Financial Decision making

Financial Decision making


Today’s Date: 23.09.2014_ Course Name: FADM2

Faculty: Prof. Paul Thambar

Team Members
1. Identify team leader by circling his/her name.

Anurag Rathindra Bhavya Sharma Tushar Kulkarni

Rahul Desai Suhasini Hiremath

Assignment Being Discussed (Video, Case, Task, Reading, Exercise…):

The team jointly read the case and discussed the key points that are mentioned in the form of answers to the questions below.

1) What is the company’s financing strategy?

The team evaluated and discussed various elements of loss in all the financial statements.
Looking at the company’s cash flow statement for the year ending 2014, it is quite evident that company is generating substantial cash from its operating activities because of the negative working capital on account of substantial revenue received in advance coupled with delayed payments to the suppliers. Also, the company is able to generate substantial cash flows from financial activities through borrowings and proceeds from sale of non-current assets. As seen from the investing activities from cash flow statement, the company seems to have sold its older assets and invested into buying new assets such as latest aircraft carriers, expanding the business in other countries, etc., through the use of surplus cash generated from operating and financial activities.

2) Based on their cash flow statement, is the company generating adequate cash to repay debts and fund ongoing operations? If not, why not?

The company is able to generate substantial cash flows from its operating activities for its ongoing operations but it is not able to generate substantial cash flows from its financing activities to repay long term debts / liabilities as evident from the following:
Repayments of borrowings
Proceeds from borrowings
Proceeds from sale of Non-Current Assets

3) Is the company a good investment based on their dividend pay outs and returns? Why?...

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