Dick Smith Holdings Ltd was a company operating in the consumer electronics goods area. Dick Smith commenced
Question:
Dick Smith Holdings Ltd was a company operating in the consumer electronics goods area. Dick Smith commenced this business in 1968. It was acquired by Woolworths during the early 1980s and was sold to Anchorage Capital Partners Pty Ltd in November 2012. In December 2013, Dick Smith held a successful initial public offering (IPO) and became the ultimate holding company of the Dick Smith business operations. Its cash flows from operations and investment from 2013 to 2015 are outlined below.
Required
(a) Examine each line item. Outline what the cash flow data is communicating to you about the operations of Dick Smith Holdings Ltd.
(b) The business collapsed in 2016 when its cash resources were insufficient to meet its current and future obligations, despite outstanding sales performance. Explain why cash is important to the ongoing survival of a business.
(c) Calculate the cash adequacy ratio for each of the three years and comment on your findings.
Step by Step Answer:
Accounting Business Reporting For Decision Making
ISBN: 9780730369325
7th Edition
Authors: Jacqueline Birt, Keryn Chalmers, Suzanne Maloney, Albie Brooks, Judy Oliver, David Bond