Graded Analysis of Ceres Gardening Company 1

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PG Program in Management - Jan'22
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Graded: Analysis of Ceres

Gardening Company
The following questions will be graded. The submission needs to be done using the template in the next
segment. Please do not discuss anything related to these questions on the Discussion Forum.

In this project, you will analyse the financial health of Ceres Gardening Company in light of profitability,
cash flow statement and working capital management.
Financial Statements: Ceres Gardening Company Download
Additional Information:

The following document is a quick sheet to the important financial metrics and their formulas. Use it to
save your time while answering questions.
Ratios at a Glance Download
Question 1 (10 marks)

Take a look at the cash flow profile of the company, and analyse the cash flow statement step by step
through the following questions.

Note: Use tab 3 of the Excel file attached above to access the cash flow statement of the company.

Question 1A: The company’s profits have increased by ~30% from 2002 to 2006(E). How much of the
profits estimated for the year 2006(E) will translate to the 'cash flow from operations' for the same year?
Which of the three categories in the cash flow statement has contributed majorly to the decrease in the
'change in cash' by the company from 2003 to 2006(E)? (1+1 marks)

(Note: 'Change in cash' is the same as 'Total cash generated'. The (E) beside a year indicates that the figures are
expected in the future, i.e. the case study analysis is taking place before the year.)

Question 1B: What is the trend in cash flow from 'operating activities', 'investing activities' and 'financing
activities' over the years? Identify at least one reason for the increase/decrease in each of the three
categories of the cash flow statement. Explain your answer. (Note: Trend indicates whether the numbers are
increasing/decreasing over the years) (2+3 marks)

Question 1C: Given below is the expected cash flow profile of the company for the year 2006(E).
Navigate Q&A
Cash Flow Profile
Analyse the expected cash flow profile of the company for the year 2006(E) and comment on any 3 of the
following factors: 'self-financing of investments', 'funding of investments', 'cash position of the company'
and 'free cash flow'. (3 marks)


As a part of the GetCeresT M program, Ceres Gardening Company started extending an increased credit
period to its dealers. Look at the operating working capital of the company and analyse the impact of this
decision on its operating working capital step by step through the following questions.

Question 2A: Calculate the operating working capital of Ceres Gardening Company for 2002–2006(E). (2
marks)
Question 2B: Calculate the operating working capital/sales ratio of Ceres Gardening Company for 2002
to 2006(E). (2 marks)
Question 2C: Calculate the DIO, DSO and DPO for the company from 2002 to 2006(E). (2+2+2 marks)
Question 2D: What is the implication of the long credit period given to dealers by Ceres Gardening
Limited on its working capital? Explain your answer by specifying at least one reason. (1 mark)

Prepare and present the economic balance sheet for Ceres Gardening Company and calculate the capital
employed by the company.

Analyse the key profitability ratios and identify the reason for the change in them by answering the
following questions.

Note the following assumptions for solving this question:
The key profitability ratios are Variable Margin (as a % of sales), Operating Margin, Return on Equity
and Return on Average Capital Employed.
Assume that there is no change in the capital employed during the year 2002 so that the capital
employed at the beginning of the year is the same as that during the ending of the year.
The gross profit is also known as the variable margin.
Question 4A: Calculate the key profitability ratios for the years 2002 to 2006(E). (8 marks, 2 for each key
ratio)
Question 4B: What is the trend in RoE from 2002 to 2006(E)? List down at least one reason for the
increase/decrease in RoE by assessing the drivers of RoE. Explain your answer in not more than 30 words.
(1+1 marks)
Question 4C: What is the trend in RoACE from 2002 to 2006(E)? List down at least one reason for the
increase/decrease in RoACE by assessing the drivers of RoACE. Explain your answer in not more than 30
words. (1+1 marks)
Navigate Question 5 (4 marks) Q&A
List down at least two pros and two cons of the GetCeres program for Ceres Gardening Company. Would
you recommend continuing with the program? Justify your answer.
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Case Study: Ceres Gardening Company Submission

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Learn Live Jobs Discussions AG

PG Program in Management - Jan'22

Graded: Analysis of Ceres

Financial Statements: Ceres Gardening Company Download

Ratios at a Glance Download

Question 1 (10 marks)

Cash Flow Profile

Question 2 (11 marks)

Question 4 (12 marks)

and Return on Average Capital Employed.

The gross profit is also known as the variable margin.

Navigate Question 5 (4 marks) Q&A

Case Study: Ceres Gardening Company Submission

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