The key issue in this case study is to examine the ways Deutsche Brauerei can sustain their growth. They need to figure out how to fund the equipment and facilities to support the growth, particularly in 2002. They are always taking on too much short-term debt, which is something the company is not known to do. We need to examine what this debt is used for. If the short-term loans are used for the purchases of equipment, the company would need to correct this quickly. We should examine the companies’ ability to pay back its debt. We should also look closely at the company’s profitability to see if it can obtain a bank loan at a decent rate.
Key things to examine in this case:
· Oleg Pinchuk’s compensation and how that might look in the next few years
· What is needed to help with growth? What does the company need? is equipment and a state of the art warehouse house and distribution center in Ukraine needed? How will they pay for this?
· Dependence on short-term debt? Examine their leverage
· 75% Dividend payout… Should this percentage be lower?
· Will they actually receive payment from distributors after providing credit on very relax terms? Is Bad debt only 2%?
· Is the company aiming to grow too fast?
I question this company’s ability to produce high profitability as indicated. It appears that the company is getting into very high levels' debt and is predicated to become more debt consumed in the new few years. I believe that Greta should examine all the factors above to determine how to advise this company.