Final Application Project

As you can see cooper tires leverage ratio has

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Unformatted text preview: lot to do with inventory and cash. We can conclude that the company must have been increasing its operations, creating more inventory and making more sales to produce more cash. How the company generates and uses cash: In 2012 the company was able to generate $454 million through operating activities of continuing operations. As a result of improved collections and lower late year sale the company has been able to decrease the balance in accounts receivable, turning those assets into cash. However, accounts payable balances have increased due to the rising prices of raw materials that the company needs to purchase. According to the 2012 10- K, during 2012 $187 million of net cash was used in investing activities, an increase of $32 million from 2011. These net cash investments include $50 million to the implementation of its global ERP system, $19 million to assets in Serbia and $17 million to increase ownership in COOCSA (to 58% ownership). Among many other investments made by Cooper Tire are shares of common stock that allowed the company to record $2.5 million of excess tax benefits on equity instruments in 2012. Financial Ratios • Cash Conversion Cycle - amount of time it takes in days for the company to convert resource inputs into cash flow. Cooper Tires cash conversion cycle has consistently increased since 2010. Since 2010 the cycle has increased to 54.83 days, from 45.27 days. This increase is likely due to the global expansion of the company, which has had a significant increase on inventory, accounts receivable, and accounts payable compa...
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