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Ruela - Ceres Gardening Company

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ruelapereira4
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23 views6 pages

Ruela - Ceres Gardening Company

Uploaded by

ruelapereira4
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Name Ruela Pereira

Question 1

Write your answer for Part A here.

Profit from Operating activities is $2,26,000 – which is 14.73% of the net profit. And the
3 main categories in the cash flow statement that contributed to the decline in total cash
flow are -:

1) Increase in Accounts Receivables


2) Investments in PP&E
3) Investment in Land

The other categories contributing to the decline is Increase in Retirement of Debts and
Increase in Dividends.

Write your answer for Part B here.

Operating Activities-: The trend that can been seen in operating activities over the given
period is decreasing trend. The main category contributing for this decrease is –
Increase in Accounts Receivables creating less liquidty.

Investing Activities-: The trend is a decreasing trend in the Investing Activities with a
little bit of Stagnancy in Cash Flow. The major contributor is Increase in Investments in
PP&E.
Financing Activities-: In Financing activities the trend that can be observed is an
increasing one from year 2003 to year 2005 while it is estimate to decline in year 2006
because of Increase in Dividends and Retirement of Debts.

Write your answer for Part C here.

Self - Financing of Investments – The company has an Issuance of Debt through which
there is an inflow of cash in the company.

Funding of Investments – There is a slight increase in the funding of investment of PP&E


wherein the cash is outflowing from the company.

Cash Position of Company – The cash position for the year 2006(E) is in negative as the
outflow is more than the inflow considering operating, financing and investing activities.

Question 2

Write your answer for Part A here. Paste the excel sheet containing your calculations
here.

The Operating Working Capital is as follows-:

Year 2002= 4540

Year 2003= 4227

Year 2004= 5122

Year 2005= 6917

Year 2006(E)= 8894


Write your answer for Part B here. Paste the excel sheet containing your calculations
here.

The Operating Working Capital/Sales ratio of Ceres Garden is as follows-:

Year 2002= 5

Year 2003= 6

Year 2004= 6

Year 2005= 5

Year 2006 = 5

Write your answer for Part C here. Paste the excel sheet containing your calculations
here.

Year 2002 2003 2004 2005 2006 (E)

DSO 51 59 84 106 122

DIO 54 46 48 41 39

DPO 36 49 74 84 97

Write your answer for Part D here.

Longer credit period have increased the sales revenue but also it has increased debt
issuance to fund the Inventory.
Longer credit period may increase sales revenue but there is no cash inflow which
creates less liquidity in the company. This leads to more purchase of Investments and
issuance of Debt.

Question 3

Write your answer for Part A here. Also, paste the economical balance sheet prepared by
you here.

2006
At December 31 2002 2003 2004 2005 (e)
PP&E 2257 2680 2958 3617 4347
Other Asset 645 645 645 645 645
Land 450 1750 2853 2853 2853
Non-Current Assets 3352 5075 6456 7115 7845
Accounts Receivable 3485 4405 6821 10286 14471
Inventories 3089 2795 3201 3291 3847
Accounts Payable 2034 2973 4899 6660 9424
Operating Working Capital 4540 4227 5123 6917 8894
Capital Employed 7892 9302 11579 14032 16739

Question 4

Paste the excel sheet containing the final answers for Part A here.

Year 2002 2003 2004 2005 2006 (E)

Variable 0.17 0.19 0.186 0 0.176


Margin
6.65% 8.72% 8.08% 8.08% 7%
Operating
Margin

23.70% 21.22% 17.89% 17.84% 16.04%


Return On
Equity

Return on 20.79% 25.13% 20.79% 20.20% 18.03%


Average
Capital
Employed

Write your answer for Part B here.

The trend of Return on Equity in decreasing over the year from 2002 to 2006 (E). While
the net profit is increasing, the infusion of equity has also increased.

Write your answer for Part C here.

The trend that can be observed in RoACE is stagnancy.

Question 5
Write your answer for Part A here.

Due to GetCeres program the sales have increased with over 25% over but this product
is been supplied from the external credit line (Loan). And the credit line to the consumers
have been extended due to which there is no cash inflow for the sales generated.

With regards to the cash flow statement the GetCeres project should be stopped if cash is
not coming in the company. But as per balance sheet the GetCeres project is beneficial
with increase in Net Profit.

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