Codec And Socs 2015 Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

ANSWER TO QUESTION # 1

The cash flow statement of the company shows the cash operations and practices of the company which involves cash transactions and cash involvement of the company. In exhibit 2, the statement of cash flow has been prepared for the company, which shows the complete trends and operations of the company that involves cash. The statement of cash flow shows the cash operations of the company for the fiscal years 2014 and 2015. The balances of 2014 are the actual amounts whereas; the balances of 2015 are computed on assumptions therefore, they are estimated amounts.

The statement of cash flow of the company shows that the cash balance arrived from the operating cash flow of the company is positive. This shows that the company will be in a good position and would be able to finance its operations effectively if the assumptions made by the management prove to be correct.

Moreover, the cash balance arrived from the financing activities showed a negative balance that depicts that the company has spent cash on acquiring new assets. The company has purchased property plant and equipment as well as intangibles, Moreover, the company has also made large amount of short term investments due to which the net amount of cash from investing activities showed a negative balance.

The financing activities of the company showed a positive balance. This is because the company has issued more shares than it the stock it has re purchased. The company has issued common stock amounting to 10,000 dollars, whereas, the company has repurchased its common stock amounting to 5000 dollars. Therefore, the company has a net balance of $5000 from the financing activities.

The overall, cash balance is positive which shows the company has a large reserve of liquidity which creates opportunity for the company to expand its business or acquire new technologies.

Moreover, the cash balance of 2015, if compared with the cash balance of 2014, appears to be extremely high. This creates a question that either the management has made some unrealistic assumptions while forecasting the balances or the management has taken steps and made effective strategies which will result in robust growth of the company.

Codec And Socs 2015 Case Solution

ANSWER TO QUESTION # 2

In exhibit 3, the revised budgets have been prepared with respect to the new assumptions taken by the management. The budgets depicts that if management fails to deliver 1 million SOCS to Apple then the overall revenue will be decreased to $504 million. Moreover, this decrease will also affect the ending inventory and purchases of the company. The ending inventory and purchases of the company will decrease by 178082 units and 1178082 units respectively this will also cause decrease in the overall purchase cost and cost of goods sold by the company.

The increase in cost of dye and cost of assembly will increase the overall purchase price of the company. This will also increase the overall cost of goods sold by the company. However, this will not affect the opening inventory cost of the company because the company uses FIFO policy. Since, the company has a large amount of liquidity. Therefore, the company can easily maintain $150 million in cash and short term investments.

ANSWER TO QUESTION # 3

The company has approximately $290 million in cash. This allows the company to maintain its cash reserves and short term investments to $150 million as well as the company can also acquire the new business for $ 100 milli.....................

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