Smitz Plc Case

This report will analyse and outline the company’s profitability, liquidity, solvency and investment potentials based on 15 ratios. All information is taken from the Next plc 2011 statement.

This solutions manual provides the answers to all the review questions and end-of-chapter problems in Financial Management: Principles and Practice, by Timothy Gallagher. The answers and the steps taken to obtain the answers are shown. Readers are reminded that in finance there is often more than one answer to a question or to a problem, depending on one‘s viewpoint and assumptions. One answer is

Secondly, the centralization of the credit function will lead to several immediate benefits. Implementing the Charlotte model in other markets will put a proven credit manager to guide decisions of local credit managers of the different KOBs. A local SMCM will also allow for greater information sharing between functions and branches in a given market, providing superior services as a centralized contact for large clients who buy from multiple KOBs. Furthermore, some redundancies could be eliminated. For example, if a branch has a few credit managers with overlapping coverage, the low-performing managers could be dismissed. The credit function appears to overlap across various business groups and there are clear synergies that could come from empowering few strong managers in a given geography with responsibilities for more than one business lines.

I work as a Credit Representative for Graco Inc, a Minneapolis based company. Graco Inc is a manufacturing company provider of premium pumps and spray equipment for fluid handling in construction, manufacturing, processing and maintenance industries. As a Credit Representative, we handle both the Credit and Collection functions. In Credit, customers are evaluated on their credit history based on financial statements, credit reports and trade references to determine the financial risk. Our goal is to support sales by extending credit and terms to customers. On the other hand, as Collectors, we perform collection efforts to ensure accounts are paid on time and resolve any outstanding balances. Customers whom tends to struggle on payments and pay late on their bills, our leverage is to hold orders to collect debt.

A review of a company’s financial performance can help determine if the organization is utilizing its resources to receive the most benefit for the organization for short and long term planning. This paper will review the current performance of StilSim by comparing it to a competitor and evaluating its past. A review of the company’s short term liquidity, long term solvency, asset management, and profitability will help to determine the next steps in the strategic plan.

Oleg Pinchuk has taken the initiative to completely change the credit standards of the firm in order to accommodate the needs of the Ukraine distributors. The credit policy for our Western Germany distributors is 2% 10 net 40. We maintain a low accounts receivable balance with modest year over year increases. In an effort to bring aboard Ukraine distributors in order to start the eastward expansion, Pinchuk initiated a relaxed credit policy of 2% 10 net 80. Even with these friendly standards, the 5 distributors are rarely able to pay us back in time and Pinchuk is considering an even more flexible policy of 2% 10 net 90. Loosening the standards for clients who are already struggling to pay in greatly relaxed environment is not a good idea. In fact, now that there is business established in the Ukraine, it is time to reign in the credit policy to bring it in line with that of the West. Pinchuk has a lot of faith in his new distributor network and tightening the credit policy will squeeze out the ones he was wrong about. This will result in fewer sales but will reduce risk by avoiding granting credit to unstable businesses. There is a reason why the banks in the Ukraine will not lend.

The interview with Colin Smith, from Office Products Depot, meant I was able to identify the accounts receivable subsystem they used and their accounts receivable management. I focussed on their policies for the offering and checking of credit, managing credit levels, charging the credit customers, receiving payment from credit customers and the general management of credit customers. I will be using the information from the interview with Colin as well as information from fictitious accounts receivable to explain their policies.

SGMS has been operating with net loss since 2008. The profit margin of -13.1% in fiscal year 2014 and -50.5% in fiscal year 2015 exhibits a troubling historical performance. Though a better profit margin of -10.2% by 2016Q2, the negative net income trends may not turn around in the short run. The negative equity in balance causes negative D/E ratios and nonapplicable Return on Equity in recent years. The company’s high leverage poses threat to its credit and liquidity.

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.

Faced with the adverse economic environment, the sports retail industry is fiercely competitive. All the companies involved take various measures to maintain competitive advantage and improve profitability. When it comes to whether a corporation is worth to invest, financial analysis is greatly needed, since it can provide sufficient information to investors from different viewpoints. After in-depth financial analysis of JD Sports Fashion (JD), one of the leading specialised sports retailers in UK, it can be concluded that JD is worthwhile for a pension fund to invest.

Reflection and comparison of the major movements in performance for Sainsbury’s over the last five years. In order understand the business; finance plays one of the biggest roles in the company. Анализ финансового состояние может принести пользу организации и содействовать повышению эффективности процесса стратегического планирования.Analysis of financial condition could benefit the organization and contribute to the efficiency of the strategic planning process.Имеются многочисленные “за” и “против” проведения финансовой ревизии фирмы. There are numerous “pros” and “cons” for financial audit firms.Но в целом, преимущества постоянного контроля

Balance sheets and income statements are a snapshot of a company’s stability and financial situation. Combined the statements show the income, expenses, and stockholder’s equity in the company. These statements are often analyzed by financial institutions when a company comes to them needing a loan. Stockholders and other investors also look at these statements to make sure their investment will return a profit for them. This paper will look at four different companies and their balance sheets and income statements. The companies are Eastman Chemical Company, Covenant Transportation

At first glance Kooritsa Kiev seems like it is in a decent position with a net operating working capital of 46,625 Rubles, a net operating profit after tax of 16,159 Rubles. However, when you delve further you realize they have a negative free cash flow of 116 Rubles, which is not always a sign of bad business, especially when a company is growing at a rapid pace however, in Kooritsa Kiev’s case it is a bad sign. Several factors point to a negative growth trend; one, their return on invested capital is very low at .3393 and with their net operating profit after tax being low this shows that they are most likely in financial trouble. Two, from 2007 to 2008 Kooritsa Kiev’s current ratio went from 1.4863 to 1.3427 suggesting that since the beginning of the year they have begun to pay their accounts payable slower. Three, their total asset turnover ratio displays concern as well; from 2007 to 2008 it dropped from 2.5 to 2.4 showing that Kooritsa Kiev generated less volume given its total asset investment in 2008. Lastly, the largest display of their trouble is their gross profit margin change from 2007 to 2008. In 2007 they were at 20% in 2008 it dropped to 17%. This shows that for every Ruble in sales in 2008 Kooritsa Kiev only kept 17 cents and spent 83 cents to deliver to its customers.

It’s noticeable how the company’s operations have been deteriorating as they are having a more difficult time translating sales into cash. Their A/R turnover is not where it needs to be, and in line with that, their liabilities are increasing as well. The company has also been inefficient with the use of their assets as their current activity ratios are not up to par with the industry standards.

In simple way we can say creditors are that those which are we purchase product, service or take money in credit base and we can make a promise to creditors to we can pay those money in future.