. is about 10 years old.

* It designs, produces and sells costume jewelry. Its office, plant, and warehouse are near Providence, R.I .where most of the costume jewelry industry used to be located.

* It sells through distributors only. There are 10 distributors with one representing 60% of its gross sales.

* The retail price per piece varies from $100 to $500. The distributors get 50% of that and HHG, Inc. receives from the distributors revenue per unit of $50.00 to $250.00

1. Identify at least 5 major company business/financial problems and what data/information you used to identify same.

2. What do you think were the causes of such problems?

3. What short-range steps do you feel should be taken to ameliorate the problems?

4. What longer-range strategies do you recommend to significantly improve the financial performance of HHG, Inc.?

			Heather's Heavenly Gems					# 1
		Income Statement for December 31, 2015
							Common
							Size
							Statement
Gross Sales				$10,000
Less Discounts, Returns and Allowances				1,000
Net Sales					9,000		100.0%
Less Cost of Goods Sold (C/G)					3,000		33.3%
Gross Margin (or Gross Profit)					6,000		66.7%
Less Operating Expenses:
Sales, Marketing, and Distribution				2,000		22.2%
General and Administrative (G&A)				1,000		11.1%
Development (R&D)				2,200		24.4%
Less Total Operating Expenses					5,200		57.8%
Earnings before Interest and Taxes (EBIT)					800		8.9%
Less Interest Expense					400		4.4%
Profits before Taxes (PBT)					400		4.4%
Less Taxes @ 40%					160		1.8%
Profits after Tax (PAT)					$ 240		2.7%

						Heather's Heavenly Gems							# 2
					Balance Sheet for December 31, 2015
		ASSETS			$10,000					LIABILITIES		$10,000
Cash					500	5.0%		Trade Payables				5,000	50.0%
Receivables			3,000	30.0%				Taxes Payable				2,500	25.0%
Less Bad Debts			2,000	20.0%
Net Receivables					1,000	10.0%
Inventory					6,500	65.0%
Total Current Assets					8,000	80.0%		Total Current Liabilities				7,500	75.0%
Fixed Assets			10,000	100.0%				Long Term Debt				1,500	15.0%
Less Accum Depreciation			8,500	85.0%
Net Fixed Assets					1,500	15.0%		Stockholders' Equity :
								Common Stock		900	9.0%
Goodwill								Retained Earnings		100	1.0%
Trademarks			500	5.0%
Total Intangibles					500	5.0%		Total Stockholders' Equity				1,000	10.0%
Total Assets					$10,000	100.0%		Total Liabilities and Equity				$ 10,000	100.0%