Case study 5,2 question

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Answered 1 days After Mar 10, 2022

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Sandeep answered on Mar 12 2022

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NORTH MOUNTSAIN NURSERY, INC- CASH FLOW ANALYSIS
Observation about the Company’s Financial Health post review of Statement of Cash Flow 2006:
First Company’s core parameters performance
    Parameters
    2006
    Comments
    Gross Margin
    49.10%

    Operating Margin
    8.00%

    Net Margin
    4.90%

    Interest Coverage Ratio
    19.18

    Operating Expense Ratio
    41.18%

    Inventory Turnover ratio
    4.59

    Days Inventory sold
    80

    Accounts Receivable Turnover ratio
    3.22

    Days Debts collected
    114

    Accounts Payable Turnove
    2.13

    Days Creditors Paid
    171

    Cu
ent Assets ratio
    1.76

    Cash Conversion Cycle (CCC)
    23

The company is in the business of outdoor, landscaping and supply of materials.
From the passage it can be infe
ed that the business enjoys near monopoly in the neighbour area.
Booming residential construction in nea
y will help company leverage its position and revenue. It can surely take first mover advantage.
    Nature of Cash Flow
    Amount (2006)


    Cash Flow from operating Activity
    $ 85,650


    Cash flows from investing activities
    ($ 50,000)


    Cash flows from financing activities
    ($38,000)


Cash generated from the core business activity is positive and sustainable for business.
Cash flow from...

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