Machine Tooling
Company Summary
Business Description
Machine Tooling has been operating in Kansas City since May, 1989. We are a Kansas Limited Liability Company (LLC). The company occupies 10,000 square feet of manufacturing area, including offices for administration, engineering, and a quality assurance area.
Overview of Technology and Products
Machine Tooling was formed to provide full-service, close-tolerance contract machining of machine and tooling components, production machining, and automation of production lines. The diverse manufacturing equipment at our facility accommodates versatility and allows the plant to operate self sufficiently.
Managerial expertise and industry experience have helped the company to show profits every year since its inception. During the last three years, the company further entrenched its position in its market niche, which resulted in healthy financials that can be seen in Table 2.1.
2.1 Company History
Machine Tooling was founded in Kansas City in 1989 on the basis of providing quality machine tools for selected industries. The owners had worked in this field for several years and had established multiple business contacts who helped the company pick up major business accounts. By 1999, the company’s revenues reached $1.5 million, and the management realized that further company growth would be difficult without securing additional working capital. To be less debt-dependent, the management has decided to go public. However, before the company issues the initial public offering (IPO), Machine Tooling currently seeks $500,000 for expansion purposes. Such expansion will improve the company’s sales ability and positively affect its IPO prospects.
| Past Performance | |||
| 1997 | 1998 | 1999 | |
| Sales | $1,000,000 | $1,300,000 | $1,500,000 |
| Gross Margin | $600,000 | $800,000 | $1,000,000 |
| Gross Margin % | 60.00% | 61.54% | 66.67% |
| Operating Expenses | $400,000 | $550,000 | $700,000 |
| Collection Period (days) | 19 | 22 | 34 |
| Inventory Turnover | 3.00 | 3.00 | 3.00 |
| Balance Sheet | |||
| 1997 | 1998 | 1999 | |
| Current Assets | |||
| Cash | $20,000 | $40,000 | $60,000 |
| Accounts Receivable | $40,000 | $80,000 | $130,000 |
| Inventory | $30,000 | $60,000 | $90,000 |
| Other Current Assets | $5,000 | $10,000 | $15,000 |
| Total Current Assets | $95,000 | $190,000 | $295,000 |
| Long-term Assets | |||
| Long-term Assets | $100,000 | $100,000 | $100,000 |
| Accumulated Depreciation | $10,000 | $20,000 | $30,000 |
| Total Long-term Assets | $90,000 | $80,000 | $70,000 |
| Total Assets | $185,000 | $270,000 | $365,000 |
| Current Liabilities | |||
| Accounts Payable | $25,000 | $50,000 | $75,000 |
| Current Borrowing | $15,000 | $35,000 | $50,000 |
| Other Current Liabilities (interest free) | $5,000 | $5,000 | $10,000 |
| Total Current Liabilities | $45,000 | $90,000 | $135,000 |
| Long-term Liabilities | $50,000 | $50,000 | $50,000 |
| Total Liabilities | $95,000 | $140,000 | $185,000 |
| Paid-in Capital | $50,000 | $50,000 | $50,000 |
| Retained Earnings | $40,000 | $80,000 | $130,000 |
| Earnings | $0 | $0 | $0 |
| Total Capital | $90,000 | $130,000 | $180,000 |
| Total Capital and Liabilities | $185,000 | $270,000 | $365,000 |
| Other Inputs | |||
| Payment Days | 30 | 30 | 30 |
| Sales on Credit | $750,000 | $1,000,000 | $1,125,000 |
| Receivables Turnover | 18.75 | 12.50 | 8.65 |
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