Victoria's Milling Case
VICTORIAS MILLING COMPANY, INC.
Point of View:Assumed in this case is the perspective of VICMICO's Finance OfficerProblem:What are the possible causes of VICMICO's cash flow problem and how can they be addressed?Case Context:This case requires an analysis of Victoria Milling Co.'s financial statements in order to present a comprehensible explanation regarding the company's debt position. This paper utilizes the concept of Ratio Analysis to solve the afore-mentioned problem. The case also examines issues of cash flow problem for VICMICO in light of a formation of a working committee consisting of VICMICO's stakeholders.
Areas for Consideration:•VICMICO and its subsidiaries were given a moratorium of 90 days to dispose its debts.
•A statement released by VICMICO's Board Chairman reported that 70- 80% of VICMICO's problem was due to the crisis of the whole industry.
•Massive importation and dwindling prices of sugar were observed.
•Data on milling industry or other related industries were not given.
•Given the extent of VICMICO's operations and industries, jobs of a big number of employees are at stake. Management must also take into account their disposition.
Methodology1.Conduct trend analysis in the company's financial statements. The company needs to assess its performance over time to come up with an explanation about its current status.
2.Consider factors that may significantly affect the company's performance.
3.Analyze the data gathered. Using Ratio Analysis, the company's management must be able to point out specific problems and issues to be handled.
Analysis•The company is highly-leveraged due to high levels of liabilities.
•Income from operations decreased greatly from Php603, 000,000 to Php234, 000,000 in 1996. This can be attributed to raised cost and expenses across the period.
•The company's performance is declining over time. This is suggested by decreases in most of the profitability, efficiency, and liquidity ratios computed. Current as
Point of View:Assumed in this case is the perspective of VICMICO's Finance OfficerProblem:What are the possible causes of VICMICO's cash flow problem and how can they be addressed?Case Context:This case requires an analysis of Victoria Milling Co.'s financial statements in order to present a comprehensible explanation regarding the company's debt position. This paper utilizes the concept of Ratio Analysis to solve the afore-mentioned problem. The case also examines issues of cash flow problem for VICMICO in light of a formation of a working committee consisting of VICMICO's stakeholders.
Areas for Consideration:•VICMICO and its subsidiaries were given a moratorium of 90 days to dispose its debts.
•A statement released by VICMICO's Board Chairman reported that 70- 80% of VICMICO's problem was due to the crisis of the whole industry.
•Massive importation and dwindling prices of sugar were observed.
•Data on milling industry or other related industries were not given.
•Given the extent of VICMICO's operations and industries, jobs of a big number of employees are at stake. Management must also take into account their disposition.
Methodology1.Conduct trend analysis in the company's financial statements. The company needs to assess its performance over time to come up with an explanation about its current status.
2.Consider factors that may significantly affect the company's performance.
3.Analyze the data gathered. Using Ratio Analysis, the company's management must be able to point out specific problems and issues to be handled.
Analysis•The company is highly-leveraged due to high levels of liabilities.
•Income from operations decreased greatly from Php603, 000,000 to Php234, 000,000 in 1996. This can be attributed to raised cost and expenses across the period.
•The company's performance is declining over time. This is suggested by decreases in most of the profitability, efficiency, and liquidity ratios computed. Current as