Cygnets of Chelsea: the first turnaround for David Kay, November 2011 Case Study Help

David had great knowledge of the financial concepts which would provide him insight regarding the business processes i.e. understanding the potential of revenue generation that uplifts the opportunity to improve the business operations. Although qualification is never enough to deal efficiently with the business issues that arose in the response to different internal and external factors. Thus, an improved understanding with the numbers allows an individual to focus on the probabilities that lead to a reduction in the sales number.

However, the experience is one of the crucial factors that leads to an effective understanding of the possible consequences regarding any particular issue faced and the strategic approach to deal with that issue. But, the qualification of David provides him with the opportunity to understand factors other than numbers to efficiently turnaround a business. This significantly allows David to develop a strategic approach to deal with any particular issue faced by the organization in terms of declining sales and profit numbers.

Question no 2

Eventually, after deciding to acquire the distressed firm, David found Cygnets of Chelsea as the acquisition target. The Cygnets of Chelsea was founded with the aim of providing the best children’s furniture and nurseries all around the world. Additionally, the company grew from strength to strength over more than three decades and strengthen its footprint both in domestic and international markets. Furthermore, the company developed a positive and strong market reputation and image for providing the interior design services with core consideration to complement its products offerings. Despite of the enviable clients, expansion of stores in the multiple countries, the sales of the company started reducing on account of the global financial crises hit in 2008. The company incurred a financial loss in the financial year 2009 and concerned with the cash problems. Furthermore, the management information system was rudimentary at Cygnets of Chelsea. On account of the insufficient information to find the causes of the losses in two successive years and inability to take considerable actions, the situation got worsen. The company was concerned about the financial loss and the problems related to the cash flow was surpassed year by year due to which various elements needs to be incorporated in the turnaround plan of the company which are as follows;

Construct a cash flow forecast

The process to construct the forecasts of cash flow would assist the company in identification of the market opportunities to improve the cash flows and have a closer look over the risks. The cash flow forecast would assist the company in assessing the actual and targeted sales of the products, following the evaluation of the causes or the reasons for the greater variation in the actual and targeted sales………………………………..

 

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