preview

Organic Farming and Ceres Essay

Better Essays

Ceres Gardening Ceres Gardening Company Case Study 1. How has the company grown? What is its basic strategy + how has it evolved? What have been the key factors in the company's growth? The growth of the company has been fueled by the market demand growth in organic products. Ceres increased their revenues by over 75% in just five years, while growing profits by over 25% (based on Exhibits 2, 3 & 4). Ceres’s basic strategy started with its founder, Jonathan Wydown, to promote sustainable organic gardens and landscapes to environmentally conscious consumers. Mr. Wydown has been a proponent of soil preservation, biodiversity, and natural fertilizers and pest control. Mr. Wydown was confident that the same principles behind …show more content…

* Debt Equity shows Ceres’ financial leverage and its aggressive posture in financing its growth with debt. The company could potentially generate more earnings than it would have without this outside financing. This indicates that even with Ceres’ expansion of distribution channels, extension of payment terms, and the creation of a direct sales force, Ceres was able to manage to stay below 1 with a mean average of .74. * Inventory Turnover shows an efficient turnover of inventory. Ceres does not hold inventory for long periods of time, which can incur additional costs by having assets sit without revenue generation. It shows Ceres’ ability to manage inventory in a seasonal cycle and further indicates their ability to forecast demands on product movement. * Accounts Receivable shows Ceres’ effectiveness in extending credit as well as collecting debts. The extended payment terms appear to be working. The prompt collection of debts enables Ceres’ to use the monies to reinvest into the business. Table 1 - Ratios Used Ratios | 2002 | 2003 | 2004 | 2005 | 2006E | Mean | Current RatioCurrent Assets/Current Liabilities | 3.10 | 2.63 | 2.18 | 2.13 | 2.01 | 2.41 | Quick Ratio(Current Assets-Inventories)/Current Liabilities | 1.78 | 1.79 | 1.59 | 1.68 | 1.63 | 1.70 | Debt Equity(Total Liabilities/Shareholders Equity) | .47 | .55 | .76 | .89 | 1.05 | .74 | Inventory

Get Access