Fly by Night Essay Example

leading up to Year 15. If they would have just analyzed the trends they would have been able to determine that the company is heading toward bankruptcy.

I believe that if the steps listed below are taken there is a possibility they could avoid bankruptcy. 1. Many of FBM’s managers are also part of the board. To me this creates a huge conflict of interest when it comes to inflating performance numbers or even disguising numbers. This should be avoided to be able to determine the true state of the company. 2. FBM relied on the US Government for all of its orders. These orders are scheduled to expire soon. If they wish to avoid bankruptcy they must expand their operations to other areas. . Total debt has increased from $22. 8 million in year 10 to $60. 6 in year 14. There was also a huge increase in interest expense from $2. 6 million to $5. 8 million. If the company wishes to survive they must stop borrowing at the same rate. In summary at its current state this company will go into bankruptcy. One telling sign of how much confidence one can take in this company is the fact that FBM’s main owner, Douglas Mather sold off significant ownership interest from year 10 to the current time.

It went down from 75% to 42%. This implies that the owner even believes there will be significant problems in the future. If FBM does not perform the steps suggested then the company will be heading toward disaster. When net income from operations is different from cash flow from operations don’t use fasb accounting.

Cash flow from operations is around 35 million. You want this number to big enough investing costs and to pay our debt.