he management of Pharmaceutical Manufacturers (PM) understand that for the firm to perform better, it must improve its working capital efficiency. You have been provided with the following extracts from the financial statements to comment on the overall working capital efficiency of the firm. Pharmaceutical Manufacturers (PM) Condensed Balance sheet (amounts in millions) at 31 December 2014 Assets Liabilities & Equities Cash and Cash Equivalents $460 Accounts Payable $550 Inventory 450 Accrued Expenses 45 Accounts Receivable
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The management of Pharmaceutical Manufacturers (PM) understand that for the firm to perform better, it must improve its
Pharmaceutical Manufacturers (PM) |
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Condensed |
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Assets |
|
Liabilities & Equities |
|
|
Cash and Cash Equivalents |
$460 |
Accounts Payable |
$550 |
|
Inventory |
450 |
Accrued Expenses |
45 |
|
|
300 |
Bank Borrowings |
750 |
|
Prepaid Expenses |
200 |
Bonds |
600 |
|
Non-Current Assets |
2100 |
Ordinary Share Capital |
1200 |
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|
|
365 |
|
Total Assets |
$ 3510 |
Total Liabilities & Equities |
$3510 |
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Condensed Balance sheet (amounts in millions) at 31 December 2015 |
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Assets |
|
Liabilities & Equities |
|
|
Cash and Cash Equivalents |
$500 |
Accounts Payables |
$500 |
|
Inventory |
425 |
Accrued Expenses |
400 |
|
Accounts Receivables |
450 |
Bank Borrowings |
800 |
|
Prepaid Expenses |
350 |
Bonds |
580 |
|
Non-Current Assets |
2300 |
Ordinary Share Capital |
1200 |
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|
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Retained Earnings |
545 |
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Total Assets |
$ 4025 |
Total Liabilities & Equities |
$4025 |
The cost of sales was $900 million and net sales were $1600 million in 2015. There were no cash sales.
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