IMT Ceres

Name Princy Jenet.
Question 1
1 a)
*14.73% of the profits estimated of the year 2006(E) will translate to the cash flow
from operations for the same year.
*Cash flow from investing activities has been contributed mostly to the decrease in
the change in cash by the company from 2003 to 2006(E).
1 b)
*Cash flow from operations – Cash flow operations is in a Decreasing trend
In the year 2003 to 2006(E), at a CAGR of -51.8%.(Reason : Accounts Receivables has
increasing considerable over years, indicating that company is not able to realize those
receivables on timeleading to a negative impact on working capital and further on the
Cash flow from operations.)
*Cash flow from investing activities – Cash flow from investing activities is high in
year 2003 & 2004 and then a limited decline can be seen in year 2005 and
2006(E).(Reason : There is a substantial Investment in Land in the year 2003 & 2004,
leading to a high investing cash outflow.
*Cash flow from financing activities – Cash flow from financing is in constant trend
In the year 2003 to 2006(E).(Reason : The amount at which the Debt and Dividends are
almost same hence there is not much change in the Financing
Activity.)
1 c)
*Cash Position of the Company: The company had better cash position on 2005,
compared to 2006(E). There is a negative change in cash, indicating a total cash outflow
leading to a low closing cash balance in year 2006(E).
*Self-financing of Investments: The company do not have enough cash flow from
operations to self-finance investment in year 2006(E), however, the company has
enough cash balance in its book which can be used for self-financing.
*Funding of Investments: The company have used debt-financing to fund its
investment.
*Free Cash Flow: The company has No Free Cash flow as it is already in Negative
Position.
Question 2
2 a)Operating working capital = Accounts receivable + inventory -accounts

payable
2002 2003 2004 2005 2006(E)

Accounts Receivables 3,485 4,405 6,821 10,286 14,471
Inventory 3,089 2,795 3,201 3,291 3,847
Accounts Payable 2,034 2,973 4,899 6,660 9,424
Operating Working Capital 4,540 4,227 5,122 6,917 8,894
2 b)Operating Working Capital/Sales Ratio
2002 2003 2004 2005 2006(E)

Sales 24,652 26,797 29,289 35,088 42,597
Operating Working 0.18 0.16 0.17 0.2 0.21
Capital/Sales Ratio
2 c)
Days Inventory Outstanding =Inventory/Cost of goods sold per day
2002 2003 2004 2005 2006(E)
Inventory 3,089 2,795 3,201 3,291 3,847
Inventory/Cost of goods sold 54.35 46.36 48.33 41.42 39.45
per day
Cost of Goods Sold 20,461 21,706 23,841 28,597 35,100
Cost of Goods Sold per day 56.84 60.29 66.23 79.44 97.50
Days of Inventory Outstanding 55 46 48 41 39
Days Sales Outstanding = Accounts receivable/sales revenue per day
2002 2003 2004 2005 2006(E)

Sales revenue 24,652 26,797 29,289 35,088 42,597
Sales per day 68.48 74.44 81.36 97.47 118.33
Accounts Receivables 3,485 4,405 6,821 10,286 14,471
Accounts Receivable/Sales 50.89 59.18 83.84 105.53 122.3
revenue per day
Days Sales Outstanding 51 59 84 105 122
Days Payables Outstanding = Accounts payable/cost of goods sold per day

2002 2003 2004 2005 2006(E)
Cost of Goods Sold 20,461 21,706 23,841 28,597 35,100
Cost of Goods Sold per day 56.84 60.29 66.23 79.44 97.50
Accounts Payable 2,034 2,973 4,899 6,660 9,424
Accounts Payable/Cost of 35.79 49.32 73.97 83.84 96.66
goods sold per day
Days Payables Outstanding 36 49 74 84 97
2 d)
Long credit period has been given to the dealers by Ceres Gardening Limited have a
negative implication on its working capital. Long credit period on accounts
receivables may lead to delay in cash inflow further impacting the working capital.
Question 3
At December 31 2002 2003 2004 2005 2006(E)
Capital Employed
Plant, Property, & Equipment (net)
2,257 2,680 2,958 3,617 4,347
Other Assets 645 645 645 645 645
Land 450 1,750 2,853 2,853 2,853
Accounts Receivable 3,485 4,405 6,821 10,286 14,471
Inventories 3,089 2,795 3,201 3,291 3,847
Accounts Payable(-) 2,034 2,973 4,899 6,660 9,424
Capital Employed 7,892 9,301 11,578 14,032 16,738

Invested Capital
Shareholders’ Equity 5,024 6,091 7,146 8,336 9,563
Long-Term Debt 3,258 4,400 5,726 7,123 8,480
Current Portion of Long-term Debt
315 352 525 730 649
Cash(-) 705 1,542 1,818 2,158 1,955

Net Debt 2,868 3,211 4,433 5,696 7,175
Invested Capital 7,892 9,301 11,578 14,032 16,738
Question 4
4 a)
Profitability Ratios 2002 2003 2004 2005 2006(E)

Variable Margin
Gross Profit 4,191 5,091 5,448 6,491 7,497
Sales 24,652 26,797 29,289 35,088 42,597
Variable Margin 17% 19% 19% 19% 18%
Operating Margin
Operating Income 1,641 2,338 2,408 2,836 3,018
Sales 24,652 26,797 29,289 35,088 42,597
Operating Margin 7% 9% 8% 8% 7%
Return on Equity
Net Profit 1,191 1,293 1,279 1,488 1,534
Owners' Equity 5,024 6,091 7,146 8,336 9,563
Return on Equity 24% 21% 18% 18% 16%
Return on Average Capital Employed
Earnings after taxes 1,378 1,642 1,719 2,034 2,192
before interest
Capital Employed 8,597 10,843 13,396 16,190 18,693

Average Capital 8,597 9,720 12,120 14,793 17,441
Employed
Return on Average 16% 17% 14% 14% 13%
Capital Employed
4 b) ROE is in a Decreasing trend from the year 2002 to 2006(E) as there is a increase in
net profit is less than the increase in owner’s equity.
4 c) RoACE is in a Constant trend from the year 2002 to 2006(E) as scale of increase in
capital employed is more than that of the Earnings after taxes and before interest.
Question 5
Pros Of Get Ceres Program:

*Get Ceres Program has sales increased as $35.1 million in 2005 to $42.6 million in
2006(E), approximately 80% of the sales were to the dealers.
*The company have done well with the financial viability with breakeven point of
approximately $30 million of revenue under the current cost structure.
Cons Of Get Ceres Program:
* Higher the price point of the organic seedling means even more dollars it might be
tied up to the inventory which the dealers were not ready to do so.
* The payment was delayed by the customers almost for 120 days which majorly
affected the business .

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Name Princy Jenet.

2 a)Operating working capital = Accounts receivable + inventory -accounts

2002 2003 2004 2005 2006(E)

2 b)Operating Working Capital/Sales Ratio

2002 2003 2004 2005 2006(E)

Days Sales Outstanding = Accounts receivable/sales revenue per day

2002 2003 2004 2005 2006(E)

Days Payables Outstanding = Accounts payable/cost of goods sold per day

Capital Employed 7,892 9,301 11,578 14,032 16,738

Cash(-) 705 1,542 1,818 2,158 1,955

Profitability Ratios 2002 2003 2004 2005 2006(E)

Capital Employed 8,597 10,843 13,396 16,190 18,693

Pros Of Get Ceres Program:

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