Sunflower Nutraceuticals (SNC) operates on a very tight cash flow. The past has not been had resources to stay above the water. SNC has been looking at some new projects and for the past nine years the projects and their impact on SNC’s financial impact has been tracked. In the first phase of these new projects two were applied to SNC.
Acquiring a New Customer
Atlantic Wellness was acquired as a new customer. Sales were increased significantly which in return also increased accounts receivable and inventory balances. This was a good decisions because as sales increase so does income. Additional accounts receivable and inventory can cause more overhead but can always be controlled.
Leveraging Supplier Discounts
With a new customer top-line growth was achieved. With the added expenses of more accounts receivable and inventory needs the cash flow for these three years was drained. It was however, offset by an added increase in EBIT due to favorable contracts.
For the next three years two more projects were acquired. After the rapid increase in top-line growth and the increases it showed, SNC decided to pursue a new project that put SNC’s products into Mega-Mart Inc. retail. This once again increased top-line growth which drives sales higher, it consistently strained the EBIT.
The Essay on Project Report on Inventory Control Techniques
Inventories constitute most significant part of assets of large majority of the companies in India. Inventory a double edged sword is usually an asset of an organization, if not used properly it will become liability. It is therefore absolutely important to manage inventories efficiently and effectively in order to overcome unnecessary investment. Improper inventory management affects long term ...
Developing a Private Label
Since retail has immersed for SNC a private label seemed logical to stand out for consumers. Starting the branding process for SNC. The sale of the private label drove EBIT up again balancing out the next three years.
The final three years and the final projects were critical. Since one project after another has off-set each other there is still a need to increase SNC’s cash flow and sales.
High-Risk Customer
Acquiring a high risk customer was a decision made with careful consideration. Since EBIT and net income were stable, sales was the next thing that needed to increase. Taking on Midwest Miracles increased the sales volume but the impact on the accounts receivables were large. Now there is talk in the business circle that Midwest Miracles is looking to file chapter 11 bankruptcy. This now leaves SNC with the option of possibly writing off a portion of the accounts receivable that has not been collected.
Decisions
The projects that were adapted by SNC showed that the financial resources can be forecasted and balanced with the right amount of research. Along with the increases and stabilizations SNC’s available credit line that was negative in 2012 when the financial restructure projects started remained steady through 2021. The total current assets also increased each year proving to SNC’s shareholders that a rapid increase in the value of the company has happened.
working capital Effects
“In business accounting, working capital is a benchmark measure of your company’s ability to meet its short-term obligations. It’s calculated by taking your business’ current assets and subtracting its current liabilities. Current assets are those that can or will be converted to cash in the next year. The major current assets are cash, accounts receivable and inventory. Current liabilities are obligations that must be fulfilled within the next year. For a typical company, the major current liabilities are accounts payable, accrued liabilities (such as wages earned by workers but not yet paid, or rent expenses incurred but not paid), and debt payments” (Chron, 2012).
The Review on Final Year Project Report
My deepest appreciation also goes out to Mrs. Sharatul Izah Bt. Samsudin who gave me many needed support, encouragement and help throughout my project’s improvement in PSM I, and my friends who struggling with me exploring this scope. Not to forget, thanks to my family and fellow friends who encouraged me. Finally, thank you to all those involved directly and indirectly helping me out during my ...
SNC’s total liabilities were up after the nine years of projects.
Reference
The Effect of Revenue Increase on Working Capital. (2014).
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