Project 4: Finance for Managers Start Here

As a senior analyst at Maryland Creative Solutions (MCS), you have continued to prove your value after helping Choice Hotels make strategic decisions by analyzing their financial reports. Frank Marinara and Elisa Izuki, continually happy with your work, have decided to transfer you to the finance team. Youre excited to continue working for MCS and you strongly believe you are capable of someday making senior partner.

DIALOGUE WITH FRANK MARINARA

You meet with Frank so he can orient you to the upcoming task. The finance operations have a slightly different focus than the accounting operations, he says. The financial analysis part of our business is more involved with analyzing financing and investment decisions, making corporate asset valuations, evaluating corporate financial performance, and providing corporate valuations. You will be working to complete a project for our Maryland-based client McCormick & Company.

Given your position as a senior analyst, you are anticipating that Frank will have several separate requests. Frank explains that McCormick & Company is considering expanding their operations by building another factory to increase the production volumes of their spice products. The client has asked MCS to help them determine if this financial investment is worthwhile.

Frank continues by delineating your responsibilities for the project: To get started, we will need to look at the variables involved in this purchase and the questions McCormick & Company has provided. Ultimately, MCS will help them determine their corporate valuation, responsibly raise capital, and make the right financing and investing decisions. This information will help you determine which financing and investing options would provide McCormick & Company with the best potential outcomes for sustainability and growth.

You will also need to participate in a meeting with the other finance analysts to discuss risk and returns, Frank says. This discussion will help the client decide if they should invest in the new factory.

The client also mentioned they would like MCS to provide them with guidance on retirement plan options and other employee benefits, Frank elaborates. Finally, I will need you to complete the project by preparing an executive summary that highlights your recommendations.

Step 1: Analyze Financing and Investing Activities

INBOX (1 NEW EMAIL)

From: Frank Marinara, Director of Finance

To: You and Finance Team

I hope you are ready to move forward with the project at hand. I want to give you the background on the McCormick & Company case and instructions for this project.

McCormick & Company approached MCS because they would like to increase the production of their spice products and are considering the construction of a new factory in Largo, Maryland. The new factory would allow the company to increase its overall production capacity. As McCormick decides whether to build the factory, they are asking our finance team to evaluate options to finance this construction. McCormick has provided MCS with the purchase price, expected cash flow, and two new product lines projects they expect to run in the newly built factory.

To understand which financing option would be best for the client, you must first understand time value of money, present value, future value, and loan amortization. These topics will help you make recommendations about the relative benefits and drawbacks of each option.

Working in the attached Excel Workbook, complete the Financing and Investing worksheet. The Financing and Investing worksheet contains information about present value, revenue, expenses, and cash flows, as well as questions that will help Frank guide the client in selecting the best financing option.

When you have completed the Financing and Investing worksheet, submit it to the submission folder located in the final step of this project. Then, proceed to Step 3, where you will examine the factors affecting McCormicks corporate valuation.

Looking forward to seeing your work,

Frank

ATTACHMENTS

McCormick & Company Workbook.xlsx