Financial Data and Balance Sheet Analysis
Financial data including the yearly balance sheet, which will be available starting in December 2019, can represent the performance of Capsim Andrews Company (Capsim Andrews Company, 2019).
Components of the Balance Sheet
The three essential components—equity, liability, and assets—were represented by the Andrews Company's balance sheet. Accounts receivable, inventories, and cash were included in the balance sheet's current assets as well as its fixed assets (Sinha, 2012).
Cash Reserves and Performance
According to the balance statement, the total current assets were $23.561, which included $0 in cash. Indicators of strong performance for the company typically include rising cash reserves. In fact, it shows that the management lacks effective ways to use the money even lack proper ways of utilizing it. On the contrary, declining cash provide an impression of poor performance in the firm (Capsim Andrews Company, 2017).
Inventory and Sales Performance
Andrews Company had total inventory of $21.103. Inventories refer to completed goods that the firm has not yet sold. It reflects the amount of money that the company possesses which are held up in its inventory. Most companies lack funds to spend in inventory (Fridson & Alvarez, 2011). Therefore, to produce the cash to generate profit and pay bill, they should dispose of the merchandise they have acquired from suppliers. A good performing company should have an inventory that grows slower than sales. In the case of Andrews Company, the rate of inventory growth is about 17.8 per cent, which means that the firm is performing relatively well (Capsim Andrews Company, 2018).
Accounts Receivable and Collection Efficiency
The Accounts receivable of Andrews Company will be $2.458 in 2019. The receivables refer to the uncollected bills. Determining the rate at which a firm gathers what it possessed can provide indications on its performance efficiency. In case a firm’s period of collection is increasing, it illustrates the challenges ahead (Capsim Andrews Company, 2018). The organization may be allowing customers’ expanse their credit aiming to identify higher top-line sales, which can be challenging in the future. The percentage size of the accounts receivable by the Andrews Company was 6.3 per cent, which meant that the organization was quicker to demand payments from its customers, which increased cash to pay for dividends, loans, equipment, merchandise, and salaries as well as growth opportunities (Sinha, 2012).
Fixed Assets and Company Performance
The firm has fixed assets in terms of plant & Equipment was $32.300 while the Accumulated Depreciation was $7.913. Similarly, the total fixed assets were $24.387. In determining the performance of the company, fixed assets are paid excessive attention because firms are normally unable to dispose them off in case of financial crisis. Therefore, the fixed assets could not be used to determine the performance of the Andrews Company. More notably, the Total Assets of the firm will be $47.948 (Capsim Andrews Company, 2020).
Liabilities Analysis
Liabilities comprise both non-current and current liabilities. Non-current liabilities show what the firm’s debt that is payable in a year or more. They include debts such as bondholders and that from the bank. Current liabilities are debts that the company should clear within a year, such as supplier debt. With regard to Liabilities, the firm will have a Total Liabilities of $36.743. Precisely, the accounts payable will be $2.783, current Debt of $299.627, and Long Term Debt of $4.333 (Sinha, 2012). Therefore, based on the financial statistics on debt, the company’s performance was good because the levels of debts were reducing. Furthermore, the performance of the company was in proper condition because the total liabilities were less than the total assets. A firm that has more debt as compared to the cash flows, which are need to settle debt repayments and interests, is more likely to go bankrupt (Capsim Andrews Company, 2020).
Equity and Cash Flow Analysis
On the other hand, Andrews Company has a Total Equity value of $11.206 with common Stock of $3.323 and Retained Earnings of $7.883. The retained earnings represented the amount of money that the company decided to reinvest instead of passing it to the shareholders. Significantly, the Total Liabilities and Owners Equity will be $47.948. Equity demonstrates the amount of money that shareholders have in the company. It also means the difference between total liabilities and total assets. The company was in good financial condition because it decided to reinvest more resources (1.8 per cent of the profits) in the business to generate more returns (Capsim Andrews Company, 2021).
Cash Flow Statement Analysis
The cash flow statements also indicate the performance of the company as it displays the amount of cash that the firm generates or spends over a given period. Therefore, it works as a statement which registers monetary performance in a certain period. Cash flow of Andrews Company comprises of three parts, which are investing, financing, and operations. The total cash flow from operations in 2019 and 2020 will be $13.838 and $9.904 respectively. Therefore, it shows that the company would have a good financial performance because there will be more cash generated from the sale of services and goods as compared to the amount used to manufacture these goods and services. Fortunately, the net cash flow of the company is positive which signals better financial conditions and high growth rate (Fridson & Alvarez, 2011).Moreover, the cash flows from investing activities will be $11.300 and $9.904 in 2019 and 2020 respectively. This is a positive indicator because it represents what the company will have acquired to keep its functions running. It also means that the firm is reinvesting a huge amount of capital for sustainability (Sinha, 2012). The cash flows from financing activities of the firm at the same period would be $24.760 and $1.904 respectively (Capsim Andrews Company, 2018). The amount signals the capacity of the company to settle debts, purchase back stock, and pay dividends, which boost the business growth. Furthermore, the company has the capacity to pay for its business functions without depending on external sources to do so.
Income Statement Analysis
The performance of Andrews Company can be assessed using the income statement. In 2017, Andrews has returns on sales (ROS) of 6.1 per cent. The ROS of the company provides information on the profit margin on the company's product. Precisely, the Capsim's ROS is low because of the competitiveness in the industry, which increases pressure on the price. Moreover, Capsim has Return on equity (ROE) of 19.4 per cent and it rises to 2022, which means that it is effectively using money invested by its stakeholders (Capsim Andrews Company, 2021). Therefore, at a rate of 19.4 per cent, the company is demonstrating good performance to its stockholders.As compared to 2023, the ROE reduced to -63.4 per cent, which indicates poor business growth. Moreover, returns of assets (ROA) determine the ratio of profits with the assets base needed (Capsim Andrews Company, 2022). The Capsim Company has returns of assets (ROA) of 11.9 per cent in 2017, and it reduced to -28.2 per cent in 2023. It presents how stakeholders are working hard for their assets and how asset needed would produce returns (Sinha, 2012). At ROA of 11.9 per cent, it is an indication of good performance. However, in 2023, it reduced to -28.2 per cent, which is an indication of poor performance. The company has an Asset Turnover of 1.95 in 2017, but it reduced to 0.43 in 2023 (Capsim Andrews Company, 2017; Capsim Andrews Company, 2023). The asset turnover illustrates the effectiveness of the asset base in revenue generation. In this regard, the asset turnover shows that the company had higher sales, which generated more revenues in 2017, as compared to 2023 (Capsim Andrews Company, 2017; Capsim Andrews Company, 2023). Its Leverage in 2017 was 1.6, which reduced to -2.2 in 2023. Furthermore, in 2017, the company had cumulative profits of $2.493.706, and it rises to $39.659.422, which demonstrated that it had a lucrative business (Capsim Andrews Company, 2017).
Conclusion
To sum up, the future of Capsim Andrews seems to be brighter. The firm is anticipating growing its business into different markets by providing products at reasonable prices. The firm will proceed to invest and concentrate on optimization of sales, reduction of costs, and inventory in various industries (Sinha, 2012). Moreover, better ways of management should be initiated to facilitate the realization of financial goals. Similarly, innovative programs must be implemented in the company aiming to enhance better and sound financial investment in foreign markets (Fridson & Alvarez, 2011).
References
Capsim Andrews Company (2017). Foundation fast-track round 0.
Capsim Andrews Company (2018). Foundation fast-track round 1.
Capsim Andrews Company (2019). Foundation fast-track round 2.
Capsim Andrews Company (2020). Foundation fast-track round 3.
Capsim Andrews Company (2021). Foundation fast-track round 4.
Capsim Andrews Company (2022). Foundation fast-track round 5.
Capsim Andrews Company (2023). Foundation fast-track round 6.
Fridson, M.S., & Alvarez, F. (2011). Financial statement analysis : A practitioner’s guide. John Wiley & Sons.
Sinha, G. (2012). Financial statement analysis. PHI Learning Pvt. Ltd.
