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Case Study/Practical
Assess Financial Risk Exposure and Working Capital Management
Company A
You are given the financial statements of Company A as follow:

The industry average for the following ratios are assumed and provided as below.

The majority (90%) of its client’s base is from overseas which will pay US dollars for the products provided by Company A.
Based on the nature of business operation and financial histories, identify and determine extent of Company A’s financial risk exposures. (38 marks)
Company B
You are given the following information for Company B as below.

1. Assume that cash and marketable securities are part of the firm’s operating current assets, calculate the operating working net working capital for both 2015 and 2014 based on the information above. (6 marks)
2. Assume that the sales for 2015 and 2014 are $33,596,875 and $36,742,308 respectively, calculate operating working capital turnover ratio for both years. (4 marks)
3. You are also given the following ratios used in working capital management for Company B:

Based on the ratios in Part 2 and 3, do you think Company B has a good working capital management? Why or why not? (10 marks)