Summary:

Haistrong Inc. (Hairstrong) was a hair accessory company that created scrunchies tailored to female athletes. Based in London, Ontario, Nicole Baranowski founded Hairstrong while she was still a full-time student attending Western University. Baranowski was a competitive rower who frequently had to readjust her hair during practice. Frustrated with this disruption, she founded Hairstrong. With the COVID-19 pandemic reducing face-to-face customer interactions, Baranowski was forced to transition sales to strictly online. Disappointingly, sales had remained low. Baranowski decided in the long-term she wanted to sell the company, but she needed to first achieve financial success in order to attract potential buyers. To accomplish this, outsourcing production internationally was a compelling option, but a line of credit was needed to support higher inventory levels. Students will evaluate Hairstrong’s historical financial performance by analyzing its Statement of Cash Flows and financial ratios. They are also asked to prepare a high and low projected Statement of Earnings and Statement of Financial Position. Finally, students are expected to consider the impacts of seasonality on the business, as well as working capital sensitivity analysis alongside qualitative risks facing the company to determine whether the requested financing should be approved. This financial and accounting management case is designed for undergraduate students at the introductory level.