ABC Company Research Paper Example | Topics and Well Written Essays - 1500 words

ABC Company - Research Paper ExampleEnding Income tax payable (10,000) (30,000) Net money diminish from operating activities (164,000) Analysis of ABC Co.s Cash Flow A companys operating cash run for indicates the revenue generated from doing business over a specified period less the operating expenses (Howell & Bain, 2008). This is an important process since it helps a company determine whether the business has a healthy financial beat between the one given on paper and the one that is applicable in practice. From the results of ABCs operating cash flow, the company is experiencing a cast out cash flow. Although this is normal sometimes, it is still a cause for alarm to the company management. The situation indicates that the company is spending more money than it is receiving. This is a common phenomenon with newly companies, however, the situation is dangerous if persistent over the long run (Lerner, 1995). There are several reasons for a negative cash flow but the of impo rt causes include poor debt collection, high operating woos, and bad business decisions. In the case of ABC Company, there are three likely reasons for the negative cash flow. These are high costs of goods sold which mostly consists of purchases. The other reason is poor debt collection, the companys accounts statement indicates that the net accounts receivable were still genuinely high with a small margin having been collected compared to the previous periods accounts. The third reason is the nature of the company, with a 25% growth in sales it means the company is a fast growing company, which results into significant increase in the companys working capital. To improve the cash flow situation at ABC, the company needs to reduce its spending and increase its sales (Laughlin, Bebbington, & Gray, 2001)However, the best option in... ABC CompanyBesides facing contestation from other companies that deal with cedar in making roofing and siding shingles, ABC also faces competition fro m products made of iron and clay, which are operating in the same market. However, cedar products have a higher competitive advantage over similar products in the market made of iron or clay. The chief(prenominal) disadvantage of cedar roofing and siding products is the attached price, which might lead to potential buyers resolving for cheaper iron products. ABC Company is therefore likely to discover its growth with minimal deviation either downwards or upwards. These deviations may be because of the harsh economic times forcing many homeowners to prefer cheaper iron products or clay products for their roofing and siding. Environmental conservation movements are also affecting the industry negatively (Sparrow Exteriors, 2013). These conservation policies are in turn making the cost of raw materials for cedar roofing tiles to be more expensive. Indulging into a new project such as building the dollhouse could be a viable solution for the company to meet its target goal of $3 milli on in the next three years. Being the companys controller, my objective lens is to create a strict budget and assess all the employees towards the project so that I can ensure everything goes according to the set budget limits. The chief executive officer should undertake the new project. After carefully consideration of its profit margin and the costs involved, the project is likely to help the company meet its target.