This is case studay, about L eeland Jewelers, INC

CASE STUDY

Leeland Jewelers, Inc

Leeland Jewelers, Inc. is a 4th generation jewelry store. They specialize in custom jewelry and precious stones. They have an unblemished reputation which has yielded them a loyal client base stemming from generations of quality merchandise.

The 4th generation consists of three brothers ? Walter, Jerry and Charlie ? each with their unique specialty and contribution to the success of the business:

Walter(54) Purchasing and ordering

Jerry (59) Sales - trains and coaches new employees

Charlie (56) Design and repair (highly recognized in the industry for his custom designs - learned from his Great Grandfather)

The three brothers are currently in their mid to late 50?s and are thinking about retirement. Both Jerry and Walter have children (graduated from college) interested in coming into the business however Charlie has never been married and has no children. Although he loves his nieces and nephews and wants to provide a career for them ? he wants his ?fair share? upon retirement.

What observations can you offer?

Action Steps:

Step 1: Common Size the Financial Statements (5 pts)

Step 2: Calculate financial ratios (5 pts)

Step 3: Calculate the Source and Use Statement (CashFlow) (5 pts)

Step 4: Analyze and list 5 points to make/suggestion for a potential buyout for the next generation. (5 pts)

Financial Notes:

Fiscal Year end is January 31 Current entity is a C-Corp with the O/S shares split evenly between the brothers In Year 0 a Loan was obtained in the amount of $75,000 to accommodate the purchase of repair equipment, show cases, growth and cashflow. (5 years @ 6.0% - unsecured, personally guaranteed by each owner) Business currently has a $50,000 Revolving Line of Credit supported by A/R, Inventory and Equipment with personal guarantees by owners.