Audi's global sales rose 8.3% to 1.58 million vehicles in 2013 however despite the increase in revenue, the net profit fell 7.7% ($5.57billion) and the operating profit margin fell to 10.1% from 11% the previous year. Based on this one could assume Audi is experiencing diseconomy of scale. But when you dig deeper into their situation the reasons for a lower net profit is not because of a “per-unit” cost of production which would truly mean they are operating as a diseconomies of scale. The true reasons appear to be because of their expansion investments. As per the article Audi “warned that profit would be hit by investment in new models and tougher climate regulation”.
As Jones sales growth rate is high than sustainable rate, so its net earning could not support increased account receivable and inventory. Then the company need bank loan to finance the increase business. 2004 2005 2006 First Quarter 2007 collection period 42.0 days 44.0 days 43.0 days 43.9 days payables period 10.1 days 10.0 days 24.1 days 37.4 days 3.Is Nelson Jones’s estimate that a $350,000 line of credit is sufficient for 2007 accurate? What will happen to Jones’s financing needs beyond 2007? Jones currently has $203,000 of accounts payable.
Dollar General in owned by Koldberg Kravis Roberts & Co. L.P (KKR) who own more than 79% of all shares in Dollar General. Some argue that part of the reason Dollar General has been so successful as of late is attributed to the economic crisis the United States experience during the second half of the 2000s. Economist believe that consumers will not shop at the Dollar General as much as the economy improves. In an effort to retain their existing customers and recruit new ones as the economy strengthens, Dollar General has begun to stock name brand items. Some analysts also believe that even when the economy improves, your average consumer will still look for ways to save money and continue to frequent the dollar discount stores.
negative 2500 $.The company needs to raise about 40,000 $ as the ending cash balance for the month of July is negative 40,000 $. The Company can get a short term loan for 40,000 $ which can be repaid in October. 2. Even though the Company started with a Capital of 250,000 $ it still ends up with a zero bank balance. This is because the increase in the collections of Accounts Receivable from customers is not sufficient to recover the total disbursements (variable production cost and the fixed cost).
Wal-Mart - Strategic Audit I. Current Situation A. Current Performance In the past year Wal-Mart’s performances in market share, profitability, and return on investment have had significant changes compared to past years performance. * Return on investment now compared to previous years: they are paying out $63.079 billion to their shareholders compared to last years $58.763 billion and an average of $3.09 earnings per share of the 4.068 billion shares out. * Market share today: Out of 2,000 big companies Wal-Mart is at 17 with 201.36 billion in market value and in its industry of retail, Wal-Mart is ranked #1 with Home Depot and Target behind.
PPG anticipated its full-year share repurchases to be at the high end of what they had originally projected. They also reported earnings per share from continuing operations to be $1.52, which included previously announced charges from restricting and nonrecurring costs. (About PPG, 2013) The health of the economy is critical for the company because its products are not primary products; so during a recession, people will choose to purchase items of more importance than maintenance products. This explains the big decline in revenues for 2012; this equates to a 14% drop compared to the previous year. Also, it can be seen the earnings per share were down by 12% and the return on average capital was down by 10%.
He noted that increased sales year upon year had been generated. However, the growing profits generated since 2003, after eight years of negative income, has fallen in 2005. This led some investors to question whether Amazon was perhaps chasing unprofitable growth(Stockport: 629). Some one may wonder that whether the companies choice of strategies is applicable or not? What are they going to do in the future?
The company has adopted its growth strategy which has been implemented in four different parts. One has been emphasis on the growth of Core UK business in order to expand internationally. This growth has allowed that company to position itself in food and non-food sectors based on retailing services. Over the years, the company has witnessed financial fortunes which have been reflected in its growing sales. Sales have risen from 22.6 million pounds in 2001 to 43.1 million pounds in 2006.
The firms stock has declined $2 per share over the last nine months but the firms profits have been rising. Shareholders normally receive what is called cash dividends and from the text the firm has never paid a dividend in 20 years. From what is written in the first paragraph, shareholders wealth is reducing during this time, and this shows that there is an agency problem. With the management team their actions show that pollution controls will show a profit maximization try, which means the managers are trying to maximize his or her salary, instead of the attempt to maximize shareholders wealth, the stock price. Evaluate the firms approach to pollution control.
Further it increased both sales and net income by 54% and 28% vs. 1993, but the company has a problem of a liquidity and a shortage of cash. One of the biggest indicators of this problem is almost double decrease in quick ratio in 2 years (Exhibit 1). This means that the company has a decrement of current assets (not considering inventory) comparing to current liabilities by 0.66. Another factor which helps us understand the reason for shortage is Cash Cycle, which consists of Average Collection days and Average Inventory days subtracted by Average Payment days. This indicator is increasing dramatically by almost 11 days in two years, because of increase of Collection and Inventory days by 16 and minor increase of Payables days by 5 (Exhibit 2 and 3).