Operating cash flow before working capital changes has largely fluctuated, increasing to a peak in 2006 and falling again. The highest point can be observed in 2008. Finance costs have decreased in 2008 by almost half. Stores and stocks increase at a steady rate but show a spike in 2008. Trade debts reach a peak in 2006 and then fluctuate. Other receivables, however, show an increase. Net cash from operating activities shows a peak in 2006. The greatest addition to plant, property and equipment is witnessed in 2008. Net cash used in investing activities reaches a peak t 2008. Net cash used in financing activities shows an upward trend with a peak in 2008. Cash and cash equivalents show a peak in 2008, with a smaller peak in 2006. *CC5 FIVE-YEAR GROWTH RATES Sales and net-income have increased over the years but the per-share results are different because the number of shares goes up considerably in 2008, reducing per-share values and making growth rates negative. No dividends were paid in the first two years and as a result, the growth in dividends per share has been 100%. Equity per share has shown a growth over the years. Issuing more shares has resulted in lower sales and net income per share. The negative effect is especially felt on net income per share. This is not a good sign for the company, as it will negatively affect share prices financial markets. Financing the expansion in 2008 with a growth in equity seems to have been an unreasonable…
The income statement and balance sheet are very important in determining how profitable the company has been when looking at trends. As the company looks at the horizontal and vertical analysis for the past two years, we have found that the net income has increased. The income statement shows that the cost of goods sold decreased by 16%, selling and administrative expenses increased by 5%, and interest expense stayed the same when comparing it to the previous year. The balance sheet we can determine that the assets and liabilities both decreased. The company’s overall expenses decreased in the past year along with the company’s revenues, but the profit…
The company that I chose was Macy’s Inc. The trend in net profit shows that there was a 30.8% increase in the net profit of the company. The debt ratio as a percentage of the total asset was 76.6%. Currently the debt as a percentage of the equity is 61%. Macy's recorded a net loss of over $4 million in fiscal 2009; this was cause by the extensive line of credit given to customers and the high rate of non-payment or late payment since 2007. A confirmation of whether or not the company has taken the steps necessary to correct the negative trends the…
There are a few factors that attributed to the cash flow problem in year 14. First, one of the most important areas that shows how liquid of a position a company has is by analyzing the difference in the current ratio and quick ratio over a period of time. The current ratio is current assets divided by current liabilities and the quick ratio is current assets subtracted by inventory, divided by current liabilities. From the chart below we can see that there was significant drop off from Year 12 to Year 13. During Year 13 Management should have determined that there was a significant decline in liquidity and changes should have been made. [pic]The next factor that is important to analyze a company the operating results of the company. The most prevalent of these are operating margin and net income margin. Please see below for the trends of the three. Operating margin is computed by taking operating income and dividing it by revenue and net income margin is computed by taking net income and divide it by revenue. [pic]…
When experiencing cash flow problems there are a few recommendations to make, these problems include:…
In mid-Year 14, however, FBN began a rapid descent. Although still growing rapidly, its cash flow was inadequate to service its debt. According to Mather, he was "just dumbfounded. There was never an inkling of a problem with cash."…
Lesson 4: Cash flow revisions, Problem spotting based on cash flow and develop aims and objectives…
The cash flow statement reports a company’s inflow and outflow of cash. While an income statement provides the information about whether or not a company made a profit, a cash flow statement can tell you whether the company generated cash. The cash flow statement also provides information regarding investing and financing activities that do not require the consumption of cash. All of these aspects are important for a company management to monitor because they all have such a strong effect on the financial health of the company. The examination of the cash flow statement should be a high priority for potential investors; the amount of money that flows in and out of a company is something that investors might want to monitor.…
1990 to 1991 was also the time of an economic recession. In order to face the company’s sales decline and the economic downturn they undertook several measures. They ended their diversification strategy and generated cash by selling off non-automotive business units. Cash came also from stock offerings and a debt offering. However, the company was in a miserable position, junk rated and facing an underfunded pension plan.…
The income statement of Landry’s Restaurants, Incorporation shows the profit or loss of the company during the specific accounting period. The consolidated statement of income shows the periods of three years. Over the year with the acquisitions that were done, in 2003 Landry’s Restaurants, Inc had a net profit of $45,901,054 and 11% increase from 2002 (Phillips et al., 2005). The income statement is important in Landry’s case because inventors will use the information to see whether the company is in a strong position for growth and how well they are financially (Albo, 2007). The statement of cash flow is used by a company when making a business decision. The cash flow shows the revenues the company is generating and the total expenses incurring during the specific accounting period.…
As result of inflation and the acquisition of its competitor, Tri-State Tablet Company in 1996, Padgett's financial needs have been risen to a permanent level rather than being merely seasonal in nature. The Company exceeded its bank credit line of USD 5 million to USD 7.2 million. So Padgett Paper requested their bank, the Calson Trust Company for a higher credit limit of USD 8 million. The request was granted under internal guidance line of USD 8 million at prime. The objective is for the Management at the company's bank must revise Padgett's debt structure in a mutually satisfactory manner that will minimize lender risk while increasing company value. The current situation is the bank is now in bad situation because of over extended. Lending exceeds reasonable levels and is not collateralized. A credit line of USD 8 million is not normal for the bank.…
1. Opportunity exists for the firm to enter into the franchising business. Which will basically allow them to keep on expending without having to take on more debt.…
Another area of concern that affected Fly-by-Night’s cash flow negatively was their income from continuing operations. All of the companies’ expenses on its comparative income statement had enormous increases from year 13 to 14. This was the first year that Fly-by-Night recorded a loss from continuing operations and it was a pretty big loss. This suggests that they paid too much to run their business.…
Comparing the debt to equity we see that there is more debt than there is equity. This is a dangerous position for the firm to be in.…
Cash flow problems cannot always be avoided as they are simply a single part of many factors that affect a business or organisations overall financial health. The flow of the monetary holdings is measured by the entirely of a company’s financial assets and not just the amount that is earned on profits. At one time or another, almost every business will experience some sort of financial situations.…