Candela Corporation Case

In: Business and Management

Submitted By plustax76
Words 787
Pages 4
Candela Corporation Case
Desmond Steele
June 5, 2011
Axia College of University of Phoenix

Summary Analysis
A $ 2,154,000 net loss was occurred by the Candela Corporation. The accruals method was used to calculate the figure. The non-cash expenses were added back into the statement in order to obtain the proper cash flows. Notional interest on stock warrants and discounted operations were the additions that are the most important. In respect to the important additions there are also important subtractions as well and those subtractions are the currency exchange rate difference and deferred taxes. The working capital analysis showed that there was a significant increase in the inventory, receivables, and tax payables. The working capital also showed that the Candela Corporation’s payable accounts, warranty costs, and other company assets decreased at a small margin. There was a gross outflow of cash that was a result from the adjustments of the working capital and it caused the outflow of cash to be in the operating activities.
As it pertains to the financing activities, the Candela Corporation tried to bring their outflow under control by borrowing small debt and using share issue but because of commitments the company had already made, it had to pay back the company’s existing debt and buy the stock back. Because of this the company had an outflow of cash again, but this time with financing activities. As it pertains to investing activities, the purchases of fixed assets were the only item and that caused an outflow in investing activities. Because the results of the investing, financing, and operating activities are negative; the Candela Corporation had a net cash outflow.

The Candela Corporation had a net profit of $ 6,814,000. The foreign exchange rate difference, notional interest on stock warrants, and discounted operations were…...

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