First Farm Corporation

Topics: Balance sheet, Financial ratios, Generally Accepted Accounting Principles Pages: 3 (726 words) Published: August 2, 2013
First Farm Corporation (A)
Time Frame:
1993-1995
Point of View:
This case study deals with the point of view of Ricardo Sarmiento, the Vice President for finance of First Farm Corporation. Statement of the Problem:
Why does First Farm Corporation have deficit operating cash flow despite of increase of 40% in sales, 89% in net income and improvement in liquidity? Objectives:
To give Mr. Sarmiento an explanation and recommendation.
Areas of Consideration:
Internal Environment
Strengths
 The company has different product lines like fresh and frozen chickens, processed meat, animals’ health products feeds. They also have aquaculture feeds and entered the fast food business that was successfully launched.  The company has sufficient operation capacities in poultry dressing, hatching and food milling and large number of working that could accommodate the large number of clients/customer.  Recognized as the leading poultry integrator in the country  They perform well every year, their sales increase up to 44% and net income increase up to 89% every other year.  Fermin Francisco, a good accountant that provides reliable informations. Weakness

 Mr. Ricardo Sarmiento, VP for Finance, who seems to have no knowledge of analyzing the financial reports External environment
Opportunities
 As the leading poultry integrator, the people admire their products.  Having large number of facilities and equipment, they could accommodate large number of customers.  The plan of having different branches could add number of buyers and it will be more accessible. Threats

 Investing to different facilities without any assurance that there will be higher volumes.  Marigold Foods, Inc., their number one competitor declared lower price, that could attract customers. And FFC continues to operate in an environment of increasing costs of products.  The costs of coin, soybean meals and fishmeal have been rising, that could lessen the number of buyers. Alternative Courses...
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