Case Study Questions:Bak Funeral Home Case   Term Paper ID:42469 Click to get this paper

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Paper Abstract: The project is a series of answers to questions concerning the settlement of an estate containing primarily a family business and the associated real estate. Paper Introduction: Running head FUNERAL HOME CASECase Study Questions Bak Funeral Home CaseYour NameYour UniversityCase Study Questions Bak Funeral Home Case Changes in the Funeral IndustryThe funeral industry has evolved from a relatively simple local businessthat was in large part unregulated into a modern industry dominated bymulti mortuary business companies striving for economies of scale Whilethere is nothing in the case that directly substantiates the statement thatAdam lowered prices on merchandise items it seems likely that overallmargins are or will be under pressure Increasing Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Whilethere is nothing in the case that directly substantiates the statement thatAdam lowered prices on merchandise items, it seems likely that overallmargins are, or will be, under pressure. Your Case my place scenarioIn this pro forma the salary of both the deceased father and Sabina arededucted. (2 3). Anew buyer with superior marketing skills and resources of all types woulddecrease the risk somewhat and Sabina remaining as manager would furtherdecease risk as opposed to bringing in entirely new management.ReferencesAaron, H. The best solutionThere is another option left unmentioned. Running head: FUNERAL HOME CASECase Study Questions:Bak Funeral Home CaseYour NameYour UniversityCase Study Questions: Bak Funeral Home Case Changes in the Funeral IndustryThe funeral industry has evolved from a relatively simple local businessthat was in large part unregulated into a modern industry dominated bymulti mortuary business companies striving for economies of scale. This does not mitigate the question of the inevitability of death,or the fact that bodies will continue to have to be disposed of in somemanner. That is about $16, less thanthe tax on the present property. Option: ii% cash flow return on a value of $1.8 million implies net income of $198, .The simplified pro-forma income statement is shown on the following page.It indicates a net income of slightly more than $1 , . No amount ofmessaging will turn $1 , into $2 , . This would increase net income by 61% of$16, or approximately $9,76 . Thiswould only make the financial situation more difficult. What is clear that if the$6 , salary of Sabina were added back into the pro forma the net incomebefore tax would essentially disappear. Option: Rental of the real estate for $2, per month and purchase of the existing business by Sabrina.The value of the property, based on valuations provided by local realtorsis in the vicinity of $1.8 to $2 million. A sale ofthe property at $1.5 million net of costs and any tax due wouldapproximately $5 -75, per year invested in bonds. It is unlikely that Humbert Balsan's movie Soylent Green (Kipp,2 3) is accurate, so the funeral business will survive. It also seems likely that cremation and an abbreviatedoverall funeral activity will also ensue further lowering the revenues andprofits of funeral homes.The positive element is that the aging of the US population as baby boomersage. Rent or sell thenew owner the real estate and negotiate as part of the sale agreement thatSabena remains as manager with a salary and an incentive program based onthe profitability of the operation. Coping with Methuselah: Public policy implications of alengthening human life span. In fact, it wouldindicate that the officer's salary of the deceased father was in large partthe value of the owned real estate. Option: Sabena purchases funeral home and moves it.The cost of the new building would be about $1.2 million and real estatetax would add about $25, to the rent. The business decision should notrest on a few thousand dollars one way or the other. Then turning the real estate into anoffice building or selling to another party would be a separate decision. Sabina leaves the businessIn this situation, the best solution would be for the sale of the businessat any price that could be negotiated. There would be little left to sellexcept whatever physical assets were not part of the real estate and a namethat no longer hand any real meaning. Sale of the funeral home at five times cash flowThe cash flow would be very modest under any reasonable rent scenario.Sabina's ability to pay for the business in five years is unclear. Elimination of the existing depreciationwould increase income by something less than $1 , depending on theportions that was on the existing real estate and what was equipment orother assets Rent based on a 1 % cash return would have to be approximately $148,5 to produce the required $12 , after tax as illustrated below.It is clear that the operation could not pay rent of $15 , per year andamortize a debt to Joan in any amount. It will probablydo so in a far different form from the traditional one in the 21st century. Soylent green. Profit sharing is eliminated although it probably should beadjusted somehow.The presentation above contains a number of items that probably should bediscussed and modified in a real life situation. Rental at $24, net per yearprovides a return of slightly better than 1% on the appraised value of theproperty. Sell the business to one of thecompanies mentioned that are purchasing funeral homes. The average age of the US population is projected to increase (Aaron,2 8). Increasing competition fromregional or national chains of funeral establishments makes this aprobability.The pricing of the elements of a funeral individually in conformity withFederal Trade Commission regulations makes in likely that the funeral homewill provide less services and the bereaved will use a variety of sourcesto lower costs. It seems unlikely that the mother would consider this a fairreturn, or that the daughter should consider it a fair offer. (2 8). Sabina probably hasa good point that she is all that is left of the business in terms of goodwill. ||FTC Pricing requirement |Increase resource of new buyer ||Increase longevity | ||Change in ownership/management | ||Change in fundamentals of funeral | ||homes | |The fundamental situation and the history of the business do not indicatethat there will be any decrease in the underlying risks of the business. The application of the rent item inall the above is ignored as handling of it is unclear. Retrieved December 1, 2 8, from BrookingsInstitution Web Site:http://www.brookings.edu/articles/2 3/fall_technology_aaron.aspxKipp, J. What is clear is thatthis is a very marginal solution. This is not an attractiveoption. Retrieved December 1, 2 8, fromFilmcritic.com Web Site:http://www.filmcritic.com/misc/emporium.nsf/reviews/Soylent-GreenIf you need to type anything after the reference list then start it on thispage-----------------------[pic][pic][pic] This eliminates the family problems,and allows Sabina to benefit from the years already invested in thebusiness.|Bak Funeral home ||Business Risks ||Increase Risk |Decrease Risk ||Change in cremation use |Sabena remains as mgr. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.