Finance Case Study
How is the company using its cash?
There are two aspects to be considered in terms of the cash used by the company: where the cash came from and where the cash be used. It is obviously that sales were primarily to retail nurseries which means by selling. In terms of the profit, the Horniman Horticulture had brought rapidly increasing gross profit, operating profit and net profit in several years, and gross margin, profit margin and net profit margin had kept increasing from year 2003 to year 2005. However, recently adverse decline in the firm's cash balance from $120,100 in 2002 to $9,400 in 2005 caused Maggie's concern which means their cash had gone somewhere through the booming business. Where their cash has used can be understood easily by checking their balance sheet. Great amounts of increasing accounts receivable, inventory, current assets compared with small amount increasing in accounts payable, wage payable and other payables caused incremental assets with a...
Please join StudyMode to read the full document