Business analysis Essay Example | Topics and Well Written Essays - 1000 words

Business analysis - Essay ExampleThe current ratio which is good above the benchmark of 1 should not be viewed as a healthy sign because the phoner is having major issues with its receivables and inventory management. The familiarity has large amount of receivables pending resulting in extravagantly receivables days and the mail service is the same for the partnerships inventories. The company has good asset turn all over but it is alike declining over the period from 1993 to 1995. The company has a negative profitability in 1994 and 1995 because of its inability to generate profits. Though the company paid dividend in 1993 and 1994 the amount due from stockholders has been significant which could further dampen the companys hood position. The financial ratios have been attached to this report as Appendix II. The companys operating cash in flow has declined sharply in 1995 leading to a negative figure of DM494,000 which surely have implications for the gigantic term surviva l of the company if it is not able to recoup its business by altering its merchandise and operating strategies. Marketing Analysis Haefren Baum is a home furnishing retailer which is engaged in selling high quality home furniture products of a German manufacturer Wiegandt GmbH eau de cologne. The understanding of the high-end furniture mart suggests that the lease in this market is cyclical which is affected by two major factors consumer buying confidence and alike by the overall economic conditions. Due to the fall in the German economy during the year 1993 i.e. gross domestic product indicated a negative growth of 1.2% the demand for furniture dropped and sales deteriorated. Haefren Baums sales also declined after(prenominal) 1993 showed as YoY decline of -19% (1994) and -5% (1995). In order to tackle the challenges the company melt off down its pricing and also opened up new outlets Rhineland suburban areas however due to the competition attracting to the market it is diffi cult for a small retailer like Haefren Baum to survive for long as it is also facing problems with generating profits and champion a strong cash position (Crane and Millett). Operations Analysis Since the company sells home furniture of Wiegandt GmBH Cologne therefore the amount payable to the company has reached DM 54,017.18. From the analysis it could be indicated that the operational efficiency of the company is becoming weak as the number of days that receivables are due for payment and the inventory held in its stock are increasing. Furthermore, the company is taking longer period to pay off its liabilities. The company has generated damage in 1994 and 1995 which suggests that the company is facing major difficulties in devising its strategies to coup up with the tough market conditions prevailing in Germany. Due to expansion of outlets the companys borrowing has increased significantly and no positive outcome has been achieved. The credit department of the company must lay o ff loans and sell of non-profitable outlets to cut down pressure on its cash position. Appendix I bills Flow Statement Cash From Operating Activities 1994 1995 DM 000s DM 000s Net Profit -16 -55 -16 -55 (Increase)/Decrease in Receivables -386 35 (Increase)/Decrease in Inventory 8 -8 Increase/Decrease in Accounts Payables 8 88 Deferred Charges 32 0 sundry(prenominal) Accruals 74 -331 Current Maturities on Long-Term Debt 327 -223 Estimated Federal Income Tax -104 0 -41 -439 -57 -494 Cash Flow from investing Activities Sale / (Purchase) of Net Buildings, Fixtures and