Financial Analysis - Sara Lee Corp Essay

during year 12 and year 13. However, in year 13 and year 14 total current assets fell

Macy’s, Inc. is known as the Great American Department Store was established in 1858 and now has 810 stores operating in the United States, coast-to-coast. Macy’s stores nationwide are grouped into 69 geographic districts that average ten to twelve stores each. Most stores are located at urban or suburban areas. As of January 30, 2010, the Company’s operations were conducted through four retail operating divisions – Macy’s, macys.com, Bloomingdale’s, and bloomingdales.com. The Company is a retail organization operating retail stores and Internet websites under two brands (Macy’s and Bloomingdale’s) that sell a wide range of merchandise, including men’s, women’s and children’s apparel and accessories, cosmetics, home furnishings and other

In Fiscal Year 2002, this was listed as negative cash flows of $168 million. The periods ending on April 30, 2003 and January 28, 2004 saw positive inventory amounts of $480 million and $1193 million, respectively. Although this is merchandise that remains on the shelf, this accounted for a significant amount of the cash flows from operative activities.

The statement of cash flows breaks down the cash exchange of the long term debt for the past two years. Under the Financing Activities portion of the cash flows statement it shows the long term debt broken down intoproceeds from and repayment of bank loans. The calculations of the changes in the past two years are expressed below in thousands:

Two discounted cash flow analyses accompany this memo. Part A contains an adjustment for possible business erosion at Rotterdam, while part B does not make that adjustment.

Even though the company has been turning in profits, the ineffective collection practice, not availing trade discounts on time and ineffective inventory management has led the company in need of larger financing needs.

Within this report, diligent focus will be shown to the financial year of 2010 and the final year of

If A/P increases from one year to the next, that means that the difference between the two amounts is cash that was available for current use. That is, instead of paying cash, whatever was purchased was put on an account. On the other hand, A/R is considered a use of cash because for every dollar that should be coming in to the company from those who owe the company money, that cash has been delayed for a collection time period. Therefore, the company does not have the money to use for its own operations.

In 2005, Sara Lee placed a strategic plan in action to transform the business into a more tightly focused food, beverage and household products company. This involved the divestiture of weak-performing business and product categories, which included eight business units. Although the divestiture would decrease Sara Lee’s revenues, it was believed that concentrating their financial and managerial resources on a smaller number of business units would be beneficial. Sara Lee struggled

In January 2006, company-owned bottling operations were brought together to form the Bottling Investments operating group, now the second-largest bottling partner in the Coca-Cola system in terms of unit case volume.

Sara Lee’s original corporate strategy prior to retrenchment was to acquire mostly unrelated businesses to increase overall company profits, which proved to be difficult to manage properly with such a broad focus. In 2005 when Sara Lee hired a new CEO they announced a plan to become a more tightly focused food and beverage, and house hold products company. They began by divesting the weakest preforming businesses and product lines also by exiting businesses that they find to be nonstrategic.

In Chapter 4 we presented a short method for determining whether a firm had been building or burning cash. The short method sums the net cash used in operating activities and the net cash used in investing activities.

Although Sara Lee Corporation focused on cutting back business operations between 2005 and 2010, the company’s has continued to utilize a broad differentiation strategy. Sara Lee does not aim to have the lowest price product or to only sell to a small niche of the market. They aim to differentiate themselves from other brands by showing the value of their brand name and their higher quality products.

Many organizations have maximized the use of cash on hand by effective cash management techniques and the use of short-term financing. This paper will discuss various cash management techniques and short-term financing methods used by organizations.

J.B. Maverick, a stock market analyst says that capital expenditures represent major investments of capital that a company makes to maintain or, more often, to expand its business and generate additional profits.