Crazy Eddie Case Write Up free essay sample

Please answer these questions and perform some calculations listed after the questions (Please read the whole case. We will discuss more than just these questions): 1. Who were the top executives of Crazy Eddie? What were their qualifications for the jobs they held? The top two executives of Crazy Eddie was Eddie Antar and Sam Antar, better known as Sam the CPA. Eddie Antar had no significant qualifications, only a street know how due to his lack of education. San Antar, was Eddie Antar’s younger brother, whose only qualification was an undergraduate education and a CPA. 2. What was the electronics industry like in the early 1980’s? The electronic industry was in its growth phase, which was characterized by the increasing inventory levels, increasing sales and the few electronic stores competing in the industry. 3. How did Eddie Antwar raise money for his aggressive expansion program? In order to raise a significant amount of money for his aggressive expansion program, the company issued an IPO in 1983. We will write a custom essay sample on Crazy Eddie Case Write Up or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page He worked diligently to convince investors of the financial stability and the high level of the company’s management. 4. What were some â€Å"red flags† present in this case that should have signaled that there was high risk? (List 2 or 3 items): 1. The company had to many relative in company leadership with a direct interest in the company. The companies CFO was very unqualified for a position of this level and again he was the direct brother of the CEO/President of the company. 3. The initial auditor of the company low-balled the bid of the company offer $85,000 for a full level audit. This was only done in order to gain the relationship, whereby revenue would be gained through consulting fees. This indicated the auditor was no more interested in the financial soundness of the company than Eddie Antar himself. 5. Calculate the following ratios and dollar/percentage changes: Based on the calculations above, identify the changes from one year to the next for each of the accounts or ratios AND explain how these calculations might have alerted you to potential problem areas. The information provided above indicates some very interesting points. The A/R Turnover ratios do not correlate to the current running inventory changes that have taken place in the past few years. The same stand true when we look at the inventory turnover ratios. In order for any of these numbers to be try, independent manipulations would have had to been performed for the numbers to make sense.