Hup Seng Insudtries Berhad is an investment holding company which is established in 1958 and it located in Johor Bahru, Malaysia. The principal activities of the subsidiaries of Hup Seng are manufactures, sales of bisuits, coffee mix, dealers in biscuits, confectionery, and other foodstuff. It is well known by produce highly quality biscuits to the market and customers. These products include cream cracker, Marie biscuits, sandwich/cookies, assorted biscuits and so on. Due to the quality management
Managing Liquidity I. Learning Objectives 1. Define net working capital, discuss the importance of working capital management 2. Define the operating and cash conversion cycles, explain how are they used, and compute their values for a firm. 3. Discuss the relative advantages and disadvantages of pursuing (1) flexible and (2) restrictive current asset management strategies. 4. Explain how accounts receivable are created and managed, and compute the cost of trade credit. 5. Explain the trade-off
three transaction cycles process would be the expenditure cycle, the conversion cycle and the revenue cycle. Expenditure Cycle for Bookmark Coffee Bookmark coffee is a café that serves great coffees that comes with amazing latte art. Not only that, this café serves affordable breakfast, meals and cakes. There are two processes that constitute the expenditure cycle for this café such as the physical component that is the purchase processing and the financial component that is the cash disbursements
information we need. To be really useful we must compare it over at least three years. The Current Ratio is the ratio of total Current Assets to total Current Liabilities. Current Ratio = Current Assets / Current Liabilities Current assets include cash and bank balances; inventory of raw materials, work-in-process, and finished goods; marketable securities; borrowers (net of provision
Starbucks’ solvency ratios provide valuable insight into whether the company is generating sufficient cash flow to meet short-term and long-term obligations. At the end of 2014, Starbucks current assets of $4169 million and current liabilities of $3039 million produced a current ratio of 1.37. During this same period, Starbucks had quick assets of $2474 million (cash of $1708 million + short-term investments of $135 million + accounts receivable of $631 million) with current liabilities of $3039
for over 100 years. Currently, the company is in a decline stage and the management is looking for a solution for the problems that have been developed over the years. The company is losing cash, having negative net income, and excess inventory which brings the assumption that the company will run out of cash by the end of 2013. The management has not been controlling inventory and that is one of the reasons why the company is in this stage. Chief Executive Officers came up with different discount
2004), involving the decision of the amount and composition of current assets and the financing of these assets. The greater the relative proportion of liquid assets, the lesser the risk of running out of cash, all other things being equal. All individual components of working capital including cash, marketable securities, account receivables and inventory management play a vital role in the performance of any firm. Shin and Soenen, (1998) argued that efficient working capital management is very important
The firms need working capital to meet its day-to-day operations. A liquid company has more cash to pay its obligation on time to reduce the financial cost and ability to invest in profitable opportunities. The study examines the relationship between working capital and profitability of sugar industry in Pakistan. The performance of the firms
Ratio Analysis In order to make inferences about a company’s financial condition, its operations, and its attractiveness as an investment we have analyzed financial ratios and compare ratios derived from SVU’s financial statements (see chart 1). Gross Profit Margin The gross profit margin ratio is used to show how much of each sales dollar is left after certain costs are covered (footnote). Looking at the table, Supervalu has increased its gross profit margin from 14.4% in 2015 to 14.7% in 2016
the company's receivables into cash after a sale. It is calculated by dividing accounts receivable by the average daily credit sales. This ratio measures the length of time needed to convert the average sales into cash. This measure defines the relationship between accounts receivable and cash flow. An average collection period and requires greater investment in accounts receivable. Increased investment in accounts receivable means less money available to cover cash outflows, such as paying bills
does not have to maintain inventory. Inventory is an asset which normally must be floated with cash, which comes in part from collecting on Accounts Receivable. This is part of the cash conversion cycle. Zynga’s current accounts receivable management is also less important because accounts receivable is a very small portion of Zynga’s total current assets. Also, when Zynga’s products are sold online, cash payment is received instantaneously through one of the major credit card companies, a user’s bank
CASH FLOW MANAGEMENT Cash is the lifeblood of an entity whether small, medium or big company, cash is an indispensable asset. As it is said, cash is the most important yet least productive asset that a small business owns. Possession or access to cash is mission-critical for companies, the flow of cash coagulates all the aspects of a business and results in the return expected from the investments. Without cash, a business cannot operate, and without proper cash management, a business might run
measure of current liquidity where inventories, prepayments and advances are excluded from current assets. Inventories usually take time to be converted into cash. Thus when in need, the company may have to accept lower price than the inventories book values. Advances and prepayments are omitted as well because they do not result in inflow of cash resources in the future for current liabilities settlement. From the table above, Walmart's average quick ratio is 0.21 for the past five years, which means
Wal-Mart Evaluation Report Analyzing Wal-Mart's annual report provides a positive outlook on Wal-Mart's financial health. Given the specific ratios and its comparison to other companies in the same industry, Wal-Mart is leading and more than likely continue its dominance. Though Wal-Mart did not lead in all numbers, its leadership and strong presence of the market cements the ongoing success. The review of the current ratio, quick ratio, inventory turnover ratio, debt ratio, net profit margin
provide a more accurate view of the outlook and financial performance of a company. The process for developing pro-forma statements to secure outside financing. Investors and lenders want to see cash flows and income projected for each company. When looking at cash flow, a company should show its cash conversion cycle (CCC). A strong CCC shows how efficient a business is running and can be compared to other company in the industry. 3. Accounting data and financial forecasting go hand in hand with one another
The Boston matrix can be tailored to Benetton to demonstrate how Market share can be gained by investment in marketing, Market share gains will always generate cash surpluses in the company, Cash surpluses will be generated when the product is in the maturity stage of the life cycle, The best opportunity to build a dominant market position is during the growth phase. The 4 categorise can could help Benetton be more successful in creating a better market share and growth
WORKING CAPITAL MANAGEMENT “More business fails for lack of cash than for want of profit” Efficient management of working capital is one of the pre-conditions for the success of an enterprise. Efficient management of working capital means management of various components of working capital in such a way that an adequate amount of working capital is maintained for smooth running of a firm and for fulfillment of twin objectives of liquidity and profitability. While inadequate amount of working capital
Financial Analysis I. Solvency The current ratio of Nestle in the three years was decrease as its current liabilities more than its current assets and the current liabilities were continuing increase. The loan and borrowing were largely increase from RM7,555,000 to RM84,313,000 as we can see in 2013 and 2014 so the debt that company needed to pay was raise (Maybank, 2014). Nestle tend to borrow and apply loan more to expand its business and invest in good quality project. The current assets of Nestle
Commission, Form 10K, Genesco Inc.,2009 Retrieved from http://www.sec.gov/Archives/edgar/data/ 18498/000095014409002839/g18346e10vk.htm#113 Walther L. M. (2010). Financial Accounting, dba/Principles of Accounting.com Walther L. M. (2010). Accounting Cycle Problem Workbook, dba/Principles of Accounting.com
and the cash flow problem the business faces in recent times. This report discusses the importance of cash and profit for business survival, outlines how the problem of cash flow arises, effects of cash flow problems for the business, and identifies methods for dealing with cash flow problems. It gathered and applied information from several sources such as academic articles, reports, and documents, assumed to be credible enough for the discussions. 2 Importance of Cash and Profit Both cash and profit