Massey A7

There are two noticeable dips in the net income in the 4th and the 7th period. The dip in the 4th time period is because of the introduction of a new product called “Allround+” which is a 4-hour liquid cold medicine for the children and the dip in the 7th period is because of the introduction of another new product called “Allright” which is a 4-hour allergy capsule. Whenever, new products are introduced a lot of money is invested in marketing and promoting the new products to encourage or boost the sales of the product. This process increases the expenses of the products and erects a higher threshold for the company to reach to, to make a profit. Hence, it is normal when the net income dips during the introduction of new products in the market.

Massey’s competitors were International Harvester and Deere&Company. In 1976, Massey’s market share was 34%, while the other two were 27.7% and 38% respectively. International Harvester had the highest sales and it was also the most efficient in making use of its assets, with a sales/asset ratio of 1.54. Massey was in the middle, doing better than Deere&Company. With regard to financing, in 1976, Massey and International Harvester both had a less than 50% debt/total capital. While till 1980, International Harvester managed to keep the ratio around 50%, Massey had the total debt/capital ratio out of control, with more than 80% debt financing. Neither of the two competitors relied on short term debt such as STD, while Massey relied heavily on STD.

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

MTI is experiencing a net loss in 2010. The net income has fluctuated significantly from 2009 to 2010, thus the net income or operating profit are not appropriate bases to determine materiality on.

July Recurring EBITDA was $8.4M unfavorable to budget by $10.2M; unfavorable to July FY16 budget by $8.9M

The drought has weakened the ability of farmers who produce food. Therefore, sub-Saharan Africa and Australia farmers obtained reduced income and tax revenues. Instead, food prices and the rate of unemployment were increased. Compared with sub-Saharan Africa, Australia had more severe financial problems. With an economic recession spreading in agricultural industry, Australia farmers are encumbered by debts that they cannot afford new technologies or crops.

Finally, the Tax Reform Act of 1986 reduced many of the tax benefits associated with horse breeding, leading to a drastic curtailment of demand for new horse transport vans. In light of the softening demand, Mark X had aggressively reduced prices in 1991 and 1992 to stimulate sales. This, the company believed, would allow it to realize greater economies of scale in production and to ride the learning, or experience, curve down to a lower cost position. Mark X’s management had full confidence that national economic policies would revive the ailing economy and that the downturn in demand would be only a short-term problem. Consequently, production continued unabated, and inventories increased sharply. In a further effort to reduce inventory, Mark X relaxed its credit standards in early 1992 and improved its already favorable credit terms. As a result, sales growth did remain high by industry standards through the third quarter of 1992, but not high enough to keep inventories from continuing to rise. Further, the credit policy changes had caused accounts receivable to increase dramatically by late 1992. To finance its rising inventories and receivables, Mark X turned to the bank for a long-term loan in 1991 and also increased its short-term credit lines in both 1991 and 1992. However, this expanded credit was insufficient to cover the asset expansion, so the company began to delay payments of its accounts payable until the second late notice had been received.

Cartwright is a retail distributor of lumber products. It built its competitive edge based on pricing and having a careful control over its operations. The company reported an operating income of $86,000 and $111,000 in 2003 and 2004, respectively. This is a 29% increase in operating income in one year, which shows the firm’s strong ability to generate cash. The firm’s account receivables and inventory are increasing from year to year which is a good sign of a growing business. Cartwright is not an asset intensive company. It does not have to have huge fixed assets; most of its assets are cash, accounts receivable and inventory which all depend on future sales. Sourcing of materials is managed very well, purchased at discounts most of the time and contribute to having lower prices.

The cash flow situation started falling from the end of year 12. The company should have known from this.

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

In the year 2007, there is a drop in financial performance within the company. Earnings have dropped

effect the American auto industry are; global competition in the industry, new technology for powering

balance sheet reported an operating loss of $301m (for the first time since 1998) while warning

- The financial statements for the past three years show a decline trend in both the operation and return on shareholder of the company, so a closer look at the factors contributing to this decline is needed.

significant drop in the revenues for third quarter of 1999. Annual revenues for 1999 were US$ 150