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Essay / Research Paper Abstract
A 6 page paper examining financial records to assess the health of the company and to suggest methods of improving its cash position. Alliance Health has been growing in terms of all leading indicators of corporate health for three years (increased net income, decreased accounts receivable, decreased accounts payable, decreased debt and increased cash at year end), yet the company’s cash flow position has deteriorated. Because Alliance does not carry an untoward level of debt at present, the recommendation for improving its cash position is to take on debt sufficient to give it positive working capital and improve ROE, while simultaneously increasing its operating efficiency to reduce cycle time at least to 2001 levels. Bibliography lists 3 sources.
Page Count:
6 pages (~225 words per page)
File: CC6_KSfinAllianceHlth.rtf
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Unformatted sample text from the term paper:
Alliance Health has been growing in terms of all leading indicators of corporate health for three years (increased net income, decreased accounts receivable, decreased accounts payable, decreased debt and
increased cash at year end), yet the companys cash flow position has deteriorated. The purpose here is to assess the companys financial statements to identify methods of increasing the
companys cash position. Improving Profitability Cooper and Slagmulder (2000) write that there are "three fundamental ways that firm profitability can be increased" (p.
63): * Secure better prices for required resources; * Operate more efficiently; and * Sell more profitably. There has been great attention to
increasing efficiency over the past decade and longer, and adjusting the product and distribution mix is an ongoing process. What remains that most organizations do not do is to
further refine what has become the definition of effective operation. Performance Assessments Profitability There are four profitability ratios, each of which provides specific
information for the investor and for the companys management. The profitability ratios are operating profit margin, net profit margin, return on assets and return on equity. Operating and
net profit margins provide management with measures of how well the company is doing what it intends to do. Investors may be interested in these ratios, but they likely
have greater interest in ROE, which provides an indication of how much the company is generating in earnings per invested dollar. ROE has declined from 32.5 to 29.0 from
2000 to 2002, when it should be well ahead of that point and increasing, rather than declining. The DuPont Identity Ross, Westerfield and
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