New strategy
NWC D
PPE E
ROE for each pound that share holder put in the firm they get 24,5 %, as leverage is go up so this
increase is not a good risk vs good return.
If the suppliers are not finance inventories ( looking Cas cycle) , it must be the bank( looking
margin, decrease ebit and increase of leverage)
CCC= NWC needs of financing 4months to receives the money , to get money back. So need
finance this 4 months.
Net fixed assest tun over = sales/ net fixed assets =3,4 for each dollar that invest in NFA I will get
3,4 dollar in sales
Hig profit high risk, maybe is OK, but profist are relative and accounting values of the history of the
company but is not cash in your pocket available to do something
When income statement told you that you have profits, not tell you as cash flow statement where
is money and if you have an excess of cash or if you have require of cash.
There is a requierement of cash due to strategy is growth. So the forecast support us to validate
with borders director how to finance the operation in the future?
More growth more cash to finance NWC, it requires finance. The growth eat all money ans there
no money in the poket
We can growth more efficiently , growing sales but less Capex . grow by itself is not enough, is not
good invest in new stores, but maybe is better in improve the stores
Income statement is not real cash in your poket, you have to look NPV that is real value through a
financial model.