Jones Electrical Case Study

The Total Current Assets for Competition Bikes is 36.8% in year 8 up from 31.5%, showing that the company has enough funds to settle current debt. Specifically Works in Process Inventory and Raw Materials Inventory remains unchanged from year 7 to 8, this shows that even with a decrease in sales the company is slow moving and has not adjusted inventory to sales. The company has accrued more debt from year 7 to year 8 seeing an increase of Total Current Liabilities moving from 5.4% to 7.0%.

As shown in the ratios chart, working capital has increased by $13M. Maturities of short-term investments and cash flow from operations are projected to be sufficient to sustain the company’s overall financing needs, including capital expenditures. The following corporate strategic plan identifies a project that needs financial backing.

Creditors normally focus on the liquidity or solvency of the borrower in terms of current ratio and quick ratio, which indicate whether the company has enough working capital to cover the short-term debts. Myer will enter into a syndicated facility agreement to refinance the existing borrowings of the Myer Group. Besides, creditors are interested in the business risks the company might undertake, which indicate the possibility that the company might be unable to pay back the long-term liability in the future. From this point, the expectation on high return on investment and high profitability in the long run make the creditor’s interest aligned with shareholders’ value.

They are interested in the company’s ability to pay obligations when they become due, especially during the operating cycle.

It still has to decide how to finance money to fulfill the canning and packaging facilities and modernize the company and its organizational structure.

Capital structure long term is looking at how assets for the business should be paid for. Through the article the common theme is to more efficiently change working capital into cash that can be used to pay for the debt and liabilities for the business. By converting the working capital into cash, the business can make payments without having to take out an extra loan or take on more debt for the business. The working capital management is evaluating the day-to-day finances of the firm and how to make sure it is paid for. Again converting working capital into tangible resources that can be used to pay for the firm is key to covering the businesses operating expenses day to day in this economy. It is more profitable for the company to do this. This will not change the overall total value of assets, but it would shift assets from being fixed into being current. Having more current assets creates a larger net working capital for the business, which is beneficial to them. Determinants of the businesses growth include total asset turnover and the dividend policy. The total asset turnover will be increased if the tips in this article are complied with. This is because having current assets that can and will be used increases this amount. The dividend policy is about choosing how much to pay shareholders versus reinvesting

Working Capital is again in the red zone, dropping more than 75% from FY09 to FY10. However, the historic trend for the company is not very impressive, with working capital dropping as low as -$3 billion. The Operating Cash Flow Ratio is somewhat more reassuring, standing at 18.13 in FY10 from 14.67 a year earlier. This implies that for every dollar of current liability, the operations are providing $18 of revenue to cover the expense. However, operations are not primarily meant to cover just short term obligations, but also long term costs. Thus it cannot be justified that operations are very adequate to meet ST obligations.

The above figure is the comparative balance sheet of Canadian Tire Corporation, Limited. for the year 2009 to 2010. In the assets section, though current assets decreased by 3.7%, the total assets decreased only by 1.2% because the net capital assets increased by 2.3%. The similar trend appeared in the liabilities section, too. The current liabilities decreased by 20.2% while the long-term liabilities increased by 1.9%. As a result, the total liabilities decreased by 9.4%. In the shareholders’ equity section, there was a 0.1% decrease in the common shares but 12.6% increase for the retained earnings which made the total shareholders’ equity

and, even if successful, such alternative actions may not allow us to meet our scheduled debt service obligations. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. These restrictions may limit the ability to engage in acts that may be in company’s long-term best interests, and may make it difficult for the company to execute their business strategy successfully or effectively compete with companies that are not similarly restricted.

Due to the new change in our company’s strategy and our lack of funds, it is unfortunate that we

For a long term borrowing, should the company turn to Southern Bank & Trust for an extended line of credit or maintain its relationship with Metropolitan Bank?

As a result of the shortage of cash flow, Resort Co. restructured and amended the Original Debt with Bank A and Bank B. Highlights include new interest terms from 5 percent to 6 percent, no more annual payments of principal and interest, and the same maturity date as originally stated. The amended original debt (Modified Debt) no longer requires periodic payments of principal and interest; instead all interest and principal is due at maturity. Additionally, with the modification of the Original Debt, Bank B offered Resort Co. a new $15 million term loan (New Term Loan) that is due on December 31, 2020 with the same interest and payment terms as the modified debt. The proceeds from this loan were used to pay for fees to Bank A and expenses incurred by third parties, pay for the principal paydown of the Original Debt held by

1 In Ravi Suria’s analysis, “we believe that the current cash balances will last the company through the first quarter of 2001.” According to Exhibit 12c the cash flow statement, in contrast, the cash balance could last for the first quarter of 2001, when it suffered from 407 losses in operating activities, though positive in investing and

Utilizing the monthly forecast financial statement provided by Guna Fibres, Exhibit 1, it is necessary to create a statement of cash flows to begin to assess how the company’s capital is being managed through the working capital accounts of the firm. Exhibit 2 shows the breakdown of cash flows on a monthly basis based on the forecasted information provided by Guna Fibres. There are several important insights to point to instability within Guna Fibres. The first trend that is concerning is that according to Guna Fibres forecast, they will require a positive cash flow from financing activities through the month of June 2012 just maintain operations. Certainly, if this was to be presented to the bank there would be no chance that they would be willing to extend credit as Guna Fibres will not be able to zero out the debt balance in the coming months. Examination of Exhibit 3 shows the statement of cash flows for Guna Fibres for year ending in December 2012. Note the highlighted the cell that indicates the change in short term notes payable for the year in the amount of

The main problem of the company is that it couldn’t liquidate a seasonal working capital loan for the requisite 30 days each year. It reflects the company doesn’t have sufficient cash and they need more loan but the bank is reluctant to give any unless the company can give a reliable financial plan to show they can pay off their loan by the end of 2012. So, Mr Malik came up with a financial forecast for the month to month operation to gain the bank’s trust. Sadly, the forecast portrays it cannot afford to pay off its debt by end of 2012 and would owe a balance of IND 3,858.00. This