Advanced Medical Technology Company
Advanced Medical Technology Corporation
TABLE OF CONTENTS
1 . What has created the need for further finance by AMT since 1983?
Incredible sales progress for AUFGABE of 30% annually can be resulting in major operating losses, and external funds are necessary to be able to continue with this rapid expansion. The net operating losses coming from 1983-1985 had been $1, 289, 000 in 1983; $1, 176, 000 in 1984; and $1, 487, 1000 in 1985. The bulk of these losses were a direct result of equally SG& A and R& D. The President of AMT feels that revenue will carry on and grow exact same rate for 30% every year for the next a few years. Nevertheless , cost of items sold and SG& A is growing for 45% and 40% correspondingly. In addition , accounts receivable in addition has continued developing at 96. 75% over the last 2 years, and therefore, the cash cycle time has also increased. The 2-year development rate to get R& Deb is excessive at fifth 89. 22%, that has led to a shortage in cash. All these things have resulted in the extra need for auto financing by LEN to maintain the current market location and to strongly enter fresh markets. The web Working Capital of AMT is definitely the Current Assets less the Current Liabilities. | | | | | | | |
| 1983| 1984| 1985| 1986| 1987| 1988| 1989| 1990
Current Assets| $7, 617| $12, 370| $17, 700| 17, 848 | twenty three, 203 | 30, 164 | 39, 213 | 50, 977 | Current Liabilities| $2, 965| $11, 056| $9, 942| 5, 510 | 5, 853 | six, 599 | 9, 869 | 12, 820 | NWC| $4, 652| $1, 314| $7, 758| $13, 338| $17, 350| $22, 565| $29, 344| $38, 157
Based on the above data, NWC has grown over the last six years. The current possessions are made up of accounts receivable and inventories, and also cash and cash variation and valuable securities. For AMT, it is important to note that a large area of the company's assets are tied up in accounts receivable and inventory, with a lesser part available in cash and cash equivalents. As shown in the following data, accounts receivable and products on hand as a percentage of total assets has grown over the last two years at ninety six. 75% and 71. 86% respectively. | 1983| | 1984| | 1985| | Rate
Accounts receivable| 1, 549 | 16. 9%| 3, 359 | twenty. 4%| five, 996 | 28. 4%| 96. 75%| Inventories| three or more, 305 | 36. 1%| 6, 782 | 41. 2%| on the lookout for, 762 | 46. 3%| 71. 86%
As we have mentioned, AMT has not been efficient issues collection of accounts receivable. In calculating the Receivables Yield, which is the sales/accounts receivable, we see that AMT's yield rate is decreasing by October through December of 1985. This kind of shows that the pace of number of receivables provides increasingly stunted, thus slowing the turnover to lend the amount of money again. Accts Receivable Turnover| December| 1 . 122786759
| November| 1 . 405820106
| October| four. 354066986
Last but not least, AMT is usually taking an increasingly long time involving the time it pays for its recycleables and the time it gathers on the sale for the finish items. This represents the Cash Cycle and is representative of the Working Cycle much less the Accounts Payable period. The cash routine for 1983, 1984 and 1985 will be as follows: Money Cycle| 181. 35 | 239. seventy six | 277. 31
Because the time it takes to cover materials versus the time to gather on the sale of those components has increased, the availability of cash to keep to buy recycleables is lowering, thus building a need for offered financing.
2 . Is len profitable? what kind of money is required for its operations?
In reviewing AMT's income claims it is apparent that they are certainly not profitable, but it takes a deeper analysis with their financials to spot the root reasons. Inside the statement listed below AMT is definitely showing...