Working capital management is the toughest task for the business growth
Working capital management is the toughest task for the business growth. It is very important that, we go for funding requisite amount in form working capital as per the needs of the business in appropriate time. Hence it is pretty encouraging that, every entrepreneur looks for an appropriate working capital (Investorword’s.Com. 2013) for the business. Phase – 1
Sales – The sales are increasing by $4 million each year and it may be accepted as SNC started it’s business in the year 2006 and would be thinking of improving the business slowly. The additional sale would be added by the company over the next three years of time frame and the sales trend analysis (Rosella, 2013) is little encouraging. It may be believed that, the new addition of this corporate client would give a message to the other new potential customers and would help for the future business as well.
EBIT – It is understood that the earnings before interest and tax would be remain more less flat for the next three years, but at this stage , it is highly important for the company to go ahead with the deal. The earnings of $ 0.26Million is very helpful to the company in this stage. Better Earnings before Interest & Taxes (Investopedia.Com, 2013) is a good indicator for the firm.
Net Income – The net income for the company in the past has gone under drastic change and under this phase it does not show any improvement .Instead the details shown are very minimal and we can predict more realistic numbers going forward. Free Cash Flow – We do not observe any non-cash expenditure like depreciation; amortization etc, Hence the net income of the company is only getting added to the free Cashflow (Valyewalk , 2012 ). So we may say that, the free Cashflow generated are not much. So the firm will have a very poor free Cashflow. We could see that earlier free cash flows of the company are not much.
Total Firm Value – The firm will have a poor enterprise value while doing a valuation (Cherwyk, P, 2011,) of
Sales – The sales are increasing by $4 million each year and it may be accepted as SNC started it’s business in the year 2006 and would be thinking of improving the business slowly. The additional sale would be added by the company over the next three years of time frame and the sales trend analysis (Rosella, 2013) is little encouraging. It may be believed that, the new addition of this corporate client would give a message to the other new potential customers and would help for the future business as well.
EBIT – It is understood that the earnings before interest and tax would be remain more less flat for the next three years, but at this stage , it is highly important for the company to go ahead with the deal. The earnings of $ 0.26Million is very helpful to the company in this stage. Better Earnings before Interest & Taxes (Investopedia.Com, 2013) is a good indicator for the firm.
Net Income – The net income for the company in the past has gone under drastic change and under this phase it does not show any improvement .Instead the details shown are very minimal and we can predict more realistic numbers going forward. Free Cash Flow – We do not observe any non-cash expenditure like depreciation; amortization etc, Hence the net income of the company is only getting added to the free Cashflow (Valyewalk , 2012 ). So we may say that, the free Cashflow generated are not much. So the firm will have a very poor free Cashflow. We could see that earlier free cash flows of the company are not much.
Total Firm Value – The firm will have a poor enterprise value while doing a valuation (Cherwyk, P, 2011,) of
References: Investorword’s.Com. (2013, December 7). Working capital. Retrieved fromhttp://www.investorwords.com/5334/working_capital.html Rosella. (2013, December 08). Sales trend analysis . Retrieved from http://www.roselladb.com/sales-trend-forecast.htm Investopedia.Com. (2013, December 07). Earnings before interest & tax – ebit. Retrieved fromhttp://www.investopedia.com/terms/e/ebit.asp Valyewalk. (2012, February 01). Analysis using free cash flow. Retrieved fromhttp://www.valuewalk.com/2012/02/analysis-using-free-cash-flow/ Fierce Biotech. (2013, December 5). Mixed outlook for pharmaceutical industry following us healthcare reform read more: Mixed outlook for pharmaceutical industry following us healthcare reform – fiercebiotechhttp://www.fiercebiotech.com/press-releases/mixed-outlook-pharmaceutical-industry-following-us-healthcare-reform Cherwyk, P. (2011, April 19). Valuing firms using present value of free cash flows. Retrieved fromhttp://www.investopedia.com/articles/fundamental-analysis/11/present-value-free-cash-flow.asp