2. I utilized an “Acid Test Ratio” which shows us whether the entity could pay all its current liabilities if they became due now or sooner than expected. In 2011, the acid test ratio was 0.64. By 2012, it decreased to 0.43. Even though the acid-test ratio is less than 1 which rates in the lower third quartile in the industry of 1.6, 0.9 to 0.6, it indicates a concern with repaying current liabilities.
Financial Analysis Task 2 Competition Bikes, Inc. (CBI) has identified and produced a ProForma for year 9 of the company. There are a number of areas of concern when reviewing this document that need additional review and evaluation prior to budget becoming finalized. In the Sales Budget, CBI identified that they were going to increase units of sales to 3,510 and this is an increase over year 8 of 87 units. Year 8 experienced a 15% decline over budget due to the economic situation yet sales trends are expected to remain consistent and the company is planning to recover from the decline in the next 3 years. A number of areas could be the reason for the decrease in sales in year 8 including the economy which could have led to outside sponsorships being decreased.
The Barn project is being re-submitted after initial development failed because of the disagreement with the developer. This project is aP04 store scheduled to open in March 2007, in an 11. 5acres land. And can be analyzed more in details considering below factors: NPV & IRR This project has an NPV of almost $7.6 Million higher than the accepted NPV of $13 million for the prototype and a combined IRR (for store sales and Credit sales) of 16.4% which is significantly higher than the 11% IRR for the prototype. Even If we look deeper in to the IRR components for store sales and credit sales we still see that both IRRs for the project (17.5% and 8.2%) are well ahead of the hurdle rate set by the company (9% for store cash flows and 4% for credit
Most banks have policies that allow exceptions for customers with good loan histories and reputations. An exception might be appropriate in this case if the loan applicant can explain how and how quickly the new equipment will increase income. The new equipment will increase depreciation expense, so at the same level of revenue the company must reduce costs by at least $184,615 (3.51%) plus the net increase in depreciation. This required expense reduction is shown below with some more-or-less reasonable assumptions. This estimate also is conservative because the cost of new equipment was not included in total assets.
Premier Investments Ltd dropped its current ratios sharply from 4.27 to 1.74. That indicates Premier Investments Ltd transferred its current assets to noncurrent assets or it got more current liabilities. However, it is still has less current liabilities covered it assets compared with David Jones Ltd. So David Jones Ltd needs to make a financial plan to meet the coming current liabilities, or they may get a financial crisis. Quick ratio Current ratio measures the current assets to be turned into cash to meet its debts in one year.
I am somewhat confident with my answer because I used simulation process correctly to find the loss of revenue and also, I used random numbers for calculating this. There are some limitations with the simulation process. The first one is that the cumulative weeks will generally not add up to accurate 52 as in my work, the final cumulative week comes as 50.968 so this is not the revenue lost in exactly 1 year. Also, if we apply simulation again then we will get the different answer for revenue loss. Therefore, it is better to apply simulation a number of times and then take the average of all those
Net oncome does not tell the full story, nor does it truly represent the overall stability. In reviewing The Home Depot’s balance sheet the first item to present itself is the company´s reduction in present and long-term liabilities. The second thing is the almost six fold increase in the current installments of long-term debt. The company has eliminated nearly $1.7 billion in short-term debt, as well as successfully reducing the amount of payable income by nearly a billion dollars. This action will help the company down the road as fewer liabilities will result in less cash outflow, and place the company in a position to manage through the construction downturn.
CFO is larger than net income each year due to the noncash charges of depreciation and amortization. In 2008, net income is negative, but CFO is still positive as $1,879 million due to the one time goodwill impairment charges. Inventory has decreased from 2006 to 2008, after its acquisition of May in 2005. Receivables also decreased each year, which maybe a sign that the company’s receivable quality has improved. Macy’s decreased its purchase of inventory and property and equipment and decrease disposition of property and equipment year by year.
The restatement results from the lack of payments received by certain Chinese customers for shipments already accounted for (Savitz, 2011). Previously, AMSC recognized revenues once customers received shipments not once payment was received. In the case of Chinese customer Sinovel Wind Group, AMSC stated that they should have used the cash-based method of accounting for shipments after September 30, 2010 (Fredette, 2011). This improper recognition of revenue by AMSC will negatively affect previously reported earnings. The adjustments for 2010, 3rd quarter earnings will reduce to $98 million, down from $101.5 million, and 4th quarter will be reduced to $43 million from $114.2 million (Savitz, 2011).
Notwithstanding increasing dividends and a moderately stable share price, the home improvement retail industry remains to struggle due to the fragmentary world wide economic complications. Throughout 2009 Home Depot recorded expenses as much higher as well as the drop in sales. While Home Depot the company is very strong, the drop in sales and net earnings brought fourth some restraints until the economy shows signs of improvement. With this in mind The Home Depot, Inc. initiated strategies in the fiscal year 2008, to help minimize losses while maintaining a strong customer base. Which in turn may have the company to increase their credit programs for consumers with the intention to increase sales.