1.The Days Cash on Hand decrease, due to cash equivalents. Again, the CEO explained the use of cash to buy equipment and inventory. However, the CEO did not explain how the unfavorable increase in Accounts Receivable also absorbed millions of cash.…
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…
Balance Sheets and Income Statements is an approach to review the overall financial status of the company. We will be reviewing four companies in different industries’ balance sheet and income statements. With a technique to combine the statements we will be able to evaluate the companies’ income, expense and stockholder’s equity in the company. In reviewing Swift Transportation Company, Eastman Chemical Company, United Natural Foods, Inc. and Wells Fargo and Company over the course of the last few years we will be able to understand the value and growth potential of these companies.…
Liquidity, solvency, and profitability are the three characteristics that will be used to see a company’s success. A simple financial statement will not demonstrate the company’s power because it is a general idea of the company’s position and does not display business developments. The company’s business developments are vital for potential investors because they determine vertical and horizontal analysis. These characteristics are also used to define the ratio analysis. Ratio analysis is dividing two numbers to get a number of percentages that can be used to compare companies in the same industry. Examining the entire company’s financial trends for a set period of time, an investor will see a factual description of the company’s financial condition. This is the financial analysis an investor desires to review prior to spending money.…
The success of a business depends on its ability to remain profitable over the long term, while being able to pay all its financial obligations and earning above average returns for its shareholders. This is made possible if the business is able to maximize on available opportunities and very efficiently and effectively use the resources it has to create maximum value for all involved stakeholders. One way the performance of a company can be measured on critical areas such as profitability, its ability to stay solvent, the amount of debt exposure and the effectiveness in resource utilization, is performing financial analysis where a set of ratios provides a snapshot of company performance and future prospects. Financial analysis is also a very useful technique that forms a basis for making key decisions about company operations. In addition to internal company members, these ratios are used by potential investors and shareholders to make investment decisions about the company.…
Understanding the flow of cash within an organization is critical to knowing the health of an organization. Without this understanding, a business may run into a situation where even though they are profitable, they may not have enough cash on hand to meet their obligations. This paper will look at the case study Eat at My Restaurant – Cash Flow (Gibson, 2013) and will analyze the difference between net cash provided by operating activities and net income and determine which a better indicator of long-term profitability is. It will then provide an analysis of the cash flow ratios for each of the firms contained in the case study. Finally, this paper will conclude with a determination of if one of the companies in the case study has a cash flow problem.…
Financial Analysis is very important to the inner workings of a business. Keep track of financial statements, taxes, audits, and various other areas of financials will show how well a company has done, is doing, and how well it will do in the future. Seeing how well a company is doing into the future is important so they can see any mistakes and try to fix them before they become an issue and hinder the growth of the company. In this essay I will compare financial statements in two companies, PepsiCo. and Coca Cola Company. I will describe what vertical and horizontal analysis is then I will go over the vertical analysis of both companies, comparing one to the other. I will go over the horizontal analysis of both companies, comparing them as well. I will describe ratio analysis and I will show the ratio analysis of both companies, including the testing of a liquidity ration, a solvency ratio, and a profitability ratio. I will explain in my own opinion which company is more financial stable and why, using comparisons of the data from the data stated. I will finally include three recommendations to improve each company’s financial health for the future.…
The company that I have chosen to evaluate is Starbucks. Within the past three years Starbucks have maintained a net revenue in more than $9 billion dollars a year. In 2009 Starbucks net revenue was about $9.8 billion dollars and just in two years Starbucks has ended their 2011 year with a net revenue of $11.7 billion dollars making that this is the highest annual revenue. At Starbucks this was a 11 percent increase on a comparable 52-weeks basis. Over the past three years the operating margin has increased more than 9.1 percent in making the year of 2011 top out at a 14.8 percent at the end of the fiscal year. At Starbucks, this makes an increase in the operating income go from $562 million dollars to $1,728 million dollars, just in three years. Now, at the end of 2011the total annual assets at Starbucks would be $7.36 billion dollars and Starbucks total debt would be $2.97 billion dollars. With all of this information it tells me that Starbucks is in a good financial condition.…
Introduction to Financial Analysis for Corporations, 3’rd Edition (dark grey cover), by George W. Blazenko. A hard-copy can be purchased from the SFU bookstore. An electronic version of this manuscript is available free of charge from the course website. Documents…
When consider the horizontal analysis comparative balance sheets of both companies. Surprisingly, other financial assets of Nick Scali in year 2010 were $696,000 while year 2009 had only $1,000. Mean that it was rose up to 69,500%. In contrast, there was no change in intangible assets for Nick Scali while Fantastic had increased by 8.76%. A growth rate of both companies are increased. Nick Scali grew by 27.68% higher than Fantastic that it total asset grew by 14.89%. Cash and equivalent of Nick Scali rose up to 50.57% but for Fantastic had declined…
There were many signals shown in the financial statements and other exhibits in the case that represented poor cash flow through Year 14. The most obvious of them all is that the collectability of the accounts receivables was problematic. It seemed as if Fly-by-Night had a good system of collecting their sales on account from year 9 to year 10 as the accounts receivable number decreased during those years. However, the accounts receivable account increased by more than six times through years ten and fourteen. Because of this poor system of collecting accounts receivable, Fly-by-Night’s cash flow would suffer. The same can be said about the inventory account. Because the amount of inventory increased by almost five times through years twelve and fourteen, the cash would continue to decrease at the same rate.…
To find the value of the firm, we have reviewed the recent financial statements including actual income and balance sheet from FY1996 - 1999 and projected income and balance sheet with and without expansion from FY1999 - 2003. We also considered historical rate of return data for the analysis.…
This case captures the problems concerning cash flow and working-capital management typical of small, growing businesses. At the end of 2005, Bob and Maggie Brown have completed their third year of operating Horniman Horticulture, a $1-million-revenue woody-shrub nursery in central Virginia. While experiencing booming demand and improving margins, the Browns are puzzled by their plummeting cash balance. The case highlights the difference between cash flow and accounting profits, as well as the common negative effects of growth on cash flow. It also provides a forum for instilling appreciation for the relevance of free cash flow to business owners and managers, introducing financial-ratio analysis, developing the concept of the cash cycle and working-capital management, and motivating the use of financial models.…
In today’s material world, many companies give an extra focus on how they could achieve high profit from their business. This profit will determine the number of earning they make. Lenders and investors almost always look at the quality of this figure to assess the “health” of a company. For instance, an investor would attract to invest in a company that has high liquid ratio because they have the ability to meet its debt…
When selecting a company in which to invest shares, it is important to undertake the relevant research and be able to understand the companies accounting history. To include an analysis of the profit and loss account, balance sheet and cash flow statement. These are the key documents in which we can retrieve data and review a full breakdown of the company’s accounts. Within an organisation, these three items are often the key to failure or success. They are of huge importance and if used to their full advantage and monitored correctly a company can use the accounts to analyse which areas of their business need to be addressed and which areas can be maximised on. These accounts are…