Financial analysis Case Study example
Undergraduate
Case Study
Finance & Accounting
Pages 5 (1255 words)
Download 0
Name: Institution: Professor: Date: Cape Chemicals: Cash and profits Introduction The case is about Cape Chemicals which has been profitable but experienced problems in cash flow. It therefore raises questions on how a company can report a better performance in terms of profitability while experiencing cash flow problems at the same time…

Introduction

There are various as to why a firm can be profitable and experience cash flow problems at the same time. This case study will discuss the reasons as to why the firm is experiencing cash problems and provide recommendations on how it can improve its cash flow. Cash flow is the ability of a company to meet its financial obligations. A negative cash flow prevents a company from meeting its debt payments like in the case of Cape Chemicals. It is important for Cape Chemicals to analyze the reasons leading to the negative cash flow while still reporting an increase in the profits. By doing this, it will be able to lower its debt ratio to enable it acquire long term borrowing. The analysis will also be aimed at acquiring a positive cash flow and positive profits. Reasons for the negative cash flows at Cape Chemicals The profit for the company has increased significantly over the last three years due to the increase in the revenue obtained from the increase in sales of chemicals. The new product lines have led to increased production and hence increased sales and revenues. However, despite of the increase in profit, the company has negative cash flow due to increase dependence of loans for its capital expenditure. ...
Download paper
Not exactly what you need?

Related papers

Financial analysis
Autonomy Corporation is a global enterprise that has dual corporate headquarters in Cambridge, United Kingdom and San Francisco, USA. The company has a presence in four continents: North America, South America, Europe, and Asia Pacific. The firm has more than 400 major clients including Oracle, IBM, HP, and Novell which are users and supporters of the firm’s technological products. This paper…
Financial Analysis
They also state that the market value is not determined by the dividend policy. In relation to the irrelevance of dividends, two theorems are applied; these are Modigliani-Miller approach and residual theory (Thompson & Mathew 82). Q2. The major assumption behind the residual income valuation model is the clean surplus relationship, that stresses the relationship among book value per share,…
Financial Analysis and Forecasting
analysis shows that there exist a perfect relationship between sales and assets. The value of R-square is 1 this shows a perfect relationship that will produce a best-line-of fit that passes through the origin. The proportionality assumption that the value of assets increases proportionally with sales is therefore, holds, and is true. B) Repeat the part a regression analysis assuming the given…
Financial Analysis for Kroger Co.
For an industry like Kroger’s, the most important factor for consumers is price. The products available in supermarkets are not differentiated and therefore they cannot be advertised heavily. Much of the advertisement that is done is carried out on the basis of attracting families to shop at Kroger because it is cost effective to do so. Apart from being cost effective Kroger also has products of…
Tesco Plc Financial Analysis
Furthermore, Tesco operate online sales of product which has seen them expand internationally and get customers all over the world. There are reasons as to why Tesco is customers’ favorite store in the UK. Tesco have got a well analyzed capital structure which supports the growth of business plan with consideration of their expertise in the financial system and cash management. Tesco also has a…
Financial Analysis
Horizontal Analysis – Income Statement   May-13 Feb-13 Nov-12       $ in million % of Sales $ in million % of Sales $ in million % of Sales Revenues 6,697 100.00% 6,187 100.00% 5,955 100.00% Cost of Sales 3,757 56.10% 3,451 55.78% 3,425 57.51% Gross Profits 2,940 43.90% 2,736 44.22% 2,530 42.49% Demand creation expense 642 9.59% 619 10.00% 613 10.29% Operating overhead expense 1,380 20.61%…
Financial Analysis for Managers
However, the highly competitive nature of today’s corporate world has given rise to an essence of unethical behaviour which underlies a majority of business operations; in order to ensure their success. Many a times, unethical behaviour in the workplace has an immense negative impact on the organization and its employees. These effects can be psychological, financial, social, or even…