SAABs Company Cash Flow Problems - Assignment Example

Comments (0) Cite this document
Summary
This paper under the headline "SAAB’s Company Cash Flow Problems" focuses on such important fact that 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. …
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER95% of users find it useful
SAABs Company Cash Flow Problems
Read TextPreview

Extract of sample "SAABs Company Cash Flow Problems"

Download file to see previous pages Business failure can occur for various reasons ranging from legal, political and economic factors that are beyond an individual firm’s control, to internal factors like cash flow problems, manufacturing, and selling difficulties and lack of firm orders on which to base production capacity. If a business finds it difficult to even break even and pay its own operating, selling, and distribution costs, it can either look for a partnership, being rescued through a Government or private bailout, being acquired by a more stable entity or file for bankruptcy. Sadly this is what happened with SAAB after its struggling Automobile Division was taken over by General Motors in 1990. But in the aftermath of the 2008 recession and subsequent bailout of General Motors itself by the American Government, SAAB Automobile Division was sold off to Spyker Cars N.V. with the aid of a Russian sponsor in 2010. Spyker had subsequently been renamed Swedish Automobiles. However, the purchase and operation of SAAB Automobiles proved too heavy for Spyker to manage because Spyker was a small firm and taking over SAAB had drained their cash position as well as tested their managerial capabilities to the maximum. After a purchase offer by a Chinese firm was thwarted by former owner General Motors (they were against the technology being available to Chinese manufacturers) the company filed a bankruptcy petition and started looking for a buyer. Various offers and counteroffers were made from China Youngman, Tata Motors, Mahindra & Mahindra, Koenigsegg etc. The company could only produce between 20,000 and 40,000 vehicles at its manufacturing plants in Mexico and Sweden. The financial meltdown did not allow it to take advantage of the Chinese demand because it cancelled its plans to expand into new markets due to low cash position, a paucity of credit and economic uncertainties. Various episodes of being unable to pay worker salaries and even to pay suppliers for materials repeated themselves in 2011. For example, July salaries were paid at the last minute on July 26; August salaries were paid through equity insurance as Gemini Fund purchased 5 million shares in SAAB. September salary payments also seemed to be in jeopardy. The Swedish Enforcement Administration has been monitoring SAAB in case of failure to meet creditor’s claims. The company Union has also threatened to go on strike because of salary payment difficulties that occurred three times in 2011. So we see that even financing from potential buyers had to be resorted to so that the company could be kept afloat (www.swedecar.com). It must be admitted that the lack of cash flow emerged from an apparent lack of attention to the production and marketing mix as well. Everyone knows that when you are trying to put a company or a brand name back on its feet, a sizeable amount of money must be spent on advertising and press relations, creating hype and curiosity so that buyers are attracted to the upcoming offerings (Kotler & Keller, 2012).  ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(SAABs Company Cash Flow Problems Assignment Example | Topics and Well Written Essays - 1750 words, n.d.)
SAABs Company Cash Flow Problems Assignment Example | Topics and Well Written Essays - 1750 words. Retrieved from https://studentshare.org/finance-accounting/1447022-cash-flow-problems-are-one-of-the-most-common
(SAABs Company Cash Flow Problems Assignment Example | Topics and Well Written Essays - 1750 Words)
SAABs Company Cash Flow Problems Assignment Example | Topics and Well Written Essays - 1750 Words. https://studentshare.org/finance-accounting/1447022-cash-flow-problems-are-one-of-the-most-common.
“SAABs Company Cash Flow Problems Assignment Example | Topics and Well Written Essays - 1750 Words”, n.d. https://studentshare.org/finance-accounting/1447022-cash-flow-problems-are-one-of-the-most-common.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF SAABs Company Cash Flow Problems

CASH FLOW

...%. 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...
3 Pages(750 words)Assignment

Cash Flow

...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...
3 Pages(750 words)Case Study

The Cash Flow Budget of Hidetoseek Company

...: Hidetoseek increase its overdraft limit beyond £ 25000. It is further assumed that rate of interest is same as before that is 8%. Task 2 The cash flow budget of Hidetoseek Company reveals that there will be huge liquidity problem in coming six months, the bank balance will not only be negative but also need overdraft for short term requirements especially for the working capital. The three issues can be as follows: The statement indicates negative balance which refers the liquidity problem. The reason behind it is the bulk purchase from the UK supplier, which will minimize the cost but will increase the loan burden. Next is the limit of overdraft...
4 Pages(1000 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...
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,...
2 Pages(500 words)Essay

Cash flow

...Finance and Accounting it is written on order instructions what you need to do exactly Contents Contents 2 Task 3 Task 2:- 5 Task 3:- 5 Task 4:- 7 References 8 Appendices 9 Task 1:- The net profit and the cash generated from operating activities of a company might not be equal for a same period of time because cash flow and net profit are different from each other. Cash flow can be defined as the money which comes in and goes out due to different financial, investment operating activities. On the other side, net profit is the amount remained from sales revenue after the deductions of all expenses of the firm. We follow the accrual...
4 Pages(1000 words)Coursework

Accounting Cash Flow

... This report compares the cash flow for Coca Cola and Pepsi using their and annual reports for their cash flows. a. Compare and contrast, over two consecutive operating periods, the respective net cash flows from Operating Activities of the two companies. For both of the two companies, Pepsi and Coca Cola, the cash flow experienced increased from 2011 to 2012. The comparison of these two companies will be based on their total cash flow from operating activities, in which both of them witnessed an increase, from 8.4 M to 9.6 for Pepsi and from 9.4 to 10.6 for Coca Cola. However, as shown in the above values, Coca Cola witnessed more cash flows from the activities as compared to its competitor. The main reason for the difference... is that...
3 Pages(750 words)Coursework

Cash Flow

...allows companies to use indirect method by disclosing, in a simpler statement format, changes in current assets and liabilities. Conclusion As a CFO I would prefer the indirect statement of cash flows method. The indirect method starts by identifying the companys net income or loss. Subsequently, any non-cash expenses, such as depreciation, amortization, loss provision for accounts receivable and any losses on the sale of a fixed asset, are adding back to net income. The indirect cash flow method shows a reconciliation from reported net income to cash provided by operations. The direct method reports...
1 Pages(250 words)Essay

Free cash flow

...Introduction Operating cash flow is a critical tool in cash flow analysis since it is used as a basis for calculating free cash flow. It also forms a basis of calculating the operating cash flow margin, which provides a crucial perspective for calculating the long-term cost trends of a company. It shows how well the company in consideration is managed compared to its competitors. Free cash flow is a tool that is used to evaluate the cash flow of a business entity. It measures the operating...
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...
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 Assignment on topic SAABs Company Cash Flow Problems for FREE!

Contact Us