BluJay
On Episode 6 You have been hired by BluJay Aviation as a business consultant. BluJay Aviation, Inc. has been in business for three years. The business has been profitable enough that Wren no longer works for the airport. She is now both an owner and employee of BluJay Aviation. Brad is still at the FBO, but also does some work for BluJay. An opportunity has arisen at the airport. The gift shop is available for lease. Wren and Brad have been thinking about taking over the operation of the shop in addition to running BluJay Aviation. Discuss this concept, along with the advantages and disadvantages of running a retail operation in addition to their normal business. Financial statements for the most recent years of operation of the gift shop are supplied.
Income Statement attached.
Second request (episode 7) is after BluJay Aviation has allowed their clients to pay 30-60 days after services have been given. This causes their cash flow from operating activities to often be negative even though they are earning a profit. The economy has also made them nervous about collecting since a few businesses that use their services, especially the realtors, may not stay in business.
Discuss the various options available to BluJay in this situation. Choose two options they might try to improve their cash flow and also advise them about the valuation of their accounts receivable.
Third advice(episode 8). Brad has decided that they should extend the life of the aircraft from an original estimate of 15 years to 20 or 25 years. Three years have already been taken on the aircraft. He believes this will allow them to show a larger profit.
Discuss this alternative and the reasons for doing it. What are the pros and cons? In your recommendation to BluJay, be sure to state the implications of your decision on all of the financial statements, not just the income statement.
Last advice. (episode 9) Another growth opportunity has arisen for BluJay Aviation and the company has asked for your advice.
A company giving scenic rides over the city in a helicopter has decided to close their business. The helicopter is for sale. Financing of this purchase would be either by borrowing or by obtaining new investors.
Discuss the advantages and disadvantages of each form of financing expansion. Be sure to determine the effect on the financial statements and various ratios. Recommend whether BluJay should expand, and if so, how the helicopter should be purchased.
Remember as business consultants, you need to make recommendations for Episodes 6, 7, 8, and 9 and be backed up with data, making any reasonable assumptions you deems necessary.
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