Financial situation of the firm at the closure of 2001 annual report
From the data available from the past three years it's possible to evince a lot of information concerning the overall finance and economic trends of the firm. In this way very interesting in our opinion is the analysis and the consequence of the dynamic of several indices of financial stability an of many others mainly concerning internal efficiency.
Indeed in this preliminary overview we won't pay much attention to the evolution of the company economic performance for two main reasons.
On one side in fact results enough clear the trend of a constant growth in the revenues and any analysis of the ...view middle of the document...
The last point bring us to deal with the analysis of a second class of indicators that we found fundamental in order to forecast future cash flows of the next three years.
We selected there the more interesting for our purposes(in Appendix A there is the entire list of them)
Taking a brief analysis of them data suggest that there is not a real balance between the time of
collection of receivables and the payables deadline. However the trend in the last year seems to suggest the will of the board of harmonize the two deadlines. One more crucial point that we'll see crucial in the financial planning is the first index that suggest the presence of a huge inventory that blocks cash flows.
Body shop strategy and our assumption on the future financial and economic trend of the firm
The management strategy for the next three years consists mainly in a direct intervention in two direction.
A) a higher level of investment in Shops with a better organization of them
B) a direct intervention on the dynamic of the inventories in order to reduce the inefficient deposits of products
Assumption on the direct predictable consequence of firm new strategy in asset manegment
In relation to point A we hypotised a dynamic of fixed investment varying during the next three years: higher in the first one( 15% in the first year and 7% in the second two years).
The justification of than is inside the past dynamic of investment the firm carried on in 1999
Secondly we thing that is necessary to proceed to the depretiate the passed fixes( the gross net fixed at 2001 are still not under depretiation), so we'll prevent a plan of ten years for each fixed asset(Appendix A).
Assumption of the evolution of the revenues, n.w.c, cogs in the best and in the worst case
To explain and discuss our personal view on the future of the firm we decided to present a twofold prospectus of possible evolution of the economic activity of the firm( we're quite sure that all reasonable future realization will fall in the gap we forecast)
Rates of growth //scenario Best scenario Worst scenario
0 0 0 0 0 0
Rate of growth of revenues 15.00% 15.00% 15.00% 5.00% 5.00% 5.00%
Rate of growth of cogs 13.00% 12.00% 10.00% 5.00% 4,50% 3,50%
Rate of growth of receivables 15.00% 15.00% 15.00% 5.00% 5,00%
Rete of growth of payables 13.00% 12.00% 10.00% 5.00% 4,50% 3,50%
Rate of growth of inventory 15.00% 12.00% 10.00% 10.00% 10.00% 10.00%
Explanation of the assumptions.
To explain our assumption it's necessary to observe preliminary that it's our idea that the new strategy of the firm won't have as an effect an explosion of the rate of growth of revenues( even in fact in the best scenario the rate is quite close to the one we observed in 2001). Obviously in the bad scenario we think that the rate of growth will be significantly low(so we assumed a rate of growth similar to the one observed in 1999).
On the other side if the...