Redhook Projection

Question #1:

    in my opinion, the Redhook projections are conservative. According to the case, in the recent years, the sales of the company had huge increased. And according to exhibit A-2, based on the forecast sales and revenue, net income in the following 4 years, 15 millions capital raising is reasonable for the business expanding. And they believe that there are still huge potential market share of the brewery industry can be exploited. More specifically, after 1984, when several products of Redhook had been introduced, the demand dramatically increased and the demand was more than the production capacity. With the development of the U.S domestic brewery industry, the sales of the imports brewery decreased since 1989. In some way, it gives the Redhook more opportunities and higher possibilities to win the competition in the brewery industry. Also, as an old company founded in 1981, the redhook is more experienced brewery compan, meanwhile there is no domestic competition in their target market, it has absolutely competitive compare with other companies. Moreover, it got the coroporation with an 110-year-old German company, which also enhance its competitive in some way.

            There are several business risk of redhook existing. First, since brewery                belongs to the alcohol drink, the health concerns from people can be negatively impact on the consumption. Second,  there are still many uncertainty situations might happen in the future, such as the change of people’s consumption preference, etc.

2. total amount of financial need is 15 millions dollar. The investment will be distributed to three lines. The first line need 6.5 million dollar, second line need 0.5 million dollar and the third line need 0.805 million dollar.

3 the bank evaluate the loan request by evaluating the credit scoring of the firm. Usually, the firm with high credit scoring is easier to get the loan from the bank. Also, the bank evaluate the loan by monitoring process, such as regular meetings with the banker is often required, etc. moreover, the bank need to considerate the turnover ratios, leverage ratios, coverage rations and profitability ratios when evaluating the loan request.

Since, the redhook is the old customer of the bank with high credit scoring, it might not be difficult for the redhook  to get the loan from the bank.

4. as far as I am concerned, I recommend the bank do business with the Redhook. As I discussed above, there are high demands of redhook’s products in the current markets and future markets. The redhook is already proved its success in the brewery industry. And the redhook is a high credit scoring customer of the bank. Also the bank need to build stronger relationships with the local business. By doing business with the redhook, the banks also gain the profit from the business, such as interest income, capital raising, etc