Contact Us
Sign In / Sign Up for FREE
Go to advanced search...
Nobody downloaded yet

Business Studies: Rapid Expansion Efforts Driving Cash Flow Problems - Term Paper Example

Comments (0) Cite this document
The author of the "Business Studies: Rapid Expansion Efforts Driving Cash Flow Problems" paper identifies the factors which could have potentially caused the cash flow issues and will offer theoretical conclusions as to how this problem might have occurred…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER95% of users find it useful
Business Studies: Rapid Expansion Efforts Driving Cash Flow Problems
Read TextPreview

Extract of sample "Business Studies: Rapid Expansion Efforts Driving Cash Flow Problems"

Download file to see previous pages A situation has occurred in which a hypothetical company that manufactures yoghurt and fruit drinks has rapidly expanded its business. During the course of this hasty growth, the firm is now experiencing a noticeable cash flow problem.

Cash flow is best defined as the position within a firm which identifies the cash receipts and disbursements (expenditures) of the company (Marshall et al, 2004). Positive cash flow represents a situation in which a firm is competently able to pay its creditors while still maintaining an adequate supply of available operating cash. Negative cash flow indicates the opposite, where a firm's creditor-related expenses outweigh its available cash. Having offered this definition, the hypothetical United Health Foods is experiencing a cash flow crisis due to its rapid expansion efforts.

Effectively managing cash flows is crucial to the success of a business, thus a business owner must "understand the sources and uses of the firm's cash" (Longenecker et al, 2006: 213). In the case of United Health Foods, its sudden rise in operational costs associated with expansion has caused the company to experience a situation where its expenditures have outweighed its revenue (cash intake). When a business expands too

In the case of United Health Foods, the problem is likely in its expansion-associated operating costs, which are the costs associated in operating a business, including utilities, rents, and payroll salaries (Nickels et al, 2006). Assume for a moment that a portion of United's growth plan included the establishment of various, additional manufacturing facilities providing yoghurt and fruit drinks to various markets. Operating expenses, logically, will continue to increase with the establishment of each new facility. This creates a situation in which United must pay out substantial start-up costs for the new operations, perhaps payments for a new distribution centre, along with various operational costs for labour and supply (raw materials). ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(Business Studies: Rapid Expansion Efforts Driving Cash Flow Problems Term Paper, n.d.)
Business Studies: Rapid Expansion Efforts Driving Cash Flow Problems Term Paper.
(Business Studies: Rapid Expansion Efforts Driving Cash Flow Problems Term Paper)
Business Studies: Rapid Expansion Efforts Driving Cash Flow Problems Term Paper.
“Business Studies: Rapid Expansion Efforts Driving Cash Flow Problems Term Paper”.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Business Studies: Rapid Expansion Efforts Driving Cash Flow Problems

SAABs Company Cash Flow Problems

...? SAAB’s Cash Flow Problems of the of the SAAB’s Cash Flow Problems Q. “Cash flow problems are one of the most common reasons for business failure. Discuss why this was the case using the car company Saab. Provide recommendations as to how they could have improved their cash flow problems.” Introduction When we say that cash is king we mean that ultimately it is the cash flow of a business that is the most important factor in sustaining it and giving it life. While people often talk of accrual accounting or matching the revenues and expenses of a period to work out the actual profit or loss incurred, it is the cash in the bank and on hand that are very much the most important indicators of business health. Even so called liquid assets...
7 Pages(1750 words)Assignment


...%. The main investment expenditure in both cases was from technology and systems upgrades, and expansion and opening of new stores. With this background, the likely cash position of the two companies is discussed in the following sections. Home Depot Home Depot has invested heavily in logistics improvement, inventory management systems, and additional distribution center space. Further investments are likely in environmental friendly technologies and interconnected retail. In 2011, Home Depot closed five stores and opened eleven new stores, effectively adding six new stores. This trend appears likely to continue into the next few years. Consequently, investment on this count is likely to be restricted to just a few new stores. Cash flows...
3 Pages(750 words)Assignment

Cash Flow

Yum Brands Inc. operates six in different segments including YUM Restaurant International, Pizza Hut (US), Taco Bell (US), KFC (US), A&W All American Food Restaurant (US), YUM Restaurant China and LJS Long John Silver’s (US). This paper comments on the difference between net cash provided by operating activities and net income by speculating on which is likely to be superior sign of profitability for the firms in the long term. The paper also comments on the data reviewed by each firm and analyze cash flow position of each firm. After analyzing the cash flows of the companies as per the information given in the case, the paper finally ends with a conclusion that comments on whether these companies has any cash flow problems or no...
3 Pages(750 words)Case Study

Comments on Cash Flow Information Revealed by Cash Flow Statements

Net Profit of the firm is fair enough in both the years but due to mismanagement or lack of operational management Fab Footwear Limited reported lower profit in the year 2008 but in the year 2009 Fab Footwear Limited's management revised its strategy and redefines its role in the business which in the end generates revenues at the upside.
No significant moment is observed in the payment of dividends to the stockholders.
Inefficient and ineffective working capital management policies throughout the period from 2008 to 2009 and I assume that this policy will not continue in the future.
Fab Footwear Limited should adopt a strong strategy between trade debtors and trade creditors because, in the end, it makes an impression...
3 Pages(750 words)Assignment

Cash Flow

...Free cash flow is arrived at after subtracting capital expenditure from operating cash flows. Free cash flows refer to the cash that a firm has left over after including all the expenses incurred over the financial period. Caledonia Company should focus on the project’s free cash flow as opposed to the accounting profits because a positive cash flow means the company has money to continue investing in the project. An accounting profit does not necessary mean a positive cash flow for the company, and since it is a project that spans five years, cash flows generated from the project will be of interest to the project manager. The incremental cash flows for the five years of operations are shown in the table below: Incremental Cash flows Year...
1 Pages(250 words)Assignment

Cash Flow

...CASH FLOW The process through which money circulates within a business entity, into and out of a project and or financial products is what defines ‘cash flow’. The statement that therefore records and illustrates this financial movement is what ‘statement of cash flow’ is. An outstanding feature is that the statement is prepared periodically and must cover a specified short time spans. Cash flow The statement of cash flow is a critical document for any company as it shows the company’s rate of return and value (Dreyer, Erasmus, Morrison, & Hamman, 2013). It also helps a company to detect problems with its liquidity because the lack of liquidity may have direct influence of performance of a company even while it is running profitably...
2 Pages(500 words)Essay

Cash flow

... positive cash flow from financing activity as compared to the company FEDEX. D. Cash flow from investing activities of FEDEX in 2011 -$3419 million and in 2012 it is -$4049 million. Cash flow from investing activities of DHL in 2011 is -1697 million euro and in 2012 it is -1129 million euro. Although the cash flow for both the company is negative in recent year but the company DHL has more prudent investing policy than FEDEX as it has less negative cash flow from investment activities than FEDEX. Task 4:- From the above study we have seen the cash flows of the two companies for two consecutive periods. The cash flow from operating activities is better in case of FEDEX as compared to DHL and the company has also shown efficiency...
4 Pages(1000 words)Coursework

Cash Flow

CASH FLOW Unit This paper talks about cash inflows and outflows in an organisation. It attempts to compare and contrast the two types of cash flow statements, that is direct and indirect cash flow statements. Either of these two types can be adopted to be used by a CFO within an organisation.
Key Words: cash flow, CFO, direct cash flow, indirect cash flow
Operating, investing and financing are the three sets of activities contained in the cash flow statement sections. The direct versus indirect cash flows are only dealt with by the operations section. One can be able to identify, through the comparison between the operations section and the income statement, the variation in timing between cash collections an...
1 Pages(250 words)Essay

Free cash flow

It is therefore the cash flow that remains after the firm makes investment in property, plant and equipments. Often, financial analysts consider free cash flow to be more efficient in measuring the strength of a business than the cash flow from operating activities. To remain competitive large companies and other forms of businesses will need to invest in new equipments in order to maintain its competitive nature. These investments affect the level of free cash flow that the business is able to maintain (Yuangchih, 412).
“This study investigates the ability of Free Cash Flow to predict performance in capital intensive and non-capital intensive industries”. (Nunez, 120). Nunez argues that, “many financial scholars and researche...
10 Pages(2500 words)Research Paper

Statement of Cash Flow

... ment of Cash Flow of ment of Cash Flow A ment of cash flow is a financial report that outlines and details the sources of an organization’s cash and the manner in which it is spent in a given period and it does not contain any non-cash items such as depreciation (Epstein & Jermakowicz, 2007). It is a financial statement useful in the determination of the short- and medium-term feasibility of an organization. It is of the essence to study the cash flow statement of an organization because cash management influences the performance, especially for small and medium-size businesses (Taulli, 2004). For such businesses, cash flow statement may be studied at least quarterly. The statement of cash flow has been in use since November 1987 when...
1 Pages(250 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Term Paper on topic Business Studies: Rapid Expansion Efforts Driving Cash Flow Problems for FREE!

Contact Us