MBA 620 Company B Information
Location, Size, and Age of the Firm
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Name:
Location: Orlando, FL
Size: 98 employees
Age: began operations in 1988
Customer Segment and Target Market
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Market: Florida and nearby destinations
Destinations: eight (the Bahama Islands; Savannah, Georgia; Atlanta, Georgia; Tampa, Florida; Fort
Myers, Florida; Miami, Florida; Tallahassee, Florida; and New Orleans, Louisiana)
Market segment: tourists and business
Aircraft capacities: 12p seats
Customer segment: vacationers, tourists, business travelers
Retention: 40% repeat customers
Seat occupancy average: 62% (middle of industry benchmark data)
Average customer fare: $249 USD
Major Competitors
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Delta Connection
American Eagle
Sun Country
Frontier
Company Leadership
Privately held, with a board, president, VP admin, CFO, COO, VP sales
Company Strategy and Direction
As a smaller player, the company is more of a follower than a leader; however, the new president has a desire to
shake things up. The image of the company as cheap transportation is no longer sufficient, and the leadership
team seeks to demonstrate that even a small company can be an innovation leader. They hope to do this by
emphasizing the potential benefits of agile problem solving and a lean and clean working environment.
These 10-year goals were adopted in 2015; they were reaffirmed in 2019 shortly before the arrival of the new
president:
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Demonstrate adaptability, flexibility, and speed in decision making and innovation
Build the best workforce; be a winning team
Do the right thing; provide excellence in customer service
Enjoy the short run; invest in the long run
Current Financial Highlights
nnual revenues: $26-27 million
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Annual growth YoY: 3%
Gross profit margin: 33%
Net profit margin: 0.2%
Aircraft in fleet: 40
Average age of aircraft: 18 years (25 years of useful life is typical)
See financial statements for more information
Background
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The company is known as a value leader.
In 2016, the company sold its ownership in a regional hotel chain, resulting in substantial cash holdings.
The company has strong business relationships with area employers in the theme park industry.
The company president is new this year; prior experience has been heavily influenced by organizational
transformation initiatives.
Turnover among employees is higher than many airline companies, but average for the central Florida
economy; maintenance employees are increasingly more difficult to find and retain; overtime is common
in the maintenance department.
Wage levels in the Orlando area are growing, resulting in upward pressure in compensation.
Customer feedback received that is at or above industry benchmarks (at industry benchmarks 60th
percentile or higher; positive feedback):
o Short wait times at counter
o Ease of modifying reservations
o Cost
o Overall value
Customer feedback received below industry midpoint (negative feedback):
o Airplane cleanliness
o Amenities
o Food and beverages
o In-flight noise
Internal Process Highlights
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Within the last 30 days, an investment and joint venture was established with SITA Horizon software
system, including an industry-standard customer portal and a hospitality industry interface functionality.
Bookkeeping is integrated with the new SITA system; an external accounting firm will still be used for
audits.
HR function is provided by a consortium partner in the local area (outsourced).
On-ground operations teams rated fair against industry-wide efficiency standards.
Human Resource Highlights
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Employees with a high school diploma or higher: 95%
Employees with a post-secondary degree or diploma: 60%
Average turnover rate: 18% annually
Internal training offered:
o Regulatory refresher courses (as needed, with supervisor approval)
o Quality and Customer Service Principles (self-study)
B_CO_FINANCE
Learner Copy
COMPANY B
Illlustrative Data for Educational Purposes
Income Statement
Revenue
Cost of Goods Sold (COGS)
Gross Profit
Expenses
Salaries and Benefits
Rent and Overhead
Depreciation and Amortization
Interest
Total Expenses
Earnings Before Tax
Taxes
Net Earnings
Balance Sheet
Assets
Cash
Accounts Receivable
Inventory
Property and Equipment
Total Assets
Liabilities
Accounts Payable
Debt
Total Liabilities
Shareholders’ Equity
Equity Capital
Retained Earnings
Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
Cash Flow Statement
Operating Cash Flow
Net Earnings
Plus: Depreciation and Amortization
Less: Changes in Working Capital
Cash from Operations
Investing Cash Flow
Investments in Property and Equipment
Cash from Investing
Financing Cash Flow
Issuance (repayment) of Debt
Issuance (repayment) of Equity
Cash from Financing
Net Increase (decrease) in Cash
Opening Cash Balance
Closing Cash Balance
Supporting Schedules
Working Capital Schedule
Accounts Receivable
Inventory
Accounts Payable
Net Working Capital (NWC)
Change in NWC
Depreciation Schedule
PPE Opening
Plus Capex
Less Depreciation
PPE Closing
Debt and Interest Schedule
Debt Opening
Issuance (repayment)
Debt Closing
Interest Expense
COMPANY B
Illlustrative Data for Educational Purposes
All values shown are in thousan
2017
2018
27,981
15,389
12,591
26,302
18,411
7,891
2,910
1,354
2,814
2,700
9,778
2,813
2,600
1,354
2,806
1,800
8,560
(669)
788
2,025
(141)
(529)
2017
2018
82,445
1,380
3,078
37,413
124,316
82,914
1,297
2,018
37,007
123,236
1,560
90,000
91,560
1,009
90,000
91,009
33,685
(929)
32,756
124,316
33,685
(1,458)
32,227
123,236
2017
2018
2,025
2,814
(10,312)
15,151
(529)
2,806
(592)
2,869
(2,706)
(2,706)
(2,400)
(2,400)
–
–
12,445
70,000
82,445
469
82,445
82,914
1,380
3,078
1,560
2,898
(10,312)
1,297
2,018
1,009
2,306
(592)
37,521
2,706
2,814
37,413
37,413
2,400
2,806
37,007
90,000
–
90,000
–
90,000
2,700
90,000
1,800
Rev 3/14/21
All values shown are in thousands.
2019
27,091
18,151
8,940
2,910
1,354
2,776
1,800
8,840
100
21
79
2019
72,944
1,336
1,989
37,032
113,301
995
80,000
80,995
33,685
(1,379)
32,306
113,301
2019
79
2,776
25
2,830
(2,800)
(2,800)
(10,000)
(10,000)
(9,970)
82,914
72,944
1,336
1,989
995
2,331
25
37,007
2,800
2,776
37,032
90,000
(10,000)
80,000
1,800

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