The company has an increase in inventory and other total assets proving that products aren’t moving through the operating cycle as they should explaining the cash flow decrease and liabilities are increasing. The debt structure of Lucent Technologies was a slight decrease of $940 from 2003 to 2004. Accounts payable has a decrease from 6.7% to 5.1%. Payroll and benefit related liabilities increased from 6.8% to 7.3%. Total current liabilities significantly decreased from 31% to 26.3%.
An integral part in performing a horizontal analysis is the ability to see the variation from one period to the next which are called trends (Horizontal analysis, n.d.). . Within the income statement, net sales increased by 33.3%, $150k, from Year 6 to Year 7. Then, a drastic decrease of 15% which is roughly $900k, took place from Year 7 to Year 8. The 33% increase showed the strength of the company, but the huge drop in sales demonstrated how Competition Bikes, Inc. (CB) struggled to attain a surge in its revenue which is the result of the 15% decline in sales caused by economic situations.
Analysis of Financial Position of Berry’s Bug Abstract The purpose it to analyze financial position of the company for the year ended 2008 as compared to year ended 2007. The techniques of horizontal, vertical and ratio analysis have been used for this purpose. Ratios Analysis The liquidity ratios shows that the company ability to pay off its current liabilities in the year 2008 is better than 2007. As current ratio increased by 2.42 and acid test ratio increased by 2.31 times in 2008 as compared to 2007. However, the account receivable turnover and inventory turnover ratios went down in 2008 as compared to 2007.
He also notes that these television ads will reach consumers in 15 non-DFW counties as well. We believe this is not the best course of action for the company because 75% of the audience reached will not be interested purchasing paint. Also, this advertising budget is not focused towards a market where 40% of our sales dollars are generated. For this advertising campaign to be successful, we would have to recoup the $350,000 dollar investment plus generate new business to justify the investment, which we are not confident will happen. The VP of Operations argued to cut prices by 20% on all paint products in order to be more price-competitive in the market.
Why? By reducing the fare to 50 cents you increase demand/price elasticity demand. Since increasing the price causes ridership to decrease by 30%, we know that the decrease in price will trigger the opposite. Chapter 3 Problem 7 In an attempt to increase revenues and profits, a firm is considering a 4 percent increase in price and an 11 percent increase in advertising. If the price elasticity of demand is -1.5 and the advertising elasticity of demand is +0.6, would you expect an increase or decrease in total revenues?
PREMIER INVESTMENTS 3.0 Profitability These ratios measure Premier Investments capability to generate profit. If these ratios are the same or greater than the previous period, higher relative to a competitor’s ratio, or similar to industry ratios, it shows that the company is performing well. Return on Equity The profit or loss earned in utilizing the investment of owners. Over this two year time period, Premier Investments watched their return drop 4.89% from 9.24 to only 4.35%. This had a very negative effect on Premier Investments and their shareholders as they received a very little percentage of return in 2011.
The Home Depot Company wants to expand their business in a global arrange. Actually, this situation is not able to happening every year; therefore, I considered it as a extraordinary item. 2. As we know from the fiscal 2007, the value of treasury stock was negative $16,383 million, but when it comes in the fiscal the value of treasury stock was negative $314 million, which means The Home Depot Company may sell their treasury stock for some money, the factor is that the sales of Home Depot Company decreased $13,488 million, therefore, they need money to run the company, so they sell some of the treasury stock for some money. This is the second extraordinary item.
Incremental revenue between Plastic and Steel is zero. This results from the company charging the same price for both products. Incremental cost decreases by $5,714.93, likewise yielding an incremental profit of $5,714.93 per week, which equals $297,176.36 incremental profit a year! This data suggests it is important to start manufacturing on new plastic rings as soon as the new equipment becomes available; the projected time frame is September. The additional profit between plastic and steel rings derives from the decrease in manufacturing cost.
(Walton & Aerts, 2009) Sainsbury | 2008 | 2009 | 2010 | 2011 | Current ratio | 0.65 | 0.55 | 0.64 | 0.60 | Quick ratio | 0.39 | 0.31 | 0.39 | 0.32 | (Onesource - Global Business Browser, 2011) The current ratio was approximately the same in 2008 and 2010. In 2009 and 2011, it dropped to 0.55 and 0.60 respectively. This is due to a decline in current assets and an increase in current liabilities of the company in both 2009 and 2011. Similar pattern happened to the quick ratio as inventory increased from year to year. Both ratios less than 1 could indicate that the company may have difficulty meeting current liabilities (Sander & Haley, 2008).
Home Depot Valuation Analysis The group calculated a per share valuation of $42.21 for Home Depot’s stock. This required certain assumptions regarding various growth rates, and based upon a sensitivity analysis, a declining sales growth rate is anticipated up to 2011. By this point Home Depot’s store expansion program will slow down, if not cease all together, due to market saturation. The inclusion of a maximum constant sales growth rate of 5% seemed to be a good benchmark for Home Depot. While this is a bit aggressive, we feel that as expansion wanes same store sales will increase marginally from the projected 3.5% growth primarily due to the strength of the brand.