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Compnet International Executive Summary

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Compnet International Executive Summary
Financial statement overview Compnet International is a US-based Company that manufactures automobiles parts and various technical parts used in computers and computerized devices. Having established a cash reserve, Compnet seeks to ensure financial stability by increasing the company’s financial liquidity in meeting the day-to-day financial obligation. This means that the company shall put aside a portion of its liquid finances either in short term investments or in bank accounts and withdraw the funds when need arises. Using this strategy, the Company is ought to cushion itself from financial mishaps as on the event of inability to pay up debts the cash reserve shall be used to settle the debt. Moreover, the reserve can be used as an investment, therefore, help increase the firm’s revenue or get used as a backup for the Company on …show more content…
Revenue also decreased from $516349 to $383716 in 2013. Over the years, the account receivables have been considered a significant asset that has even been employed as collateral on loan acquisition. Their decrease is a sign of adverse being to the company as reduction in account receivables means reduced debtors which reflects reduced trust and relation between the customers and the Company (Weil, Schipper, & Francis, 2012). The company is, therefore left with fewer customers to purchase their goods thus the core reason for the reduced sales. The company shall thus record an increase in the working capital as it is considered as great source of cash in the cash flow statements (Wild, 2012). However in 2014, the company managed to record an increase in the cash receivable to $75510. Viewing the sales records the customer-company relationship remains unchanged thus the company decided to opt for an additional source of funds to finance the facilitation of the business as attested to by the increase in debt in 2014 to
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