Financial Records Review Essay
1. Deere and Company
Based on the balance sheet of Deere’s and Company, it is clear that there is less “cash” available in the year 2008 compared to 2007 showing a decrease of (- 48.77 %) mainly because of the increment on “inventory” acquisition by a (+ 30.14 %), happening the same way with “marketable securities” showing a decrease of (- 45.56 %).
The “receivables from unconsolidated subsidiaries and affiliates” also showed an increment of (+ 123.38 %), and the “retirement benefits” showed a decrease of (- 44.01 %); the “trade accounts”, “financing receivables”, “property and equipment”, “investments in unconsolidated subsidiaries and affiliates”, “goodwill” and “deferred income taxes”, remained the same with slight changes.
As for liabilities, the company increased their “short-term borrowings” from 2007 to 2008 by a (+ 67.87 %) as well as their “payables to unconsolidated subsidiaries and affiliates” by a (+ 23.95 %); but their primarily liability are their “accounts payable and accrued expenses”, it showed an increase of (+ 10.70 %), and the “retirement benefits and other liabilities” showed a decrease of (- 17.80 %); the “deferred income taxes”, and the “long term borrowings” remained the same with slight changes.
Based on the Income statement of Deere’s and Company,
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What the company is doing right is that they are constantly incrementing their sales year by year, giving them more profits in the end. What they are doing wrong is that they are increasing tremendously their short-term borrowings leaving them with fewer assets. What I personally recommend to Deere’s and Company is to sell their inventory to transform it in cash.
2. Arkansas Best Corp
Based on the balance sheet of Arkansas Best Corp., it is obvious that there has been an increase in the “cash flow” in recent years by comparing 2006 results with those of 2007 (+ 1772.72%) and 2008 (+ 7.54%); in “short-term investments” there was a considerable decrease from the year 2006 to 2007 (- 58.65%) and then again an increase in the year 2008 (+ 48.48%), the “net receivables” had a slight decrease and the “property plant and equipment” together with “goodwill” remained stable with slight changes.
As for liabilities, you can see that both, “accounts payables” and “short/current long term debt” have been declining slightly in recent years, on the other hand the “long term debts” remained stable from 2007 to 2008, “other liabilities” increase by (+ 44.39 %) and “long term liability deferred charges” decreased slightly by (- 22.03%).
Based on the income statement of Arkansas Best Corp., it is notable that the “total revenue” remained the same, but the “cost of revenue” increase by (+ 10.58%) compared with past years, resulting in less profit for the company.
What the company is doing right is that they are decreasing their selling general and administrative expenses, and keeping the amount of sales at the same time. What they are doing wrong is that they need to analyze the increment in cost revenue and compare it with their selling price. What I personally recommend to Arkansas Best Corp is to determine whether the cost of production was inefficient, either by material, labor, etc. and fix it.
3. Monterey Gourmet Foods, Inc.
Based on the balance sheet of Monterey Gourmet Foods, Inc., it is notable that there has been a decrement in the “cash flow” of (- 61.18 %) in the year 2008 compared to 2007, the same case occurred with the “net income receivable” account, showing a decrement of (- 38.37 %); this caused a decline in total assets. On the other hand “Account Property Plant and Equipment” showed an increase of (+ 7.98 %). As for liabilities, “accounts payable” experienced a decrement of (- 20%), which resulted in a decline in total liabilities by (- 19.67%).
Based on the income statement of Monterey Gourmet Foods, Inc., there was a decrement in the “total revenue” of (- 3.32 %), without experiencing significant changes in the “cost of revenue” account, thereby decreasing gross profit.
What the company is doing right is that they are keeping their sales up, giving them a net profit year by year. What they are doing wrong is that they must reorganize their administrative expenses, because they are investing almos 95% of their assets on their administration. What I personally recommend to Monterey Gourmet Foods, Inc. is a diversification of products to determine what products selling more on the market.
4. Boston Properties
Based on the balance sheet of Boston Properties, there is a significant decrease in current assets, mainly in the “cash flow” account (- 83.97 %) from the year 2007 to 2008; on the other hand the “income receivable” had a slight increase of (+ 7.46 %), without experiencing other changes in assets accounts. Regarding “long-term investments” we see a significant rise of the account, with an increase of (+ 273.18 %), another increase of (+ 13.64 %) is shown in “Charges Deferred from Assets of Long Term” account, and an insignificant decrease in the account of “Property Plant and Equipment and Other Assets”.
This leads to a decrease in the total assets in a (- 2.51 %). As for liabilities, there was a decrease in “accounts payable” of (- 70.64 %); however there was an increase in “long term debt” of (+ 14.19 %) and an insignificant decrease in the accounts of “other liabilities” and the “minority interest”, resulting in a decrease in total liabilities (- 1.90 %).
Based on the income statement of Boston Properties, there was a decrement of in the “total gross profit” of (- 2.58 %), occurred primarily due to the increase of “cost of revenue” by just (+ 6.6 %), since there was just a significant increase in the total income.
What the company is doing right is that they invest their cash in the long term investments, assuring themselves with a net income for the next years. What they are doing wrong is that by leaving themselves with no cash flow, they are no longer taking risks and loosing possible opportunities on the market. What I personally recommend to Boston Properties is to wait and keep the company running until the market opens again.