Anandam Manufacturing Company: Analysis Of Financial Statements Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Anandam Manufacturing Company: Analysis Of Financial Statements Case Solution

The company's time of interest has decreased; means that if the interest rate is low, the company might not be able to pay its liabilities. We can also compare the income of the company, although it is going upward,but it is only increasing at a very steady rate as compared to the rivalfirms. Anandam firm Net Profit Ratio indicates to wards a declining line.

Trend Analysis

Trend Analysis
	2013	Growth in 2013-14	2014	Growth in 2014 -15	2015
Cash	200	42%	480	60%	800
Credit	1,800	42%	4,320	60%	7,200
Total sales	2,000	42%	4,800	60%	8,000
Cost of goods sold	1,240	44%	2,832	59%	4,800
Gross profit	760	39%	1,968	62%	3,200
General Selling &Admin exp	80	18%	450	45%	1,000
Depreciation	100	25%	400	61%	660
Interest expenses (on borrowings)	60	38%	158	46%	340
Profit before tax (PST)	520	54%	960	80%	1,200
Tax (. 30%	156	54%	288	80%	360
Profit after tax (PAT)	364	54%	672	80%	840

By analyzing the trend, it can be seen that the firm has recorded the highest sales growth in 2015, in addition to which, the trend analysis is completely different in 2015 as compared to 2013 and 2014, which shows a growth rate of approximately 80%, after all the taxes are deducted. Growth in COGS show good results in 2014 and also shows good effects in 2015. As the positive growth in total sales, has a direct impact on the increasing costs, as analyzed by the aforementioned statement of trend analysis.

Would you grant the loan? Why or Why not?

As the loan officer, it is clear that the company’s financial position is not much stable and it would not be able to pay back the amount to the bank. So if I were the loan officer, I would not have granted the loan to the Anandam company, as the bank would have been exposed to risk that and there would have been high uncertainties that whether the company would be able to return the bank’s amount or not. Although the company is planning a bright future,but the current figures show that the company is not in a good condition, placing questions over its ability to pay back the loan amount

Strength and Weakness Analysis of Anandam Company

Strength

It is a good standard clothing firm.
The firm sells advanced designs of children's clothing.
Amandan company has skilled labor work force.
Amandan company has 12 years’ experience in the textile industry.

Weaknesses

Amandan company does not have a good strong plan to improve its receivable collection period or its inventory turnover period.
The firm does not ship the products directly to the customers.

I would recommend that Anandam building-firm should-improve its Account Receivable as soon as it can,because if it improves its Account Receivable ratio then it can get money much faster, which would enable the company to pay its suppliers, increasing the company’s stability.

Recommendations

I would also like to recommend the company to give importance to its assets turnover into the cash account, and it should also look at its Receivable collection period very carefully. Low collection time increases the risk of bankruptcy

In addition to this, the company can use on-time billing so that the customers can earn money quickly and prevent any delays in collection.

The company can use a well-developed loan system portal so that it could keep the track record of its due payable amount. This will help keep the company in being updated and in keeping its financial and debt values stable.........................

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Anandam Manufacturing Company: Analysis Of Financial Statements Harvard Case Solution & Analysis