Report prep Sample Reta
Industry: 45311 - Florists
Revenue: Less than $1M
Periods: 12 months against the same 12 months from the previous year
Generally, what is the company's ability to meet obligations as they come due?
Notice that liquidity conditions have improved on lower profits and higher sales volume. It may be that
liquidity performance in the company is driven more by sales than profit levels.
The firm has made some real progress here this period. The liquidity position is better in all areas. For
example, both the current ratio and the quick ratio have improved this period. These generally are the
benchmarks that are used to assess liquidity. They are not perfect measures and do have limitations, but
they are solid when used together.
However, the company's position is still only average. One issue is that the net profit margin is lower than
last period. This will be discussed further in the next section, but it should be noted that margins affect cash
flow, not just profits. Is there a way to elevate profits higher and keep some of the earnings or cash flow in
Tips For Improvement
Here are some ideas or "tips" that might be considered by managers to better manage cash and liquidity in
If cash is a constraint, try to establish a sufficient line of credit from the bank. The business should
obtain, but not necessarily use, as much financing as possible from the bank. If you decide to obtain
external financing, structure as long-term rather than short-term in order to decrease monthly
• Sell any unnecessary/unproductive assets the business may have to increase cash. These are assets
that are not contributing sufficiently to the generation of income and cash flow.
• Set longer terms for Accounts Payable when possible. For example, increase a 30 day payment
window to 60 days.
• Watch the sales patterns of goods to make sure they are not sitting for too long or not moving at