EXAM FINANCIAL ANALYSIS BEGINNERS BALANCE SHEET INTANGIBLE ASSETS TANGIBLE ASSETS FINANCIAL ASSET INVENTORY ACCOUNT RECEIVABLE BANK CASH 100,000 1,630,000 3,670,000 16,610,000 4,960,000 240,000 140,000 27,350,000 ACCOUNT PAYABLE SUPPLIERS ACCOUNT PAYABLE STATE ACCOUNT PAYABLE OTHERS 1,840,000 3,440,000 1,510,000 27,350,000 COMMON STOCK RETAINED EARNINGS LTB 7,000,000 560,000 13,000,000
P/L TURNOVER COGS GROSS MARGIN OVERHEAD ADDED VALUE TAX/WAGES EBITDA DEPRECIATION 25,030,000 9,000,000 16,030,000 2,810,000 13,220,000 13,890,000 -670,000 -300,000
FINANCIAL RESULT -340,000 RESULT BEFOR TAXES -1,310,000
EXAM FINANCIAL ANALYSIS BEGINNERS 1. What would you say on the ...view middle of the document...
3. If you were bank manager what would you think? Liquid Ratio AR + Bank + Cash AP Inventory COGS 78.65%
Days of Inventory
There is a lack of liquidity of the Company which makes difficult to fulfill their short terms commitment of payments; however, due to the high Inventory and the Gross Margin of this Company would be an interesting and risky investment as long as they give the Inventory as a warranty or reestructure its headcount.
4. What about the short term situation of the Company? Acid Ratio Current Ratio Bank + Cash 5.60% AP Inventory + AR + Bank + Cash AP
AP Suppliers Overhead AR Turnover
8 months we are late in suppliers payments
2 months payment commitment of Clients
AP Suppliers COGS
2 months payment commitment to Suppliers
As we mentioned before, the Company had a liquidity issue. They are not capable of fulfilling their payment commitments in the short term (they have a delay of 8 months with their suppliers). Moreover, the Company should not have an issue on the payment conditions with Clients and Suppliers since in both cases the payment commitment is of 2 months roughly. Regarding the Current Ratio, it could be tricky because the Inventory should not be considered since can not be easily cashed (Wine).
5. What would you say about the amount of the inventory, account receivable and account payable? The Inventory level hold by the Company seems reasonable (2 years) as the Wine requires a certain period of time to improve its quality. Account Receivable (AR): According to the amount of the AR, we notice that our Client payments are being made...