Alliance Concrete Case Analysis Essay

The surmount estimate for 2006 are shown in the projections for adhesiveness Concrete. The familiarity is expected to father its Net In go prevail over by $2,350 billion. If the society was to correct $3 million in dividends, it would be $11,349 million in retained earnings. If you make no enthronement in not bad(p) expenditure and make payments to your banking go with loan, the loan would come down to $57,660 million. If the company does not reinvest, it depart be at a 50% chance of a problem occurring, which laughingstock cause more(prenominal) losses. Just as they did in 2004, not only did it cost $2.6 million to fix the problem but also the company had to close down for 2 weeks, hence the drop in sales for 2004. My recommendation to Alliance Concrete would be to pay off the $7,000 million obligation to the bank which is owed. This would be extracted so you do not default on a loan. It would also put you at the borrowing limit as well. If the company does default o n the loan, it pass on not be a heavy look for the company. Stock prices and confidence in the company will drop, as people will think that the company cannot pay its bill. by and by give off the debt to the bank, I would suggest to allocate the rest of the money towards capital expenditure. It will be necessary for the company to upgrade at least(prenominal) some of the equipment to lower the possibility of something going bad. It would be a summarize nightmare if the company ran into another problem like the one they face in 2004, and it may lead to bankruptcy. They may not be open to recover because their debt would go through the roof. That being said, I would skip on the dividend payments and insure that the following year there will be a bigger payment to the stockholder, if everything goes well. The investment into the company would make the company croak give and may even generate more revenue.If I was to renegotiate with the bank, I would put forward the projectio n of growth. I would highlight the ontogeny in sales and revenue along with viewing the effort to pay down the banks loans. I would put forward the current and quick ratio, showing that we have enough money to liquidate the assets to cover our debt in pound case scenario. The company can argue that, eventhough the real(a) estate market is slowing down, the company is still showing growth, which is a good sign.If Alliance Concrete was to skip on dividend payments the argument that can be put forth would be that the company is growing and shows signs of prominent improvement, if we put money into it now. Also that, investment now in the company could mean even more dividend payments in the future. We could also argue that it necessarily to be skipped because the company removes to put back money into itself because we need to get repairs done. If we pay dividends now, it may not be the best for the company, because we will not be able to get the repairs done that are necessary and will cost us more to fix and recover from that problem.After carefully looking at all aspects and possible situations I would suggest that the company skip on the dividends for this year, and invest its money back into the company along with paying of some of the debt. This will be beneficial for all. It will make the company grow all with paying of its loans. The stockholders can be assured that the company is growing and that there will be better dividend payments in the future.