Disclosure Analysis Paper
Every public company is required to reveal financial statements to the public, especially the Security Exchange Commission. These financial statements are also reviewed by an independent certified public accounting firm along with notes stating the financial information is conformed with general accepted account principles. In addition, the financial statements show items such as income statement, balance sheet, and cash flow statement of a company. This paper will summarize the statements which include cash and cash equivalent, account receivables, and inventory of Amira Nature Foods.
Amira Nature Foods is a leading provider of basmati rice grown in certain regions in India. Although Amira has just recently become a publicly traded company, they are becoming well-known and their financial information shows how well they are doing over the past year.
Cash and Cash Equivalent
Amira has just become a publicly traded company, therefore, their financial information is limited. However, it shows a strong sign that they are doing well. Their cash and cash equivalent include cash from operating activities, short-term investments, and other cash from investing activities (Fool, 2013). Cash and cash equivalent have increased tremendously in the last fiscal year from March 2012 to March 2013 from $8.3 to $33.27 million, respectively (Fool, 2013). Obviously, this dramatic change was a result from going IPO. Cash was mostly generated from issuing stocks. Another report from Marketwatch for the second quarter of 2014 fiscal year ended September 30, 2013 showed that Amira had $46.22 million in cash and cash equivalent (Martketwatch, 2013). This was an increase of $12.95 million from last fiscal year ended March 2013. Evidently, this increase was a sign of growing in overall business as opposed to cash generated solely from issuing stocks from prior year.
Receivables
Amira sells their branded product to over 25 countries which includes traditional retail small and large chain stores such as Jetro Restaurant Depot and Smart & Final (Amira, 2013). Therefore, their receivables consist mostly from sales on account. Receivables showed for year ended March 2012 and March 2013 were $38.83 million and $66.79 million, respectively (Fool, 2013). This was a significant increase of almost 42 percent. Again, this change was resulted from becoming a public company which made their company known and sales indeed increased as a result. In the second quarter of fiscal year 2014, Amira showed a slight increase in receivables as compared to March 2013. Sales were $329.62 and $413.78 million in March 2012 and March 2013, respectively (Fool, 2013). Relatively, receivables should not get out of line with sales. Ideally, receivable to sales ratio should be below 30 percent. This means that if this ratio is higher than 30 percent, it would be a warning sign that the company has a significant amount of cash tied up with the slow paying customers. The receivable to sales ratio is calculated by dividing the receivables over sales revenue in an accounting period. For Amira, this is only 16.14 percent at end of March 2013 which is a good sign that investors would likely consider an attractive buy.
Inventory
Even though Amira has launched new lines of Amira branded products such as ready-to-eat snacks (Amira, 2013), their inventory is mostly basmati rice in different package sizes. Amira’s inventory was $141.62 million in March 2012 and $181.46 million in March 2013. As mentioned previously,