Financial analysis Case Study Example | Topics and Well Written Essays - 1250 words

Financial analysis - Case Study Example There are various as to why a firm can be profitable and experience cash flow problems at the same time. This case study will discuss the reasons as to why the firm is experiencing cash problems and provide recommendations on how it can improve its cash flow. Cash flow is the ability of a company to meet its financial obligations. A negative cash flow prevents a company from meeting its debt payments like in the case of Cape Chemicals. It is important for Cape Chemicals to analyze the reasons leading to the negative cash flow while still reporting an increase in the profits. By doing this, it will be able to lower its debt ratio to enable it acquire long term borrowing. The analysis will also be aimed at acquiring a positive cash flow and positive profits. Reasons for the negative cash flows at Cape Chemicals The profit for the company has increased significantly over the last three years due to the increase in the revenue obtained from the increase in sales of chemicals. The new pro duct lines have led to increased production and hence increased sales and revenues. However, despite of the increase in profit, the company has negative cash flow due to increase dependence of loans for its capital expenditure. This means that the cash obtained from the profits and other business income is used in capital expenditure. That is, the company uses all of its liquid cash to pay for loans used in capital expenditure leaving it with a negative cash flow. Cape Chemical is a company which deals with the distribution of dry and liquid chemicals. The main reason as to why the company is profitable but broke is because the company has been servicing loans or purchasing capital equipments. Cape Chemicals has intensely used its cash flows to purchase capital equipments in its bid to add new product lines for the company. The need to increase the capacity of the company has seen the company use most of its cash to purchase new equipments a situation which has drained its cash flow s. An additional chemical product line for the company requires a large sum of money which has drained the firm’s cash supplies. The company has also been serving loans (long term loans) which have been borrowed for the capital requirement reasons. Cape Chemicals used to borrow for its capital requirement until 2006 when the company had reached its bank borrowing limit. The increased borrowing has led to an increase in the debt ratio of the company as shown below Debt ratio 2005 2006 2007 45.45% 58.4% 71.5% The increase in the debt ratio over the three year period is an indication of increase borrowing. The close the ratio is to 100%, the higher is the company depended on borrowings and loans making leading to increase in the total debts and a reduction in the total assets. Capital expenditures are subject to depreciation which reduces the net income and subsequently the profitability of the company. The depreciation expenses associated with the capital expenditure of Cape Ch emical therefore leads to the negative cash flow experienced in the company. Poor collections practice in the company is also responsible for the negative cash flow. For example, according to Stewart, the liberal credit policy in the company had led to increased accounts receivables which then led to the reduction in the

Road Traffic Accident Essay Example | Topics and Well Written Essays - 2750 words - 1

Road Traffic Accident - Essay Example The case that is undertaken for discussion is a 26 year old pedestrian male who is struck by a high speeding car, consequent to which he suffers multiple injuries which includes deep 5cm laceration on his forehead, sharp pain in the back of the neck, unequal chest movements, abdominal injury and injury to the pelvis and right femur. The 3 main injuries which will be specifically discussed are the sharp pain in the back of the neck, unequal chest movement and injury to the pelvis. The sharp pain in the back of the neck of the patient hints at probable spine injury at that area. Most cervical spine fractures occur predominantly at 2 levels -at the level of C2 and at the level of C6 or C7 (Mueller 2006). The normal cervical spine has 3 distinct columns- the anterior column is composed of anterior longitudinal ligament and the anterior 2/3rds of the vertebral bodies, the middle column consists of the posterior longitudinal ligament and the posterior 1/3rd of the vertebral bodies, the annulus and intervertebral discs and the posterior column includes all of the bony elements formed by the pedicles, transverse processes, articulating facets, laminae, and spinous processes. Disruption of more than one of these columns makes the spine move as 2 separate units, increasing the likelihood of spinal cord injury. Based on the mechanism of injury, cervical spine injury can be classified into flexion, flexion-rotation, extension, extension-rotation, vertical compression, la teral flexion, and imprecisely understood mechanisms (Mueller 2006). The patient can present with the spinal shock which manifests as flaccidity, areflexia, loss of anal sphincter tone, fetal incontinence, priapism and loss of bulbocavernosus reflex. He can also manifest with signs of neurogenic shock like hypotension, paradoxical bradycardia and flushed but dry skin.  Ã‚        The 26-year-old man who met with a road traffic accident was admitted with multiple injuries involving the spine, chest and the pelvis. He was managed in the intensive care with continuous monitoring of his vital signs. He was given appropriate fluids, electrolytes, blood transfusion, diet, and medications. The main concern in this patient is the prognosis of spinal cord injury which is poor. Hence it is obvious that the patient and his family members are worried about his prospects in terms of recovery, day-to-day activities, employment, social and married life. The patient and the relatives will need emotional and psychological help before discharge. In addition, the patient will also need rehabilitation measures including physiotherapy and occupational therapy.