Jones Electric Distribution

The company has been functioning well in terms of generating profit and demand so far. However, there will be a 20% increase in demand for the next month of operations as predicted by management, and the production and supply management's problems may come as a problem they can no longer afford.

In this task I’m going to analyse the figures on cash flow that I created in P3 and justify why you think the business might have problems also provide range of solutions.

Next what catch my eye was an increase of amount of money owned by the business to the Creditors so this will be money leaving the business within the near future and if this continues to raise then the business will end up in huge debts. I have find out some improvements as well such as an increase in the amount investments in fixed assets, which could mean the business is investing more or more of the assets were sold from last year which is good news for a business.

Given the net sales in 2011 is still higher than 2010, we can assume the problem is most likely with its operating cost management. On the other hand, HH’s assets turnover rate dropping 0.30 from 2010 suggests an inefficiency of generating more sales with its increased assets in 2011.

I was pretty confident that our sales would justify the additional office and salary expense. However, as I looked at the pro forma statements it became very apparent that the sales force would sell more unit than the plant could produce. In hindsight, I should have increase production in Quarter 2 so I could keep up with future sales in Quarter 4. As a result, I did not hire new sales people but I fine tuned my advertising by copying my competitors and increased the advertising budget from $198,598 to $311,897. The pro forma income statement showed total revenues at $8,280,065 which was jump from $6,888,870. My operating profit also increased from $1,104,794 to $1,658,769. I was content with the slow but steady growth.

The company that I have chosen for this assignment and project is Lowe 's Companies, Inc. Lowes strongly focuses on the mission statement “helping the customers to improve their homes”. The company started in 1921 as a small store in North Carolina. Great success and high demand of Lowe’s products led to an increase in the number of stores. By 1955, there were five more functional stores. Rapid growth took place around 1960s. Carl Buchan was one of the founders of Lowe’s, who died in year 1960. Exactly a year later in 1961, the company went public. This was the time when Lowe’s was given its name. Initially it was called North Wilkesboro Hardware Company. By 1979, Lowe’s established more than 50 stores in the United

There is a principal curtailment in the amount of $500.00 posted in July. The borrower is requesting the funds to be reversed and refunded. Send an email over to Investor Accounting to seek approval of the transaction request. Once approval is received, submit the request to Payment Processing. If the request cannot be approved, draft a response to the borrower advising of the circumstances.

In case the company does not get the cash balance over $200,000 they will default on their loan agreement. Defaulting could cause the company to shut down, and everybody could lose their employment. Another adverse effect of not taking after Lisa’s orders would be the controller losing her job. Resisting your boss could be seen as insubordination which could result in termination. Lisa Infante knows these things, and she is putting the ball in the controllers’ court, so she has little blowback in case things go wrong. The company defaulting on the loan would be the most significant adverse

The company’s debt ratios are 54.5% in 1988, 58.69% in 1989, 62.7% in 1990, and 67.37% in 1991. What this means is that the company is increasing its financial risk by taking on more leverage. The company has been taking an extensive amount of purchasing over the past couple of years, which could be the reason as to why net income has not grown much beyond several thousands of dollars. One could argue that the company is trying to expand its inventory to help accumulate future sales. But another problem is that the company’s

Also, according to its leverage ratios, the company’s debts are not only very high, but are also increasing. Its decreasing TIE ratio indicates that its capability to pay interests is decreasing. The company’s efficiency ratios indicate that despite the fact that its fixed assets are increasingly being utilized to generate sales during the years 1990-1991 as indicated by its increasing fixed asset turnover ratio, the decreasing total assets turnover indicate that overall the company’s total assets are not efficiently being put to use. Thus, as a whole its asset management is becoming less efficient. Last but not the least, based on its profitability ratios, the company’s ability to make profit is decreasing.

Although the company has a profit of 30000 $, Jones Electrical Distribution has a negative cash flow of -30000$. Profits are not equal to cash. A business can go bankrupt if negative cash flows continue to occur for years to come. If we investigate further we find that the company has a high day sales in accounts receivable. The company is unable to collect cash quickly from its customers.

K-L Fashions’ balance sheet shows a company that has tremendous opportunities for investments. Allow me to explain. Any company with lots of cash is a reassurance to investors that the company can generate revenue. Their cash flows have been $272,640 in 2005, 82,540 in 2004, however their inventory increased by 7.13%, which indicates that the cash was invested in the inventory. In 2003 it was 321,390, and lastly it was 281,750 in 2002. The Cash & Cash Equivalents is trending in the right direction. Cash is king, you can’t manipulate cash. Either is there or not. Cash helps companies survive and grow. Secondly, the Accounts Receivables is trending upward. In my opinion this shows

free cash flow over the last eighteen months and our concomitant success in reducing the use of our line of

The company’s creams inventory remains constant because it does not follow a trend in innovation and changes so often as the other products. The surplus in inventory is a big disadvantage since; last year’s products may not be in style this year in addition to the cost of storage. For all these reasons their cash flow is less in comparison with previous years causing that Luxor Cosmetics keeps increasing their bank loans, creating more debt, making it harder to pay out as 2011. In this particular situation the company could have either decrease its budgeted sales (productions) or increase its actual sales by improving more effective marketing strategy and research and development of its products in the markets. This way their inventory would decrease and their cash flow would increase. (Hopkins, 2009)

Our choices led to a constant increase in net income over the three years. Short term debt increase by approximately 100% percent but steadily reduced over the next three years. We were happy with the positive growth of the company and the fact that we were able to pay off most of the initial short term funding required by the increase in working capital requirement. Overall the current situation of the company in 2018 is good, although the total value created is less than 20% of that created in phase 1. From this we learned that the value of the firm can be significantly increased more through a reduction in working capital requirement than through increasing the firm’s sales and net income.