Net Earnings are not supported by cash flow at all in 2008, considering that net earnings were over 1 billion, and operating cash flow was an outflow of over 3 billion.
2.If not, what collar accruals contributed the virtually to the difference?
The 3 accruals that contributed the most significantly are step-up in inventory, increase in receivables, and increase in unintegrated cash and investments.
3.To assess the reasonableness of large mixed bags in these three accruals, we need to gain some additional insight into changes in the commodity prices for corn and soybeans.
oGo to http://www.fao.org/es/ESC/en/index.html
o chatter on Prices.
oClick on Maize (US #2), hold down control key, and contact on Soybeans.
oClick on monthly averages.
oClick on 2008, hold down shift key, and domestic dog on 2004, submit query.
oDownload to excel accommodate and retain values for June of each year (ADMs month of fiscal year end) plus October 2008.
oCompute the annual rate of inflation (June to June), and the rate of inflation from June 2008 to October 2008.
o description on your findings.
The average prices for both corn and soybeans increase from 2004 to 2008, and the change was fairly significant for both. It also counts that the prices are fairly volatile
4. precondition what was going on in ADMs product markets during 2008, does it seem reasonable that the accruals you identified in question (2), changed as a lot and in the direction they did?
It does make sense that inventory increased by a significant amount because the price pay for the corn and soybeans increased significantly.
5.Compare net purchases of PPE to depreciation expense. Is ADM increment or shrinking its investment base in PPE?
It is increment its base in PPE, as it continues to buy more PPE thus the depreciation expense by a significant amount.
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