Profiling Limits Debt

The company have generated very low operating cash flows, which is caused by a negative net income(16, 55) in 94,95, again with sales going down and cost of goods sold increasing. The company current ratio (2.3, 2.1, 2.5) in 93, 94, 95 are indicating satisfactory but when analyze quick ratio (1.1, 1.1, 1.3), and we also know that sales are down which mean more inventories. Now the account payable days has been increasing (49, 62, and 66). They have been delaying there payment which mean more cash on

As you can see from this mock Balance Sheet of our business, it (1) has enough assets to pay our debts when they are due, and (2) the claims of short and long-term creditors on

Although the company seems to be profitable, it has faced shortage of cash. It happened due to increase in Accounts Receivable as well as Inventories. On the other hand, Accounts Payable does not increase that rapidly and difficulties regarding cash collection become evident. Furthermore, the cash collection cycle becomes larger (59 days in year 2003, while more than 70 in year 2006).

After reviewing the Balance sheet I have a concern regarding the Current and short term liabilities. Creditors/ trade payable is payment yet to be made for goods already received, if this continues to rise then it will effect the business profit and less stock will have to be ordered so repayments can be made. Bank overdrafts also continued to rise and in the long-term the business will be paying greater interest, which will again eat into the profit. Both increased quite a great deal from the last year-end. If this continues then the business will get into bad debts and owe too much that it will end up having to sale its assets to survive. Finally I can see that due to the above issues and other issues the net current assets/ working capital has decreased so therefore the business is less value then it was a year ago. If the business is worth £1 million now, this could soon decrease within another year.

This is a weakness for CBI because it could indicate that they are not collecting from their buyers in efficient or timely manner. When a company has large amounts of funds that are uncollected they do not have the cash on hand to purchase raw materials and pay expenses, which can negatively impact its ability to turn a profit. This will be examined further when the average collection period is analyzed later in this report.

If Allied Collection Services can NOT provide all of the validation media requested above, ALL collection efforts MUST be stopped and the account MUST be DELETED from Allied Collection Services. If you can NOT validate your claim, you can NOT, by law, collect on it, or SELL it to another collection agency. Also, reporting a debt to the credit reporting agencies that cannot be validated is a violation of the FCRA (Fair Credit Reporting Act), and carries a fine up to $2500 to be paid to me. I have two years to decide if I want to pursue this matter. PLEASE GIVE THIS MATTER THE ATTENTION IT

Collections with JPMorgan Chase. It's really hard specially if customers are very upset with the situation

Although the income statement and balance sheet provide measures of a company’s success in terms of performance and financial position, cash flow is also vital to a company’s long-term success. Disclosing the sources and uses of cash helps creditors, investors, and other statement users evaluate a company’s liquidity, solvency, and financial flexibility. Financial flexibility is the ability of a company to react and adapt to financial adversities and opportunities. McDonald’s cash flow is

Support: The Company’s revenues increased considerably (19%). However, the Accounts receivables also increased significantly (38%). Increase in revenues are generally associated with a proportional increase in the allowance for doubtful debts. By not reporting a significant ‘allowable for bad debt accounts’, the company is able to overstate its profits and could be a cause for concern in the long run, if the receivables turn out to be bad.

debt. The steady cash flow generated by the business, short-term bank loans, and the proceeds of the

This gave Rick an opportunity to take those frozen accounts and start his own collections agency with the vast amount of local and international accounts and connections that National University previously provided. This was a start to a new business altogether, and without National as an overhead, Rick was able to make substantially more profit for himself and his three co-partners that he brought in with him to Legal Recovery Law Offices. Along with his own savings, his three partners also matched his investment into the new business allowing them to support starting costs and equipment needed for the business. When Rick started the business, he said “The field was relatively new. Few rules or laws, if any, applied to us and we were able to have free reign on the industry.” He was able to partner with Capital One, Visa and MasterCard. When he started, many laws and rules that we see today in this field didn’t apply, but now the collections field has seen a vast drop in growth as more and more laws are enforced and more fees and lawsuits continue to add up for collection firms. Legal Recovery was one of California’s industry leaders and until recently, had been able to survive, but Rick stated, “The current legal measures and rules against publicly owned collections agencies is astronomical, our only option was to shut down and open a separate firm in a different direction.”

The main obstacle told in the video "In Debt We Trust" isn't social inequality itself. The main obstacle is the businesses that help keep the poor in debt. Businesses such as H&R Block have to add high interests with their loans because people with a lower socioeconomic status are a bigger risk when it comes to loans. Poor people can't get out of debt when they get these quick loans to survive because of the high interest attached to it. They can't borrow any money without the high interest, so in the end they are paying quadruple the amount or more than a person with good credit and lower interest rates would pay. I think it might help to educate the poor on how loans and interest work, but at the same time, once you're already in debt,

Assets in the financial statement are always required and show useful information to investors and understand where the information comes from. For instance, accounts receivable net which the organization does not expect to collect all of the money it is due from all patients and insurers, (Finkler, S.A., Ward, D.M. & Calabrese, I.D., 2013). The bad debts become about of the money due. Furthermore, accounts receivables, net represents gross charges less an allowance for poor debts, and many contractual allowances established with those third party payers. Typically, an example of a bad debt would show charges of a large sum of money delivered from a hospital. Then, the contractual allowances from

Along with these, it is also evident that the company must fix its processes involving bad debt accounting and revenue recognition. They should also attend to their accounts receivable to come up with better terms that would make collections faster and more efficient.

Furthermore, if an organisation does not have enough cash resources in order to settle its current liabilities, this will highlight great inefficiency with stock turnover not being sold. A good company such as Sainsbury’s we see is healthy because revenue is recognised from inventories sold – this revenue allows cash to flow in order to pay for short term and long-term liabilities. It is evident that there are insufficient cash flowing into the company from investing activities and financing activities, which are shown by the brackets.