Asos Inventory Receivables

Their increase in cash conversion days shows their inefficiency that was caused by their increase in accounts receivable days from 53 to 77 and inventory days from 103 to 130. They are also suffering from a decrease in operating profits due to the decline in sales. I expect operations to remain steady at this level, as Wiegandt will continue to offer flexible credit to maintain their own sales volume. This is dangerous and can eventually lead to financial collapse if Haefren does not increase their sales.

The company have generated very low operating cash flows, which is caused by a negative net income(16, 55) in 94,95, again with sales going down and cost of goods sold increasing. The company current ratio (2.3, 2.1, 2.5) in 93, 94, 95 are indicating satisfactory but when analyze quick ratio (1.1, 1.1, 1.3), and we also know that sales are down which mean more inventories. Now the account payable days has been increasing (49, 62, and 66). They have been delaying there payment which mean more cash on

Although the company seems to be profitable, it has faced shortage of cash. It happened due to increase in Accounts Receivable as well as Inventories. On the other hand, Accounts Payable does not increase that rapidly and difficulties regarding cash collection become evident. Furthermore, the cash collection cycle becomes larger (59 days in year 2003, while more than 70 in year 2006).

This causes more trade debt, which means a higher the tax penalty. Furthermore, age of payables has increased from 98 to 154 days, nearly tripling over the last four years. This is damaging to the image and trustworthiness of the company, even causing issues from the bank trusting them with grant of loan. Having a large amount of inventory can conclude additional problem involving cost of capital, maintenance cost, aging inventory and the cost of space or storage. This therefore proves the poor management skills that are required to operate a booming and profitable business.

Bug-Off Exterminators provides pest control services and sells extermination products manufactured by other companies. The following six-column table contains the company's unadjusted trial balance as of December 31, 2011.

But the real reflection of the performance of the management lies in the Operating profit margin (OPM) and in this case M&M has done fairly well and their OPM for FY2014-15 is similar to their last years OPM. Whereas Tata Motors has increased their non-operating expense by spending to the tune of 4K crore on R&D (for Jaguar and Land Rover) and has hence garnered losses for FY 2014-15 (OPM: TM -5.4% M&M 10.4%). Although

The assessment of Bradmark’s internal controls over its revenue cycle procedures were done through the

A restructuring of debt constitutes a troubled debt restructuring… if the creditor for economic or legal

Interco's overall financial health is relatively healthy. It is highly-liquid as the current ratios are consistently over 3.5, showing that it has plenty of cash to cover any of its current liabilities. Its accounts receivable days indicate that in 1987 it took longer to collect on outstanding accounts while this figure would drop in 1988. The same trend follows with its inventory days, increasing in 1987 and decreasing in 1988, which would signal that its turnover was slower in 1987 and faster in 1988. The accounts payable days increased in 1987 while slightly decreasing in 1988. This is a healthy trend as Interco was able to take

11. Accounts receivable turnover and days sales in accounts receivable for the last three years:

The company’s day-to-day operations did not change significantly over the last few years. Average collection period, inventory turnover, accounts payable, accounts receivable as well as cash conversion cycle all went up and down over the last four years but mainly stayed in the same range. So, there is no any significant change in operations. Mr. Cartwright has a very sound control over operations of the firm. Therefore, I believe, the company needs few more years to recover from the debts

Inventory turnover in days is an assistant figure of inventory turnover. The shorter of the days, the faster of the inventory turning to cash, and the better use of short-term capital. This figure of the firm was very high in 2001 and began to fell down from 2002,then lower than industry in 2004 and 2005.This indicates the management of the firm became better.

Accounts receivable turnover is the second method by which a company’s trade receivables’ liquidity can be evaluated (Gibson, 2011). Žager et al. (2012) noted turnover ratios should be as high as possible as this indicates a firm’s ability to convert its assets more often. 3M’s accounts receivable turnover for years 2007 and 2008 is shown in Exhibit 2. In 2007, 3M turned its accounts receivable over 7.12 times and 7.70 times in 2008. This calculates into a turnover of its accounts receivable every 51.28 days in 2007 and 47.38 days in 2008. The increase in accounts receivable turnover times per year (decrease in number of days to turnover accounts receivables) from 2007 to 2008 is a positive trend for 3M. It suggests, along with the prior calculation, the management of receivables is likely to be improving in efficiency.

The firm’s accounts receivable ratio increased from 68.71 in 2006 to 74.56 in 2010. This means that it is taking Abbott almost six days longer to collect from its customers today than it did five years ago. Furthermore, the firm’s accounts payable days has decreased from 43.72 in 2006 to 38.22 in 2010. This means that Abbott is paying its suppliers 5½ days earlier today than it did in 2006. A change in the inventory ratio from 8.01 in 2006 to 11.03 in 2010 indicates that it is taking the firm longer to sell finished goods than it used to. The increase in the accounts receivable and inventory ratios, combined with a decrease in the accounts payable ratio, indicates poor working capital management and helps to explain why the firm has increased its holdings of cash and short-term investments. To correct this, Abbott’s managers should focus on collecting cash from its customers faster and delaying payments to its suppliers. To maximize its cash position, the firm would be best served by paying its suppliers in the same amount of time as it collects payment from its customers.

Cash conversion period is use to analyze cash cycle and it is an approach measure liquidity. Days inventory held is the number of days from receiving the item until they actually sell it. Just for Feet held its inventory for 268.88 days in 1998 and 322.69 in 1999 between the receipt days an item until it was sold to the customer. Days of sales outstanding average of days that it takes for customers to pay for merchandise. Just for Feet took 12.08 days to pay for the merchandize in 1998 and 8.89 days in 1999, the day of sale outstanding average show that just for feet has a strict policy on the payment of their product. Day pay outstanding is the days between the inventory is received and when payments are made, Just for Feet took 66.74 days to pay their outstanding in 1998 and 80.95 in 1999. Just for Feet is taking longer to pay their supplies. Operation Cycle is an indicator of management performance efficiency, Just for Feet operation cycle is $28,096 in 1998 and 331.58 in 1999.Cash operation cycle is the elapse between the firm’s payment for their inventory and