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Business Analysis & Valuation Assignment Sample

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Business Analysis & Valuation Assignment Sample

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Question 1:

Demand for organic products is increasing day by day, and this is the main reason behind the growth of the company Ceres Gardening. According to a report, in the last five years, the company Ceres gardening successfully increased their revenues by 75% and made a profit of over 25% in the last five years.

Jonathan Wydown is the founder of the Ceres gardening company and the company's founder for the first time promoting sustainable organic gardens and landscapes. The company's founder is a proponent of biodiversity, soil preservation, natural fertilizers and pest control (Anacleto et al., 2017). The company's founder was sure that comparative guidelines behind joint development would, in the end, apply to home nurseries. This idea of the founder of the company Ceres Gardening helps him to develop a market which consists of few certified selected organic seeds and seedling for flowers, vegetables and culinary herbs (Zeunert, 2018). This type of market strategy and the products that are used for the marketing makes the company different from other companies and give an advantage to the company in competitions. 

To increase the company's growth, some key factors are very much responsible, and those key factors are segmentation, and the demand of the market, product offering, the strategy behind the production and distribution channel are the few factors based on which the Ceres Gardening Company is growing.

Question 2:

The financial health of the company Ceres Gardening is excellent, and the company continuously shows a positive response on its financial health from the year 2002. The current ratio, quick ratio, debt-equity, inventory turnover and account receivable help to understand the financial health of the Ceres Gardening Company.

The ability to pay the short term obligations of the Ceres Gardening company shows by the current ratio. With the help of this current ratio, it can be found that the company is able to fulfill its liabilities in 2002 2 times over (Alexandra, 2017). The ability to meet the short term obligation of the company is measured by the quick ratio. To meet the short term obligations, assets of the inventory are not used by the company. The growth of the company with its debt is shown by the debt-equity. The debt-equity also shows that the company is able to earn more profits than the profit earned by the company without outside financing.

Accounts receivable of the company Ceres Gardening shows the effectiveness in collecting the debts and extending the credit. The collection of the debts gives an advantage to the company by using that money by reinvesting in the business.

The financial health of the company can be understood after seeing the inventory turnover. The company never holds their inventory for a long time. This process of not holding the inventory for a long time can incur extra costs by having assets sit without generating revenue (Edwards and Davies, 2018). This process shows the ability of the Ceres Gardening company to manage the inventory in any seasonal cycle. The forecast demand on the movement of products also shows by this inventory turnover.

Question 3:

Based on the innovation being accustomed to Get Ceres Program, Ceres Gardening Company has purposefully started its aim in increasing the outreach in the penetrating market of the retail industry with its organic gardening business. Ceres has significantly offered the retailers' simple creditable terms and abided with capturing the active customer segment 10 identifying the casual gardeners. The new progress in marketing strategies promoted by the company has put forth additional strain on the capital position (Braungart and McDonough, 2020). The company has been stripped of their cash and eventually borrowed some due to its restrictive debt covenants. Thus, the burgeoning sales are ineffective and are not sustainable for the future. This has preferably provided the company with two vital options, thereby raising the equity to a more specific level to support the growth or withdrawing from the "aggressive growth policies" to promote expansion with sustainable strategies.

The company's primary risk factors implicate from its syllable where the influence has John attention on alluring the possible discounts as well as that extra credit facility to the retailers to encourage with more supply of inventory (Broderick, 2019). The other subject nation about inventory hence guaranteed the average retailers when not supposed to flock their stock ok with casual shoppers Stop it has probably increased its fame during the year 2006 since the sales growth increased with the percentage of 21% that is up to 42 million. However, it has also been acknowledged that the final inventory served to the retailer is assumed to be 10 million dollars and has projected up to 23 million dollars by the year 2006. This has preferably created issues among the dealers shortly. They are already accustomed to sufficient inventory to meet their progressive sales growth by next year.

Question 4:

  • The innovation of new strategies that Ceres Gardening Company has formulated has negatively impacted adherence to the cash flow and other financial progress for the company (Reig et al., 2019). It has developed and promoted a sustainable strategy for their organic garden as well as the landscape. With its small venture to rapid growth since 1990, it has become a centre of attention within the retail sector. During the last time when the company has observed a prophet, it has focused its sheep towards retail sales. The decision is based upon industrial research, which suggested the need to shift and grow interested in organic seeds and form more excellent opportunities with sales growth and marketing innovation. However, in recent times the strategy has been proved with the less effective outcome for the company regarding their financial status. Therefore the paramount specific need to be attempted with their project values regarding future cash flows based upon the new strategy.
  • The projection that has been formulated is best upon proforma that has been as human feet growth level statement for individual components with adherence to the income statement. As per the information, the company has promoted a significant growth of 20% during the year 2007 and 2008 with the convenience of the strategy, but it has already been cleared that the financial analysis that the dealers have suggested predicted that the company e-will not likely to sustain the growth.

Excel Analysis

Question 1

The income statement, balance sheet and cash flow of the company Ceres Gardening shows in the excel sheet, and along with all these, an assumption also created on the excel sheet. What will happen with the company in the year of2007 can be discussed from the assumption of the excel sheet. It can be shown in the assumption created on the excel sheet that growth in the sales of the company is 0%, gross margin, SG & A, % of sales, change in R & D expenditure, depreciation, interest rate and effective tax rate all are increased by 1%. Cash (days of sales) of the company in the year 2007 is 243.5. Cash, per cent of sales of the company, is 66.7%. Accounts receivable (days of sales) are increased by one along with inventories (days of COGS). PP & E turnover (sakes / PP & E) is also multiplied by 1. The land of the company does not increase. Accounts payable (days COGS) is increased by 1 per cent of prior debt, which is the current portion is also increased by 1%. The dividend payout ratio is increased by 1%. The gross profit of the company is 85, and the gross margin is 1%. Earnings of the company before paying interest and taxes are 4,581, and the margin of earnings before paying interest and taxes decreases by 53.8%. Earning of the company before paying taxes is 4,669, and the net income of the company is 4,623. The total assets of Ceres Gardening are about 13,574 and which is also the total liabilities and shareholders’ equity. The operating cash flow of the company is 8,594, investing cash flow is 4,347, and financial cash flow is 518. The total change in the cash of the company is 3,729.

Question 2

The excel sheet shows all the financial details of the company. The income statement, balance sheet and cash flow of the company are shown in the excel sheet. After showing all the projection and after analyzing all the projections, it can be said that the company has no debts remaining. From the balance sheet, it can be seen that in the assets section, total cash is 5,684, accounts receivable is 23, inventories are 23, current assets is 1,070, net plant, property and equity is 4,347, other assets are 645, the land is 2,853, and non-current assets are 7,844. 13,574 is the total assets. 

In the liabilities and shareholders’ equity section, accounts payable is 23, the current portion of long term debt 85, current liabilities is 108, long term debt is 8,480 and shareholders equity is 4,987. The total liabilities and shareholders’ equity is 13,574, which is equal to the total assets; therefore, there are no debts remaining for the company.

References

Journal

Alexandra, J., 2017. The city as nature and the nature of the city-climate adaptation using living infrastructure: governance and integration challenges. Australasian Journal of Water Resources21(2), pp.63-76.

Anacleto, A., Negrelle, R.R.B., Cuquel, F.L. and Muraro, D., 2017. Profile and behavior of flower consumer: subsidies for marketing actions. Revista Ceres64(6), pp.557-566.

Braungart, M. and McDonough, W., Social Justice Entrepreneurship Resources.

Broderick, R.J., 2019. DESIGNING RESILIENT COMMUNITIES: Stakeholder Advisory Group Meeting 2 (No. SAND2019-2356PE). Sandia National Lab.(SNL-NM), Albuquerque, NM (United States).

Edwards, F. and Davies, A.R., 2018. Connective consumptions: Mapping Melbourne’s food sharing ecosystem. Urban Policy and Research36(4), pp.476-495.

Reig, P., Larson, W., Vionnet, S. and Bayart, J.B., 2019. Volumetric Water Benefit Accounting (VWBA): A method for implementing and valuing water stewardship activities. Working Paper). Washington DC: World Resources Institute.

Zeunert, J., 2018. Dimensions of urban agriculture. Routledge Handbook of Landscape and Food (1st edn). Routledge, London, pp.160-184.

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