(c) Hydrogenics Corporation financed its assets mostly through debt. In 2013, it had 84.6% debt and 15.4% equity. Similarly in 2012, it had 89.7% debt and 10.3% equity. Its debt to equity ratio was 5.50 times and 8.72 times in 2013 and 2012 respectively. The debt to equity ratio of Hydrogenics Corporation is a concern to creditors. Potential creditors might be reluctant to extend credit to the company. (d) The account receivable growth rate from 2012 to 2013 was a decrease of 5.52% whereas the allowance for doubtful accounts went up by 12.10%. The sales account had a growth rate of 33.81%. From these numbers we see that the sales of Hydrogenics Corporation increased from 2012 to 2013. Since there was a decrease in the accounts receivable, …show more content…
The Corporation has sustained losses and negative cash flows from operations since its inception. The Corporation is exposed to liquidity risk as it continues to have net cash outflows to support its operations. The Corporation’s objective is to minimize its exposure to credit risk from customers in order to prevent losses on financial assets by performing regular monitoring of overdue balances and to provide allowance for potentially uncollectible accounts receivable. The Corporation has also insured a portion of its outstanding accounts receivable with Export Development Canada. By insuring its outstanding accounts receivable, Hydrogenics had less write-off of bad debts. Based on its past experience of not collecting its receivables from customers, the company made a larger allowance for bad debt in 2013 than 2012. The result is the higher growth rate in allowance for doubtful accounts and decrease in accounts …show more content…
In terms of commitments, it has operating leases of $4,677 thousand due after 2018. In 2013 it recorded $845 thousand of its operating lease as rent expense. In 2014, it is expecting to expense $1,083 thousand. This amount is material for Hydrogenics Corporation considering its low cash inflow from operations. In the area of contingencies, Hydrogenics Corporation has not recorded any transactions yet. It has “entered into indemnification agreements with its current and former directors and officers to indemnify them, to the extent permitted by law against any and all charges, costs, expenses, amounts paid in settlement, and damages” (Hydrogenics). Hydrogenics Corporation also expensed $7,614 thousand in 2013 as part of its guarantees. It offers the customers guarantees for its products and services. In the notes to the financial statements of 2013, it states, “the standby letters of credit and letters of guarantee may be drawn on by customers if the Corporation fails to perform its obligations under the sales contracts” (Hydrogenics). Profitability
Credit Risk: Financial instruments that possibly subject the Company to concentrations of credit risk consist of cash equivalents and receivables. Due to its large and varied customer base and its geographic diversity, Saputo has low exposure to credit risk concentration with respect to customer’s receivables. There are no receivables from any individual customer that exceeded 10% of the total balance of receivables as at March 31, 2015 and March 31, 2014. However one customer represented more than 10% of total consolidated sales for the year ended March 31, 2015, with 10.2% (one customer with 11.4% in 2014). Allowance for doubtful accounts and past due receivables are reviewed by management at each balance sheet date. The company updates its estimate of the allowance for doubtful accounts based on the assessment of the recoverability of receivable balances from each customer taking into account historic collection trends of past due accounts. Receivables are written off once determined not to be collectible. On average, Saputo will generally have 10% of receivables that are due beyond normal terms, but are not decreased. However, Saputo management does not believe that these allowances
The analytical formats used in response to question number 3 are threefold; 1) trend analysis, 2) common size analysis and 3) percentage change analysis. The rationale for this three-fold approach is that all other ratio analysis is derived from these three. The utilization of trend analysis aids in giving clues as to the financial status of the company is likely to improve or deteriorate. Likewise, the common size analysis relates to the fact that all income statement items are divided by
For the month of October 2015, The New London Hospital Association, Inc. generated a consolidated gain from operations of $71k compared to a budgeted gain of $373k. That brought the YTD operating gain to $368k versus a budgeted YTD gain of $250k. Monthly Non-Operating Revenue was $44k compared to a budget of $83k. YTD Non-Operating Revenue was $229k compared to a budget of $334k.
This is another sign of a strong company, although it is not uncommon for a company to have a down year. These ratios show the following: · Nike has a very good ability to pay current liabilities. This was evident in the current ratio and the acid test. · Nike has an excellent ability to pay short term and long-term debt. This was proven in the debt ratio and times-interest-earned ratio.
Currently, HCA is approaching an all time high debt ratio of 70%, well above their established target ratio of 60%. The increase in debt ratio has attracted the attention of rating agencies who have clearly stated that in order for HCA to maintain their A bond rating HCA must return to their 60-40 capital structure. Now the question arises as to whether the A rating should be sought or should HCA move to a less conservative position. Some investors believe that a more aggressive use of leverage would present greater opportunities in the future. Others feel that with changes in Medicare/Medicaid reimbursement structure on the horizon, HCA should remain conservative. In order to decrease the debt ratio, HCA would have to 1) decrease the growth rate (inadvertently decreasing ROE) or 2) decrease debt/increase equity. The debt ratio is important for many reasons, but it should not be the basis of a company's future. The market will ultimately decide the value based on numerous facts, not just the bond rating.
The gross profit margin of AMH is increasing slightly from 2014 to 2016 but it is way lower than Terreno Realty Corporation. On December 12, 2014, AMH and their operating partnership entered into a contribution agreement with AH LLC, pursuant to which AH LLC contributed to their operating partnership all of AH LLC's interest in 45 properties owned by AH LLC. The value of the properties was determined by broker price opinions prepared by independent third parties. In exchange for the properties, their operating partnership issued to AH LLC 653,378 Class A units valued at $17.11 per unit, the closing price on the NYSE for the Company's Class A common shares on December 11, 2014. AH LLC was liquidated in August 2016 with its ownership interests in the operating partnership distributed to its members. Return on investment used to evaluate the efficiency of an investment or to compare the efficiency of a number of different
The Accounts Receivable Turnover- trend indicates that number of days collect accounts receivable has deteriorated. This indicates slower collection of debtors and potential cash flow problems. Of concern is trend that indicates that the allowance for doubtful accounts is actually become a lower proportion of the accounts receivable balance, suggesting that there is an inherent risk that ha e company is attempting to ‘window dress’ its financial statements by lowering the allowance to make the financial statement position look better. These also point toward a potential going concern problem under
HFHI is in compliance with FASB’s SFAS 117 but might want to work on detailing what program(s) different employees are working on to properly allocate the expense of the employee. Lastly, based upon the liquidity, capital and profitability ratios, 2015 was not a good year but 2016 was an excellent year.
For both years, approximately 26.5% of the assets were financed by the company's creditors (long –term and current creditors). The fair value of the assets would have to decline to 26.5% below their carrying amount. The creditors would not be protected in liquidation.
During the same period, stockholders’ equity (net worth) has increased by 18.88% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.
Why is a financial system important to an HCO; does a budget really make a difference? The HCO is undergoing many exciting changes that effect how the HCO operates. There are technological Electronic Health Records (EHR) and Electronic Medical Records (EMR) upgrades, payment, and system billing changes and practices, and quality improvement measures. The swift changes in Healthcare include costs that require a financing budgeting system. “The financial plan is a reality check for the HCO organization” (White and Griffith 433). A finance system records and reports HCO transactions. The recorded transactions are useful to set and achieve performance improvement measures.
The financial health of MHJ does not look promising as it can be seen above even though the current ratio indicates that the company is able to pay its debt in the longer period but in the short run the quick ratio suggests that MHJ is unable to pay its current debts that fall due within a year as the ratio is below 1. The inventory turnover ratio is low which means the company is not efficiently turning their inventory over into sales.