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Financial issues on statements

I need some pointers on the following:

1. On Feb 15, 2011, this company (attached) filed bankruptcy. I need to find 3 things on the December 31, 2011 financial statements that indicate the company financial problems.
2. Company is currently reorganizing under bankruptcy court protection. Is there anything on the financial statements that indicate financial strength?
3. Why is the depreciation and amortization (oper. activ. - stat of cash flows) included?
Thank you!!!


Solution Preview

There are several things to consider with these financial statements:

- cash is almost 50% less in 2011 versus 2010, yet collections from Accounts Receivable are only down 8-9%
- Inventory is down almost 19%, which will relate to a significant decline in sales (sales not shown with this data)
- Net Loss is almost 300% from 2009 to 2011; and about 11% 2010 versus 2011 (both represent very sharp drops which will cause cash position to suffer, market position will suffer, and need to borrow will increase
- Property, Plant & Eqpt is down almost 14%
- Goodwill is down almost 6% - very bad trend for this to occur
- Other long term assets down almost 28%
- Accounts Payable down almost 26% (indicates paying less to vendors which mirrors the fact that inventory ...

Solution Summary

This provides an analysis of financial statements of a company in decline. It focuses on financial information which reveals not so subtle trends in the decline of a firm, including how it may affect stakeholders.