1. Identify two warning signals that could have negative implications with respect to the company’s ability to generate cash flows to meet its future needs. In each case, explain why the signal you have identified could reflect a cash flow problem. 2. At the annual general meeting of White Star, the managing director, Ms. Rose Dawson, made the following statement: ‘ Recently a number of articles in the financial press have questioned the financial position of our company. This criticism is totally unjustified. Net profit was $25 million and total assets have increased by $160 million. These results show that 2019 was a very successful year for White Star. ’ Comment on Ms. Dawson’s statement.
1. Identify two warning signals that could have negative implications with respect to the company’s ability to generate
2. At the annual general meeting of White Star, the managing director, Ms. Rose Dawson, made the following statement: ‘ Recently a number of articles in the financial press have questioned the financial position of our company. This criticism is totally unjustified. Net profit was $25 million and total assets have increased by $160 million. These results show that 2019 was a very successful year for White Star. ’ Comment on Ms. Dawson’s statement.
Info:
WR:
2018 = 380m
2019 = 395 m
CR:
2018 = 1.8m
2019 = 1.6m
QR:
2018 = 1.2m
2019 = 0.9m
Debt-to-equity ratio:
2018 = 0.85 times
2019 = 0.68 times
Return-on-equity ratio:
2018 = 8.33 %
2019 = 12.26%
Earnings per share:
2018 = 0.312m
2019 = 0.475m
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