Write a 3 page report aboout whats good and whats bad about this company with the given data. also, should or shouldnt lenders from its prospective give a $10,331,200 loan to this company? expalain why yes or why no ?

thats all i have

text should be visuble but numbers might hard to see

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Case Study - Happy Valley Farms Loan Request: Renew the present operating line increasing the commitment to from $250,000 to $500,000 Renew the present cattle line and increasing the commitment from $1,000,000 to $1,500,000 Renew the present $200,000 hedging line of credit Renew the present $300,000 capital line of credit Approve a new $750,000 term note to purchase cows and replacements heifers Approve a $885,000 term note to consolidate existing IT loans together Approve a new $1,951,000 real estate loan to consolidate existing loans together Approve a new $4,245,200 real estate loan for expansion and construction Total commitment requested: $10,331,200 kon iec hotels GA Background: he Adda od p ri Owners: Jim and Katie Meyer are 72 and 71 years old respectively. They have four children of which two are full time back at the farm. One son Mike is 48 years old and has ownership in the operation Their other son, David and 45 years old, works on the farm but has no ownership. Their other two children have no involvement in the operation. Management Jim: President and General Manager Katie: Vice President: does all the books and feeds calves Mike: Oversees the dairy operation including feeding the herd, manages all HR responsibilities David: Oversees the cropping operation and manure management Happy Valley Farms is a 3 generation commercial dairy farm located in Columbia County, WI. The farm was started in the 1950's and incorporated in the 1970's by Jim and Katie. Mike and David came back to the operation in the 1990's. Happy Valley Farms is organized as a sub chapter C-corporation. Jim, Katie and Mike each own 1/3 of this entity. In order to mitigate taxes, they formed two additional entities. The first entity they formed was for the purpose of transitioning ownership of cattle into an LLC called Happy Cows, LLC. All new heifers are sold from HVF to HC, LLC and then leased back to HVF as they enter the milking herd. The goal is to have all animals owned by HC, LLC. The second entity they formed is a land holding LLC called Happy Land, LLC. All land purchased the past 4 years have been purchased by Happy Land, LLC. Happy Valley Farms (HUF) is currently a 900 cow dairy. The dairy did their first expansion after Mike and David came back to the farm in the early 2000's which took them from 500 cows to their current level. This expansion entailed building a new 400 cow freestall barn and expanding the parlor. They filled the barn from within so they didn't purchase any cows. Two years later they built a dry cow barn so the main facilities were maxed with milking cows to maximize profits. In 2015, they expanded the parlor again to minimize the time cows were away from the barns, hoping this would increase production Now they are looking at expanding the hard to ma th prior me change in percower the chance they made in 2015 tou c h was In addition to the dairy, Happy Valley Farms operates 3.500 crop acres of which 1.100 of those wres are rented. Of the 1,100 acres rented, 100 acres are owned and rented from im/Katie Mae and David They have been slowly purchasing land and looking for additional and to rent to get ready for this expansion. All of the 1500 acres will be needed to feed livestock with this expansion w as their heifers until they are months of age, and then they are sent to t heir power they are 15 months . They have the sa m e line and do the cropping and man with their Own labor HVF utilizes financial production, agronomy, and nutrition consultants very effectively. They do not currently engage in the management and no mikor feed contracts in place. They do have crop Insurance with Compeer Financial Tim and Kate have a wil in place, however Mike and David are unaware of the trution plan on the death HVF is very active in the community. They host school farm tours and have hosted their county's une Dairy month breakfast. In addition, they have received the good newborward from their local farm bureau The client's are proposing an expansion of the facilities to handle 1.500 cows. The project will require upgrades to the current facilities, building a new freestall barn and increasing the feed and manure storage. The expansion includes adding another 500 stil barn sandbedded) and remodeling the oldest barn to make bigger til nation, they will make improvements to the manure handling system, feed storage and upgrading electric to have across the farm Articipated costs of construction is $4 Million A $624000 contingency fund is being set up for cost overruns and to accommodate for construction costs not expected. Clients have discussed the expansion with their milk processor who have expressed at this time, they would be able to talk the additional mik however would not put it in writing that things wouldn't change upon completion of the project SEARCHES Clear reports were on all owners. Nothing unusual was contained in the reports. Credit reports show accounts have been paid on time. Credit Bureau scores ranged from 770-825. Production management: Production management has been average. In 2018, the unit shipped 73.7 lbs/lactating cow/day which was 32 lbs under budget. SCC averaged 234,000 last year. The annual replacement rate of 41% was Shigher than the projected 36 wly During 2018, HVF had net income of ($271,900) with CDRCat 100%. Although the unit had a loss, performance was 5522,100 better than budget Total milk shipped was 260,700 wts vs budget of 270,00 cwt of min. The average number of lactating cows was right on budget. Average mik price was 518 37/cwt or $1.59/cwt higher than budgeted. Mik revenue as a whole was $257,100 ahead of budget. Basis was strong at $3.06/cwt vs budget of $201. Cost of production was $19.41/cwt and was $0 31/cwt higher than budgeted. Sensitivity: In a typical year for this operation, a one lb/cow/day drop in production on the reduction in revenue of $79,100 amounts to a Capital: The pro forma Ye balance sheet shows OE at 49% with wc of $449/cow. The lowest the projected OE will get is 47% with an anticipated low wc/Cow of $383/cow. This does not include the client using any available commitment on their lines of credit to fund any working capital shortages. When we consolidate all three business' along with the individuals. pro forma Of is 52% with WC/Cow of $416. The year end consolidation of all three business' equity poution is 67 Collateral: All loans are cross-collateralized. Assuming a 15% discount on total project cost be 70% based on a new appraisal of all land currently securing the loans / Avis expected to Peet Analysis HVF finished 18 out of the 31 dairies in the benchmark last year with net income of $-253/cow. The top herd showed profitability of $584/cow. As compared to the prior two years benchmark, HVF finished 36 out of the 54 dairy accounts with net income of $219/cow. The range was profit of $1,839/cow to a loss of $-698/cow Historial Earnings and Production 2016 016-7ers going 5100 There 154 Penthouse 1.9824 144 211201 Sesi Pars Suel Ne 08. Ver done SFO E 1 1860 Dalry Production 2018 2017 2016 2015 Milk/cow/Year Uselbs. Sold) 24,248 25,055 23.335 23,285 Somatic Cell Count 218.000 207,000 161,000 183,000 Replacement Rate 39% Percent of Coas in Milk 90 91% 915 Year End Balance Sheet - Consolidated pro Proforma Current Assets Intermediate Assets Long Term Assets Total Assets $1,630,711 $7,082,530 $8,197,326 $16,910,567 $1,549,372 - $ 124 12 - $12,261,718 $22,035,899 Current Liabilities Intermediate Liabilities Long Term Liabilities Total Liabilities $803,161 $1,858.823 $2,915,338 $5,577,332 $873,588 $2,580,593 $6,954,525 $10.408,706 Net Worth $11,333,235 $11,627,193 53% 67% Working Capital $827,550 $754/cow $675,764 $416/cow Projected Credit Standards of Dairy and Entities Duner tout 5 LTLAR STLOVS Working Captalow Dary investment Debt Repayment Income Over Feed Coat 36.900 $8.50 31200 Dairy Financial Benchmark Projections Per Cwt Labor Cost Feed Cost Replacement Cost Accrual Cost of Prod Year end 2018 $4.36 $10.59 $2.50 $19.41 Budget Yr1 $4.22 $10.44 $2.16 $19.72 Budget Yr 2 $419 $9.91 $2.93 $19.90 Budget Yr 1 $449 Budget Yr 2 $519 75.0 770 Budget Yr3 $567 78.5 39% 40% WC/cow Lb/cow/day Cull Rate CDRC Cash Margin Break Even Milk Price Net Income Proj. Mailbox Price 195% 175% $468,900 $19.48 ($109,700) $19.54 37% 183% $865,200 $19.24 $489,800 $19.83 $960,900 $19.49 $565,800 $19.84 Prej. Tr1 Pro Tr2 Praj Yr3 Prol Yr Crop Production harvest Value Added - Crop Purchase 11,04702 103 104 10.3 Helfer Appreciation 9 14 4 3 2 1 Milk includes MPP ) .0004 55,507,154 S 14. 11431 15 20 11.3333538 $12.64 3110. Total income 1 . 2 78 MO OS 2222 1020 5 43.250 Drying and Expense 5057,175 $1000 200 Fuel Expense 73 54472794174 I t Expense: A Laber Expense-Total SS15) Marting ExpenTotal 91 53 0.240 5173.2 5178.00 Nutrient Management Expense 1154 111 Production Enhancer Expense Production Services Expense $5322 RentiLease Exp. Total 578 BOS Repa i ntenance Expense TNT Sud Pits Expense 14210 1 Der Taxes Expense 140541 41,5 4215 02 Trucking & Freight Expense 1055 5 M 45200 U s S1818 14 Expense 1819 181,545 51 911539 Total Expenses 11.676.44 $10.546.39 $10.7.56 3 .75 489.841, 5565.797 1014.533 11109.60 be