First problem we encountered were the current and quick ratios were unusually high due to the amount of cash, receivables and short term investments that Krispy Kreme held. This is an indication that the company was not investing in other projects and remained conservative with regards to the treatment of current assets from 2001 to 2004. The net sales, receivables and inventory turnover were much lower compared to the industry, but ultimately the profit margin and return on equity remained consistent which we considered questionable. The leverage ratios were lower than the industry; the company used debt to make payments and took a line of credit. Although cash reserves were high and debt was very low, the cash ratio was lower
2010) is provided below. 1167872 4 Despite the leading position and the good business results, SWOT shows several sources of potential risks for UST. The company is losing market share against new price-value competitors because of slow innovation and late product introduction and extensions. Historically, UST relied on his leading market position boosting earnings with annual prices increases. But in the meanwhile smaller competitors started to quickly erode market share with prices cut.
Concerning the economic issue, there were a lot of big mergers in the United states in 1998. Wells Fargo seized this opportunity to merge with Norwest Corporation, and it resulted in the 6th largest bank in the US with $190 billion assets under management. In 2003, the earnings increased even though there was a rise in the interest rates level. The firm profited from the economic slowdowns, because it reduced competition. The main aspect of the social issue is the population growth, which implies a growth of the demand for financial products.
Kwik Lube Case Study Compute the loss for Kwik Lube stations during the last two years using trend analysis. How accurate can results claim to be? With a -.01 bias and a negligible tracking symbol, the forecast analysis substantiates Dick Johnson’s assertion that the presence of competition cut directly into Kwik Lube’s profit. A trend analysis was conducted and projects sales in the amount of $1,419,445 and $1,530,445 for 2006 and 2007, respectively. Comparing the gross sales forecast to actual sales, this results in a loss of $309,445 in 2006 and $420,445 in 2007.
Ratio Analysis From 2006 to 2007 Britvic’s net profit rose by 0.3% while gross profit fell by 1.05%, therefore production cost was reduced, which can be due to the deal with C&C (Magners cider maker) and the acquisition of Ballygowan water which brought a cost saving of €14m. Over the past 5 years, 2010 achieved one of its highest gross profit 55.3% and net profit was never so high at 7%. The deal with C&C also made Britvic’s share prices raise and it reached its highest price (399p) over 2 years period. As many companies, Britvic in 2008 was also affected by the global economic crisis and in that year gross profit fell by nearly 8% but net profit was not affected as much. Britvic’s pubs trade was also affected by the recession, company shares fell to its low in 5 years, reaching 222.25 p, a difference of 165p comparing with previous year.
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).
Procter & Gamble Case Analysis Financial Stagnation: In this case study, Procter & Gamble (P&G) has experienced disappointing financial reports for the year 1999-2000. Profits, excluding reorganisation costs, grew by only 2 %, to $4.23bn, and it’s flagship brands endured disappointing growth, causing the company to scale back its growth forecasts. (Jones, 2001) P&G has responded in two ways. Firstly, it has acquired Clairol, the shampoo and hair-colouring business, for $4.95bn. This led to a 4% drop in share prices.
Paul Geary 10109099 Project A: Okun’s Law United States 4th March 2011 Above we see the Business Cycle for the United States displaying both the Unemployment rates and the Real Growth GDP in percentage change over the last 30 years. There are clear indicators that the US economy has had clear stages of economic over-cooling and over-heating during the last 30 years. Between 1981-1985 the US economy expanded greatly except for a 4% drop in 1983. This rapid expansion was clearly unsustainable, as we see with the gradual contraction in the size of the economy from 1986 to1992 where GDP was barely 1% and unemployment reached 7%. We see this again from 2004 all the way to 2010 with unemployment increasing to 10%.
During that time the Company experienced troubles and the revenue has fallen while debt taken on to finance mergers and infrastructure investment remained the same. Ultimately, the market value of the Company’s common stock plunged from about $125 billion in 2000 to less than $150 million as of July 1st 2002. Overall, more than $9 billion in false or unsupported accounting entries were made in WorldCom’s financial systems in order to achieve desired reported financial results. (WorldCom stock price) Quantification of Findings We have audited the accompanying balance sheets of WorldCom Corporation as of December 31, 1999 and December 31, 2000, and the related statements of income, cash flow, and stockholders’ equity for the period ended December 31, 1999 and December 31, 2000. During our review of the income statement we noticed that the Corporation mistakenly releases accruals and capitalize expenses that should be charged on expenses.
The policy of reducing debt made MC leave the company with just $36 million cash which was well under the number of 1990 ($283 million cash ). MC’s stock prices fell more than two-thirds from $33.38 in 1989 to $10.50 in 1990, resulting in a drop of $2 billion in market capitalization; even if in 1991 it went up to $16.50. Another consequence was an important decrease of Times interest earned from 2.6 in 1989 to 1.4 in 1990 and 1.5 in 1991 which triggered a depreciation of bond rating from A3 in 1989 to Baa3 in 1991 quite close to junk bonds. For the future this is a strong signal of the MC financial crisis situation. Most liquidity and solvency indicators show that the group would have not been unable to cover its current obligations/liabilities and was close to bankruptcy.