PLANNING ANALYSIS FOR GATEWAY
Gateway is the smallest of the three companies, with the largest proportional cash reserve. As you can see from the chart above, we have recommended Gateway maintain the status quo by keeping their reserves at hand rather than investing those reserves. If Gateway was to invest with their excess capital reserves, they could reap the cash benefits, expand their business horizons, and attract new investors. However, they would run the risk of making poor investment decisions, which could prove to be quite costly, undermine their cash reserves, and run the risk of people not paying back their loan. In light of this fact, we feel that having the reserve cash under these economic conditions ultimately will prove more beneficial because it would act as a buffer against unknown situations, such as terrorist acts or natural disasters, and from slow economic growth. Analysis shows that Gateway is in a good position overall and we do not want to alter their current standings. Therefore, we feel that this course of action would have minimal effect on Gateway's current level of sales, profitability margins, customer service, and growth potential.
