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Cash Management Report

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Cash Management Report
Introduction:
This cash management report will analyze and interprets the trends for a business called “SERENA’S WORLD OF SHOES“ financial performance in terms of liquidity and efficiency with which it will focus on the assets and liabilities of the business. This report will describe the trends, causes of these trends and strategies for improvement with the help of various analytical tools.

Findings

Liquidity
Liquidity analytical ratios
(Key performance indicators)
2011
2012
Working Capital Ratio (WCR)
0.70:1
0.60:1
Quick Asset Ratio (QAR)
0.07:1
0.05:1
Cash Flow Ratio (CFR)
12.38Times
0.17Times
WCR
The WCR has decreased slightly from 0.70 to 0.60 from 2011 to 2012. This indicates that this business has slightly worse ability to meet its short term debts.We can see from the chart his is not a favourable result.
QAR
The QAR has also decreased slightly from0.70 to0.05 from 2011 to 2012. This indicates that this business has slightly worse ability to meet its immediate debts within the near future. We can see from the chart this is a favourable result.
CFR
The CFR has decreased from 12.38 times to 0.17 times from 2011 to 2012.This indicates that this business is less able to cover its average current liabilities or its short term debts. We can know from the table this is an unfavourable result.

Efficiency

2011
2012
Debtors Turnover Ratio (DTO)
98days
95days
Creditors Turnover Ratio (CTO)

87days
Stock Turnover Ratio (STO)
60days
67days
STO
In 2011, it took average 60 days for the business to sell their stock to customers,but in 2012 it was 67 days. The STO increased slightly from 2011to 2012. This represents an drease of the STR. This means that the business is selling its stock slower. Without further detail of the type of stock that is sold by Tuscan Foods we cannot know whether this is satisfactory or unsatisfactory.
DTO
In 2011 it took on average 98 days for the business for the debtors to settle their
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