To continue the second part of my analysis and review, I will be touching on the Cash Flow Statement (CFS) and also discussing some strategies which CFG will be undertaking in order to boost their business and grab a larger market share. Some of the points discussed are worthy of debate as to their effectiveness, but the idea is to put them out on the table so that they can be objectively analyzed and commented on, so please feel free to criticize each point constructively.
Cash Flow Statement Analysis
Operating cash flows were healthy for FY 2007, with a net cash inflow of US$173.9 million. This is mainly due to the higher volume of business (which generates higher cash flows) and also a decrease in other receivables and prepayments, which caused a net cash inflow on the indirect method of preparing cash flow statements. The decrease in other receivables resulted in a net cash "increase" of US$51.8 million compared to a decrease of US$38.0 million for FY 2006. There was also an increase in trade payables which resulted in a net cash inflow of US$19.0 million compared to less than US$1 million inflow for FY 2006. This would indicate that CFG is getting better credit terms from its suppliers as the increase is significant (about 10% of net operating cash inflows). Readers should also take note of the adding back of interest expense (which is essentially a profit and loss item and is non-cash) of US$25.5 million and deduction of actual interest paid of US$20.8 million. There is thus a net cash inflow of about US$4.7 million as a result of the difference between accrual accounting and cash outflow recognition. The expense which was recognized in this period will probably be paid out in the following FY 2008, so US$25.5 million is a good gauge of FY 2008's probable cash outflows for interest expenses. Overall, interest expenses and income taxes have increased significantly which is not surprising considering the increased amount of bank loans taken by CFG and the expansion of their Peruvian operations which necessarily entails higher tax expenses.
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Further Reading: China Fishery - FY 2007 Analysis and Review (Part 1)By: musicwhiz
To continue the second part of my analysis and review, I will be touching on the Cash Flow Statement (CFS) and also discussing some strategies which CFG will be undertaking in order to boost their business and grab a larger market share. Some of the points discussed are worthy of debate as to their effectiveness, but the idea is to put them out on the table so that they can be objectively analyzed and commented on, so please feel free to criticize each point constructively.
Cash Flow Statement Analysis
Operating cash flows were healthy for FY 2007, with a net cash inflow of US$173.9 million. This is mainly due to the higher volume of business (which generates higher cash flows) and also a decrease in other receivables and prepayments, which caused a net cash inflow on the indirect method of preparing cash flow statements. The decrease in other receivables resulted in a net cash "increase" of US$51.8 million compared to a decrease of US$38.0 million for FY 2006. There was also an increase in trade payables which resulted in a net cash inflow of US$19.0 million compared to less than US$1 million inflow for FY 2006. This would indicate that CFG is getting better credit terms from its suppliers as the increase is significant (about 10% of net operating cash inflows). Readers should also take note of the adding back of interest expense (which is essentially a profit and loss item and is non-cash) of US$25.5 million and deduction of actual interest paid of US$20.8 million. There is thus a net cash inflow of about US$4.7 million as a result of the difference between accrual accounting and cash outflow recognition. The expense which was recognized in this period will probably be paid out in the following FY 2008, so US$25.5 million is a good gauge of FY 2008's probable cash outflows for interest expenses. Overall, interest expenses and income taxes have increased significantly which is not surprising considering the increased amount of bank loans taken by CFG and the expansion of their Peruvian operations which necessarily entails higher tax expenses.
Read more...
Further Reading: China Fishery - FY 2007 Analysis and Review (Part 1)
To continue the second part of my analysis and review, I will be touching on the Cash Flow Statement (CFS) and also discussing some strategies which CFG will be undertaking in order to boost their business and grab a larger market share. Some of the points discussed are worthy of debate as to their effectiveness, but the idea is to put them out on the table so that they can be objectively analyzed and commented on, so please feel free to criticize each point constructively.
Cash Flow Statement Analysis
Operating cash flows were healthy for FY 2007, with a net cash inflow of US$173.9 million. This is mainly due to the higher volume of business (which generates higher cash flows) and also a decrease in other receivables and prepayments, which caused a net cash inflow on the indirect method of preparing cash flow statements. The decrease in other receivables resulted in a net cash "increase" of US$51.8 million compared to a decrease of US$38.0 million for FY 2006. There was also an increase in trade payables which resulted in a net cash inflow of US$19.0 million compared to less than US$1 million inflow for FY 2006. This would indicate that CFG is getting better credit terms from its suppliers as the increase is significant (about 10% of net operating cash inflows). Readers should also take note of the adding back of interest expense (which is essentially a profit and loss item and is non-cash) of US$25.5 million and deduction of actual interest paid of US$20.8 million. There is thus a net cash inflow of about US$4.7 million as a result of the difference between accrual accounting and cash outflow recognition. The expense which was recognized in this period will probably be paid out in the following FY 2008, so US$25.5 million is a good gauge of FY 2008's probable cash outflows for interest expenses. Overall, interest expenses and income taxes have increased significantly which is not surprising considering the increased amount of bank loans taken by CFG and the expansion of their Peruvian operations which necessarily entails higher tax expenses.
Read more...
Further Reading: China Fishery - FY 2007 Analysis and Review (Part 1)
