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Horniman Horticulture

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by

Daniel Maldonado

on 30 October 2013

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Transcript of Horniman Horticulture

Horniman Horticulture
SWOT Analysis
Do you agree with Maggie Brown's accounts payable policy?
Phase 2
Ratios
Threats
Leveraging operations
Expected revenue hitting 30% growth rate
Expected 12 acre parcel closing
Opportunities
Weaknesses
Strengths
Accounts payable policy
Accounts receivable
Inventory turnover
Capital expenditures
Goal of 8%
What Explains the Erosion of the Cash Balance?
Suppliers provide 30 day payment terms
Discount for payments received in 10 days
Risk averse due to inventory loss concern
Detrimental weather may lead to defaulting
Interest rate risk affecting demand
Weather changes leading to loss of inventory
Becoming illiquid in the near term
Increasing revenue, net profit, total assets, & returns on equity
Increase in demand by 40%
Good public relations
Stable depreciation expense
Debt does not exist
Liquidity issues
Not attaining 8% cash margin on revenue
Increasing number of Receivable days
Increasing Inventory Days
Inventory duration
Unsustainable growth rate
Financial Performance
History
Identify types of Analysis
Housekeeping
Case Summary
Between the lines
Research
Ratios
Ratio Analysis
2005 Benchmark
Payable Days 9.9 26.9
Receivable Days 50.9 21.8
Inventory Days 476.3 386.3
Captial Expenditure
-$75,000 for farmland in Cash
What do you expect the financial position of the business to be in 2006?
Valuation Analysis and Free Cash Flow
Sales as key driver
30% revenue growth

Operating Level
Profit Margin Increase
Depreciation Expense slowly rising
Capitalization cost

Free Cash Flow
Non Cash Items
Changes in WC
CapEX

Discount Rate
Beta
30 year Treasuries
Market risk premium

Valuation Analysis
$2.95 million
Expansion ability
Cash management issues
Valuation
Full transcript