The Cost Of Sales Increased And Reduced Average Inventory

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%.

4. For the most recent year, what is the amount of cost of goods sold in the

Given the net sales in 2011 is still higher than 2010, we can assume the problem is most likely with its operating cost management. On the other hand, HH’s assets turnover rate dropping 0.30 from 2010 suggests an inefficiency of generating more sales with its increased assets in 2011.

The effect of this transaction and next year’s income statement would be the ending inventory balance will increase and added in the cost of goods sold. The current period, the high value of the inventory balance will imply lower gross margins. The income tax expenses will decrease as the income tax expenses are usually proportionately depending on the company’s net earnings. In the next year, the transaction will increase in income and tax expense. Because a lot of inventories will be processed into finished goods which increase the gross sales, increasing the level of gross profit and earnings in the company. The income tax expenses and net earnings will increase.

Now as far as the company’s cash flow is concerned, the company has been suffered with very weak cash flows because inventory and receivables have increased which result in negative cash flows and due to increased in accounts payable resulting in positive cash flow thus overall cash generated from operations remain intact. However as mentioned above it is operational inefficiency due to delay in collection from customers resulting in delay in payments to creditor. The current ratio is at satisfactory level.

First of which, is the current ratio. It has been rapidly declining since 2000. To me this indicates that there is a liquidity issue. Each year their trade debt increase exceeds the increase of net income for the company. As a result, the working capital has taken a nosedive from $58,650 in 2002 to only $5,466 in 2003.

Increase in current liabilities Substantial increase in current liabilities weakened the company’s liquidity position. Its current liabilities were US$2,063.94 million at the end of FY2010, a 48.09% increase compared to the previous year. However, its current assets recorded a marginal increase of 25.07% - from US$1,770.02 million at the end of FY2009 to US$2,213.72 million at the end of FY2010. Following this, the company’s current ratio declined from 1.27 at the end of the FY2009 to 1.07 at the end of FY2010. A lower current ratio indicates that the company is in a weak financial position, and it may find it difficult to meet its day-to-day obligations.

To make further comment we need to investigate further by looking at industry, competitors and economy. There may be other factors causing this ratio to decrease such as a general decline gross margin profit in retail sector affecting all companies, high inflation causing less demand, increasing competition etc. We should do further investigation to make further comment.

In conducting the balance sheet vertical analysis for Allergan, one trend that can be seen is the increase of cash as a percent of total assets, rising from 29.43% in 2012 to 39.4% in 2014. While having large amount of cash is necessary, idle cash is unproductive. Another trend is the consistent percentage of trade receivables and inventories as a percent of total assets, fluctuating within a very small range. This most likely means good management of working capital. Similar conclusion can be made regarding long-term assets, such as PPE and goodwill. On the liabilities and equity side there is more of the same. No clear downward or upward trend can be seen on any of the major accounts. Due to solid profitability the last two years, retained

Cost of goods sold will continue to be an area that further increases as a result of management decisions. We estimate that COGS will increase from 42389.35 to 64621.89, which is an

The biggest change in Abbott’s balance sheet can be seen in the composition of its asset accounts. In 2006, % of the firm’s assets were current, while 69% were of the long-term variety. In 2010, however, the portion of current assets increased by 7%. This increase in current assets is most visible in cash and short-term investments (4% in 2006 to 9% in 2010) and corresponds with a higher level of uncertainty in today’s economy. The fact that Abbott Laboratories has chosen to increase the value of liquid assets on its balance sheet indicates low returns on long-term investments and a preference of keeping cash on hand rather than reinvesting in the business.

Also, the gross profit had a lower increase(+9.67%), that means the cost of sales increased more than the revenue increase in term of percentage. There was a 13.16% rose in net operating expense as both selling and distribution costs and administrative expenses increased. One of the reasons why net operating expense increased because the firm had a programme of reinvesting for organic growth which supply chain, IT and store portfolio had improved. The rose of the net operating expense lead to a 2.13% drop in the operating

Balance Sheet: Assets, such as Cash and Cash equivalents are up over last year by $20.72 million dollars, whereas Short Term Investments where 0 at the end of 2013 they were slightly up to $1.12 by January 3, 2015. Other Assets shows a drop of $8.26 million dollars, mostly in Property, Plant and Equipment. Based on the 10-K report the balance sheet was in the thousands other web based financial reporting sites show the numbers to be in the millions. Upon further review of the Balance Sheet from the financial website “Watch” the break down in Property, Plant and Equipment shows the biggest difference in the Accumulated Depreciation. (Market Watch) The Vertical Ratio for 2014 Total Current Assets is 3% of the Total Assets and in 2013 was also 3%. The Horizontal Ratio for Total Asset were 37% reflecting a change from 2014 at $212.05 and 2013 $195.61 signaling a significant increase in 2014. The 2015 financial were not completed at the time of this report but the

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

In year 2007 quick ratio reached dangerous point – 1,02, company’s ability to pay its short-term obligations was badly influenced by the increase in short-term liabilities In 2008 meaning of the ratio grew up, because of the factors listed above. In year 2009 both ratios fell, since company took more liabilities than in 2008: its short-term borrowings, current tax and short-term provisions increased Average showings on AstraZeneca Quick ratio during the period was 1,13, while GSK – 1,22 which again proves that GSK was more liquid during the analysed period.