Threshold Sports, Llc What Are Management’s Goals and Strategy?
By: vr2jj • April 15, 2019 • Case Study • 638 Words (3 Pages) • 1,234 Views
Study Questions and Responses
- What are management’s goals and strategy? What creates the financing need in this company? Is there a first-mover advantage? Explain.
Threshold Sports, LLC works to establish a cycling market in the U.S that is similar to the market in Europe by managing and producing competitive cycling events. With management’s experience in event planning and relationships in the cycling industry, they felt confident in creating a niche market in the U.S for cycling. Management has a goal to double their revenues within three years by developing additional racing events and leasing the company’s assets for noncompany events. Their strategy was to open a total of six new races in three years, but in order to do that they would need additional financing. Financing the development of the additional races would require approximately $500,000 in working capital. Threshold, LLC has a first-mover advantage because the cycling market is fairly small.
- Assuming a 40% tax rate, what is Threshold worth?
Threshold Sports, LLC | |||||
Estimated Fee Income and Loss, 2001-5 | |||||
(in thousands) | |||||
2001 | 2002 | 2003 | 2004 | 2005 | |
Revenue | |||||
Management-fee income | $1,150 | $1,525 | 1,750 | 2,100 | 2240 |
Special-project income | 80 | 80 | 90 | 105 | 110 |
Profit (loss) from racing events | 90 | 337 | 752 | 1,322 | 2,015 |
Misc. income | 2 | 3 | 3 | 4 | 3 |
Total Income | $1,322 | $1,945 | $2,595 | $3,531 | $4,368 |
Expenses | |||||
Salaries and overhead | $1,104 | $1,296 | $1,495 | $1,719 | $1,977 |
Special Projects | 35 | 55 | 60 | 72 | 85 |
Depreciation | -11 | -16 | -22 | -28 | -34 |
Expansion expense | 40 | 55 | 100 | 200 | 225 |
New business | 24 | 30 | 60 | 100 | 200 |
Total expenses | $1,192 | $1,420 | $1,693 | $2,063 | $2,453 |
Profit (loss) before tax | $130 | $525 | $902 | $1,468 | $1,915 |
Tax 40% | $52.0 | $210.0 | $360.8 | $587.2 | $766.0 |
Net Profit (Loss) | $78.0 | $315.0 | $541.2 | $880.8 | $1,149.0 |
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