Case Study - THE CARDBOX COMPANY - OPERATIONAL FIN

Table of Contents
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OPERATIONAL FINANCE: BUILDING A ROBUST BUSINESS
CASE: THE CARDBOX COMPANY

In December 2008, Alberto Puig, CEO of The Cardbox Co. was concerned by the severity of the economic crisis that was damag
company. “It is imperative that we come up with a different business model if we want to survive this big crisis,” thought Alberto, w
Cardbox was a family business, selling paper and cardboard. The business was located in Barcelona, in one of its industrial sub
distribution channels were two: wholesalers’ distributors and its own webpage. One of the advantages of Cardbox was the imme
large number of products offered in its catalogue. These products could be dispatched in 24 hours thanks to the size of the inven
The first year in its history that the company saw a reduction in sales was in 2007, when sales had gone down an 8% to 45.8 mil
sales were 42.3 million euros and the prospect was a decrease of 15% in sales in 2009.
Besides the sales reduction there were more problems. The price of materials had gone up, and customers were looking for exte
The company had also had an increase in bad debts. In 2008, 1% of the sales would never be paid back (Bad Debts). The comp
loss in the P&L as a cost.
As a result of the condition of the Spanish economy, the banks were cutting down credit lines for most of the customers. In the c
measure would mean a reduction of short term credit lines in 2009 to 15 million euros, but Alberto did not know if he would be ab
The assumptions for 2009 were the following:

Sales: 85% of 2008 sales.

COGS, purchased goods at acquisition price, were expected to be 82% of sales.
Bad Debts: it was expected that in 2009, a 2% of the sales would never be paid back. These Bad Debts would appear in the P&
Overhead: 14% of sales.
Depreciation: 10% of last years’ Net Fixed Assets.
Interest Expense is computed as 6% of the sum of Short Term Credit and Long Term Loan at the end of 2008.
Corporate Taxes are 30%. Taxes are paid in June of the following year.
Days of receivables: due to measures taken by the marketing department to increase the sales in 2009, it was expected that t
would be 150 days.
The minimum cash balance required for 2009 was 1 million euros.
Days of Accounts Payable. Since industry payment terms were 90 days, this was the objective for 2009. Compute payables on
26.306 million euros.
Days of Inventory. On January 1, 2009, the company was planning to send back merchandise to one of the suppliers at acquis
sale back and other efficiency measures, the days of inventory should decrease to 170 days.
Fixed Assets.
In 2009 Cardbox expects to invest in fixed assets an amount similar to the depreciation of the assets.
In order to reduce the firm’s liquidity tension, Alberto had asked the bank for an additional 2 million long term loan. This loan
by a mortgage on one of the family properties. With this new loan, and after having amortized 400,000 euros, Total Long Term
2009 would amount to 5 million euros.
The company had not paid dividends for the last three years and was not expecting to pay any dividends in 2009.
economic crisis that was damaging the sales of the
his big crisis,” thought Alberto, while at his desk.
ona, in one of its industrial suburban areas. The
ages of Cardbox was the immediate availability of a
s thanks to the size of the inventory.
d gone down an 8% to 45.8 million euros. In 2008,

customers were looking for extended payment periods.

id back (Bad Debts). The company accounted this

most of the customers. In the case of Cardbox this

did not know if he would be able to do it.

d Debts would appear in the P&L of 2009 as a cost.

end of 2008.

in 2009, it was expected that the receivables period

or 2009. Compute payables on 2009 purchases of

one of the suppliers at acquisition price. With this

ssets.
illion long term loan. This loan would be guaranteed
400,000 euros, Total Long Term Debt at the end of

dividends in 2009.
Analysys Historical ---> Forecast ---->
Financial stamenent
All numbers in €(000) Forecast (DEC) 2007A 2008A 2009E 2010E
Balance sheet ok

Asumption & Drivers

Day period 360 360 360 360

Sales Growth(% Change) -7.6% -15.0% 11.3%

Cost of goods (% Change) 74.5% 79.2% 82% 82%
Rent & Overhead 6,620 5,034 5,827
Bad Debt 478 719 599
Depreciation & Amortization ( % PP&E) 11.7% 10% 10%
Interest (% of Debt) 6% 6% 6%
Taxes 30% 30% 30%
Purchases 29,770 35,500 26,306 30,525
Days of receivables 138 135 150 150
Days of account payables 118 79 90 90
Days of inventories 159 184 170 170
NFO 23,730 26,370 23,703 25,853 0.5181223
Working Capital 5,530 7,305 8,029 7,262
Needed of credit 18,200 19,065 15,674 18,591
ROS 4.7% 0.6% -2.4% -1.9%
g 9.9% 1.0% -3.6% -2.9%

Income Statement

Sales 45,800 42,300 35,955 40,000

COGS 34,100 33,500 29,483 32,800
Gross Margin 11,700 8,800 6,472 7,200
Bad Debt 228 478 719 599
Overhead 6,620 5,950 5,034 5,827
Depreciation & amortization 795 740 630 630
Operating Profit 4,057 1,632 89 145
Interest Expense 1,000 1,253 1,341 1,240
EBIT 3,057 379 -1,252 -1,096
Taxes 917 114 -376 -329
Net income 2,140 265 -876 -767
Balance Sheet

Cash 800 1,200 1,000 1,000

Receivables 17,580 15,820 14,981 16,667
Inventory 15,100 17,100 13,923 15,489
Current Assets 33,480 34,120 29,904 33,156
Net Fixed Assets 7,210 6,300 6,300 6,300
Total Assets 40,690 40,420 36,204 39,456

Payables 9,750 7,750 6,577 7,631

Taxes due 917 114 -376 -329
Short Term Credit Lines 17,283 18,951 15,674 18,591
Current liabilities 27,950 26,815 21,875 25,894
Long Term Loan 2,800 3,400 5,000 5,000
Equity + Reserves 7,800 9,940 10,205 9,329
Net income of the year 2,140 265 -876 -767
Total Liab.+ Equity 40,690 40,420 36,204 39,456

ROE 21.5% 2.6% -9.4% -9.0%

0.6234043 0.6592383 0.6463245
1. A short business analysis
Cardbox es una empresa familiar que se dedica a vender papel y cartón. La empresa estaba ubicada en Barcelona, ​en una
industriales suburbanas. El canal de distribución se da por dos vías : distribuidores mayoristas y página web propia. Una d
ventajas competitivas de Cardbox es que posee alta rotación de su inventario, los cuales puede ser despachados en 24 ho

2. A brief P&L analysis

Sales : Las ventas han caido el 2009 con respecto al 2008 . Ello es razonable tomado en cuanta debido a la crisis finaciera
en el mercado español .NEGATIVO

Gross margin % : El margen bruto disminuido de 26% a 21% , como resultado del aumento de materia prima precios e el s
ha sacrificado poco margen para mantener que las ventas no caigan mucho en este meracdo bajista .NEGATIVO

OPEX . Los costos fijos se han mantenido constantes como los salarios y y overhead representan el 14 % de las ventas . Co
consecuencia , El EBIT/ SALES debaria mantener estable ro ha caido 5%, con respecto al 2007 , lo cual demuestra que la e
caido en su muy eficiente .NEGATIVO

Otras partidas de P&L : La depreciación es estable . Los gastos finanacieros han crecido más que el EBIT , lo cual es negativ

Rentabilidad :
Beneficio neto : Tuvo una caida de 2140 a 265 . NEGATIVO
ROS : El retorno sobre ventas ha caido del 5 % al 1% . NEGATIVO
ROE : Cae de 21, 5 % a 2,6% .

Resumen : A pesar que la compañia es profitable , su eficiencia ha caido y ha perdido puntos de rentabilidad . Estos resu
deben a la crisis economica .

3. A brief balance sheet analysis

La empresa tiene activos corriente en mayor medidadque net fixed asset .Además , tiene un grado de apalancamiento y
fianacieros . con respecto al año pasado , vemos que ha bido un incremento en los inventarios y cash y , mientras que un
disminución en la inversión en activos fijos . Asu vez , vemos que se han dimisnuido las cuentas por pagar y un aumento en
cuentas de enduudamieno de corto y largo plazo .

Los Operational Ratios nos permitiran analizar las relaciones operativas y el desempeño de la compañia .

Days of receivables : El ratio se ha disminuido de 138 a 135 , lo cul tinen un pequeño positivo impacto financiero
Days of account payables .: Ha decrecido de 118 a 79 , lo cual tiene un impacto finaciero en el flujo de caja .
Days of inventories : el ratio ha aumentado de 159 a 184 , el cual tienen un impacto financiero negativo .

Resumen : Los retrasos operacionales tienen un impacto fiianciero significativo en el cash . En conclusión , la empresa esta
mal manejada y sumada a ello la crisis finanaciera .

4. Diagnosis
En los resultados obtenidos en el forecast , encontramos que la empresa tiene probemas NFO Y WC .

Problemas en NFO : Hay dos principales problemas en el NFO los malos desempeños en las politicas operacionales y la rece
economica en la que nos encontramos .

Problema en wc : el fondo de maniobra es insuficiente , ello debido a que en el forecast del año 2009 y el 2010 tendremos
 En los resultados obtenidos en el forecast , encontramos que la empresa tiene probemas NFO Y WC .

Problemas en NFO : Hay dos principales problemas en el NFO los malos desempeños en las politicas operacionales y la rece
economica en la que nos encontramos .

Problema en wc : el fondo de maniobra es insuficiente , ello debido a que en el forecast del año 2009 y el 2010 tendremos

5. Action Plan
El plan de acción es mejorar las politicas operacionales ,ya que el problema fiianaciero es grave . En los siguientes años un
se ralentice el crecimiento se sugeriere que se mejore la política de crédito al cliente, para que en los proximos años , para
BAD DEBT . Tambien , se tiene que mejorar el manejo de de los inventarios , lo cual es fundamenatl en emprasa d e este ru
sumado a que nos econtamos epocas crisis podrian tener un impacto financiero significativo . Finalamente , se sugiere que
proximos años cuando acabe la recesión se aumente el precio para mejorarr el gross margin y, por ende ROS y , por consig
sustainable growth .
ubicada en Barcelona, ​en una de sus áreas
as y página web propia. Una de las
ede ser despachados en 24 horas .

nta debido a la crisis finaciera que exite

de materia prima precios e el sector . Se

o bajista .NEGATIVO

ntan el 14 % de las ventas . Co mo

07 , lo cual demuestra que la empresa ha

que el EBIT , lo cual es negativo .

os de rentabilidad . Estos resultados se

un grado de apalancamiento y gastos

os y cash y , mientras que una
tas por pagar y un aumento en la

a compañia .

positivo impacto financiero .

o en el flujo de caja .
o negativo .

n conclusión , la empresa esta siendo

Y WC .

oliticas operacionales y la recesión

ño 2009 y el 2010 tendremos pérdidas .

 Y WC .

oliticas operacionales y la recesión

ño 2009 y el 2010 tendremos pérdidas .

ve . En los siguientes años una vez que

ue en los proximos años , para reducir
menatl en emprasa d e este rubro
. Finalamente , se sugiere que en los
y, por ende ROS y , por consiguiente , el
INCOME STATEMENT
All numbers in €(000) % of Sales
Year Year % of Sales % of Sales Forecast
Dec-07 Dec-08 Dec-07 Dec-08 Dec-09
Sales 45,800 42,300 100% 100%
COGS 34,100 33,500 74% 79%
Gross Margin 11,700 8,800 26% 21%
Bad Debt 228 478 0% 1%
Overhead 6,620 5,950 14% 14%
Depreciation 795 740 2% 2%
Operating Profit 4,057 1,632 9% 4%
Interest Expense 1,000 1,253 2% 3%
EBT 3,057 379 7% 1%
Taxes 917 114 2% 0%
Net income 2,140 265 5% 1%

BALANCE SHEET
All numbers in €(000) Forecast
Forecast
Dec-07 Dec-08 SUF Dec-09
Cash 800 1,200 400
Receivables 17,580 15,820 -1.76
Inventory 15,100 17,100 2,000
Current Assets 33,480 34,120 0
Net Fixed Assets 7,210 6,300 -910
Total Assets 40,690 40,420

Forecast
Dec-07 Dec-08 SUF Dec-09
Payables 9,750 7,750 -2,000
Taxes due 917 114 -803
Short Term Credit Lines 17,283 18,951 1,668
Current liabilities 27,950 26,815 0
Long Term Loan 2,800 3,400 600
Equity + Reserves 7,800 9,940 2,140
Net income of the year 2,140 265 -1,875
Total Liab.+ Equity 40,690 40,420 0

Purchases 29,770 35,500 Purchases 26,306

Receivables in days 138 135 150
Payables in days 118 79 90
 Inventory in days 159 184 170
e.g. Compute the forecast of sales for December 2009 (Sample question - 0 points.)