Hi, can anyone help me to answer case 14: THOMPSON TOYS INC on cash budgeting. Or maybe any of the tutor here have the answer can u please share... Thanks..

o. nasea bn your ananysns, it you were a loan officer, how would you rec ommend that GPF structure its needed financing? 7. If you gare using the computer model, evaluate the impact of your rec- ommendation by changing the assumption regarding debt and equity fi nancing. What impact does your recommendation have on the company's return and risk characteristics? (Hint: Evaluate the impact on the finan- cial ratios.) CASE 14 Thompson Toys, Inc. Part1: Cash Budgeting and Financial Planning {EThompson Toys, Inc. (TT), is a wholesale distributor of toys, games, and {hobby goods and supplies. In 20x0, the company currently employees 26 '. pe0ple-7 in the marketing department; 9 in the warehouse and distribu- A tion department; 7 in accounting, finance, and human resources; and 3 {corporate officers. The company was founded in 1966 by Bob Thompson. In 1975, he " raised equity capital by issuing stock to family members and close associ- ,- ates. Subsequently,- avery thin market for the stock had developed. When Thompson retired in 1989, his son john became president of the closely held business with assets of 5357292 and net income of $61,404- The .com .' pany continued to grow, posting a better than 18 percent compound rate i'pf return under john- Thompson's guidance. A $500,000 bank term loan : was secured in 1991 to purchase a competitor; this loan was completely repaid in three years. In 1995, a $300,000 bank line of credit was secured 'tofinance the company's seasonal needs and a $250,000 term loan was secured for a computerized inventory system. The company's success is il- lustrated by the 20x0 financial statement provided in Exhibits 1 and 2. Both Bob and John Thompson had always relied on cash budget fore- . ' casts-that is, they used the statement to know where cash balances were ...:expected to be-but neither one had fully understood accrued' accounting fjincome statements and balance sheets. 67 ..m-a- .. - a--.,. wflmmm .-...,.. M ...-......- " Who *- .... ...-... .--.-.......-,7 wt fl." ' in "N. .c. mm... -(..-,.-.I.-.--.....e..................... "...... . . an .. wt ., "Ron sw", . . , J, , ..e-,e.,,..,..,.',. . "mu." y- . r 4r . . e. ..-...m... .t . s-q- rum-"..n <.7. .. . a. a .- ... gr ...... mm. irc-... very t .t afarhczxnttattw ..mu en. tu u h i>