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Westmills Carpet Strategic Alternatives Case

Context ICBC Finance Practice

Date Dec 2025

Gallery 26 visuals

Output Case deck

Westmills Carpet was profitable on paper, but cash told a different story. Rising input costs, long receivable cycles, and customer concentration quietly strained liquidity, pushing the firm toward a breaking point despite stable demand. With limited time, the analysis traced how working capital decisions, pricing discipline, and financing structure interacted under stress. The case forced a choice between short term survival and long term value erosion. The recommendation centered on restoring cash flow visibility through tighter credit control, pricing adjustments, and operational discipline, concluding that liquidity, not profitability, ultimately determines whether a business survives its growth phase.

Report Gallery

26 visuals from the underlying deck and analysis.

Title slide for a presentation titled "Rolling Out The Carpet for Success" with details indicating it is for Team F1, Ivan & Edina, given to Derek Mather, Senior Vice-President at Canadian Enterprise Development Corporation (CED), and Incoming Interi

Slide titled "We recommend a 3 step approach" showing three recommended steps: 1) Go from negative equity to fair value, 2) The most experienced person for Westmill, 3) Maximize product quality and efficiency. Three annotated boxes with strategic act

Slide titled 'Input Costs are Hard to Shake' with bullet points: 75% of total cost is purchased materials, Nylon, acrylic, polypropylene pricing matters more than labor, new multi-color lines rely on imported U.S. yarn, input costs are an issue but n

Line graph showing housing starts from 1960 to 1978 with critical drops in 1970 and 1975, and a rise over time. The slide title is "Housing Starts are not the issue," and additional text highlights market resilience and rebound.

Slide presentation titled "Customers want to trust you" showing a bar graph of service needs ranking across retail, residential, and commercial contracts, with a note about delivery when promised being most essential. The slide includes a footer mess

Line graph showing the value of Canadian dollar from 1950 to 1977 with a decline around 1977, titled 'The Canadian Dollar is also weakening'. Highlights CAD depreciation not helping Westmills. Notes CAD/USD at bottom and reliance on US imports. Text

Slide titled "Rates to stay elevated" showing rising overnight rates from 1960 to 1978, and inflations and unemployment rates from 1968 to 1978 with a note indicating unemployment and inflation stayed high from 1974 to 1978. The slide is by Team F1,

Slide titled 'Market Share is a positive' showing bar graphs comparing Westmills' volume and all product volume in commercial, residential, and retail contracts, with a conclusion that Westmills has a great volume share in residential contracts.

Slide titled "Westmills suffered from market meltdown" showing a timeline from 1966 to 1976, with key events: early growth (1966-1972) with 3 distribution facilities and doubled capacity in Kelowna, public (1973) with a national IPO and acquisition o

Slide title: Westmills is not the only struggler. Bar chart comparing net income for 1975, 1976, and 1977 across five companies. The companies are Harding Carpets, Celanese Canada - Carpet Division, Peerless Rug, Peeters Carpets, and Westmills. Annot

Slide titled 'Marketing Expenses are Bleeding Westmills' showing a graph of EBITDA to EBIT from 1973 to 1977, with EBITDA in dark blue, Marketing Expenses and Administration in red, and EBIT in light blue. Two text boxes: one green saying 'Your EBITD

A presentation slide discussing interest rate coverage and leverage. The slide shows two bar graphs, one on the left illustrating falling interest coverage from 1973 to 1977, and one on the right illustrating rising leverage from 1973 to 1977. Text h

Slide showing a bar graph of cash flows from 1978 to 1986, with red bars indicating negative cash flows and green bars indicating positive cash flows. Text overlays emphasize that current cash flows are only positive after 8 years, but marketing expe

Slide titled "We valued Westmills at sub-zero" with financial analysis content. It includes considered debt structures, WACC of 20%, and uncoverable interest payments. The slide shows that Westmills' equity value is $2.1 million, with 1.5 million ful

A presentation slide titled 'However, we can minimize this' discussing ways to maximize market value, showing metrics like equity value of $1.4 million and price per share of $0.9, with a note that positive valuation indicates $800,000 in marketing c

Slide presentation titled 'This is why it changes valuation' showing two scenarios. Scenario 1: base case forecast with a bar graph depicting decreasing negative cash flows from 1978 to 1986, ending with small positive values. Scenario 2: marketing e

Slide titled '$800k of marketing cuts is achievable' showing bar charts with original, cut, and final expense data for sampling, sales force comparison, and travel & entertainment, with notes on sales reps, reducing physical samples, and cutting trav

Slide showing sensitivity of price per share to tariffs, with two charts displaying percentage tariffs against percentage change in share price, indicating risks and opportunities in pricing adjustments.

Slide presentation titled "Westmills' operation is a mess" with a flowchart showing issues affecting Westmills, including human resources, product, and process challenges, such as management uncertainties, unsuitable product designs, and inefficient

Slide titled 'Next Internal President' showing profiles of David Hirst, William Ford, and James Hamilton with their respective roles and qualifications. Highlighted text emphasizes the need for technical expertise in manufacturing and sales for leade

Flowchart illustrating the process of yarn mixing and matching for textile production. It includes steps: Yarns, Tufting Machine, Dye, Finish, with issues like quality problems at dye stage and variables such as fixed fabric and color combinations.

Slide titled "Improve coordination" with a flowchart showing the process from sales confirmation to delivery, emphasizing computer handling for schedule standardization, with notes on pre-approved configurations, assigned schedulers, and delivery opt

Slide titled 'Maximize strategic efficiency' with two sections about leasing employees and exploring suppliers. Text includes bullet points on routing, skilled workforce, stable cash flow, diversifying suppliers, and exploring other regions. A footer

A project timeline chart titled 'Roll out your success this year' showing tasks and durations from months 1 to 12. Tasks include Management Change, Meaford Lease & Employee Move, Finalize Catalogue, Implement Marketing, Implement Coordination, and Ex

Slide titled 'Risk & Mitigation.' Two columns labeled 'Risk' and 'Mitigation.' Under 'Risk,' listed risks include tariff risk, market share loss, long-term competitiveness, and currency risk (CAD/USD). Corresponding mitigation strategies include rede

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