Carrefour Case Analysis

The purpose of this analysis is to highlight how Carrefour has financed its emersion over the last four years i. e. 1968 through 1971 with the help of the narration of lineages and procedures ( show up 1). In addition, the financing needs for the projected emersion of the company go out be reported and analyzed briefly. For this purpose professional-forma Income Statements (Exhibit 2) and Pro-forma Balance Sheets (Exhibit 3) encounter been alert for the next four years (1972 through 1975). From 1968 to 1971, Carrefour has apply flip-flop notes extensively as a source of cash. other(a) significant sources of bills are Other watercourse Liabilities, Accounts Payable, Shareholders Equity and Long term debt. more than or slight of the sources have been utilized to fund Building and similarly to generate more cash for the firm. A good portion of the sources have in addition been used to create more Inventories from 1968 to 1971. Land has been acquired during these four years as also other fixed assets and current assets. As is seen from the Pro-forma Balance Sheet, Carrefour would have to take significant amounts of Long Term Debt(at 10% Interest rate) in order to finance its expansion outside France.According to the projections, LT Debt would have to be increased to around 89% from 1971 to 1972 and 96% from 1972 to 1973 respectively. This means Carrefour would also have to pay huge amounts of interest on these debts. With tax income growth of 35% Carrefour would be able to support its debt and still gather in fair amounts of profit including dividend payouts. However, huge amount of debt and interest expense king be risky and could lead to negative earnings if the actual revenue growth falls below the expected value of 35%. Exhibit 1 CARREFOUR asseveration OF SOURCES AND USES 1968 to 1971 1968 1971 Change Source/Use intangible asset Assets 0 1 1 Use Land 14 28 14 Use Buildings & Equipment 50 202 152 Use Other inflexible Assets 21 49 28 Use Total Fixed Assets 85 279 194 slight Depreciation 10 63 53 Source Net Fixed Assets 75 216 141 Investments & Advances 5 19 14 Use Inventory 30 107 77 Use Acounts Receivable 2 4 2 Use Other live Assets 58 124 66 Use Cash 18 151 133 Use Total Current Assets 108 386 278 full(a) ASSETS 188 622 434 Shareholders Equity 39 112 73 Source particular Provisions 0 1 1 Source Long-term Debt 26 64 38 Source Accounts Payable 0 77 77 Source Trades notes (noninterest) speed of light 244 144 Source Other Current Liabilities 23 124 101 Source Total Current Liabilities 123 445 322 TOTAL LIABILITIES & EQUITY 188 621 433 Master Check(Sources-Uses) 0 Exhibit 2 CARREFOUR PROFORMA INCOME STATEMENT Past 3 yr avg of % of sales taken for all items miss Revenues and Int Rates Actual Actual Actual Actual Actual Pro Forma Pro Forma Pro Forma Pro Forma 1968 1969 1970 1971 1972 1973 1974 1975 Intangible Assets 0 4 1 1 5 7 9 12 0. 004 0. 001 0. 000 0. 002 Land 14 20 25 28 50 67 90 122 0. 020 0. 017 0. 013 0. 016 Buildings & Equipment 50 82 136 202 266 359 485 654 0. 080 0. 094 0. 090 0. 88 Other Fixed Assets 21 38 52 49 95 129 174 235 0. 037 0. 036 0. 022 0. 032 Total Fixed Assets 85 140 213 279 411 555 749 1011 less Depreciation 10 22 35 63 97 142 204 287 0. 100 0. 069 0. 112 0. 094 Net Fixed Assets 75 118 178 216 314 412 545 724 Investments & Advances 5 10 12 19 27 36 49 66 0. 010 0. 008 0. 009 0. 009 Inventory 30 65 72 107 162 219 295 399 Acounts Receivable 2 2 3 4 6 8 11 14 0. 002 0. 002 0. 002 0. 002 Other Current Assets 58 50 75 124 157 212 286 386 0. 049 0. 052 0. 056 0. 052 Cash 18 51 116 151 199 268 362 489 0. 050 0. 080 0. 068 0. 66 Total Current Assets 108 168 266 386 524 707 954 1288 TOTAL ASSETS 188 300 457 622 870 1162 1557 2090 Shareholders Equity 39 89 98 112 206 278 375 507 0. 087 0. 068 0. 050 0. 068 Special Provisions 0 0 1 1 1 2 2 3 0. 000 0. 001 0. 000 0. 000 Long-term Debt 26 25 64 64 121 237 393 605 Accounts Payable 0 48 61 77 124 168 226 305 0. 047 0. 042 0. 034 0. 041 Trades notes (noninterest) 100 79 147 244 244 244 244 244 Other Current Liabilities 23 59 86 124 173 234 316 427 0. 058 0. 060 0. 056 0. 058 Total Current Liabilities 123 186 294 445 542 646 786 976 TOTAL LIABILITIES & EQUITY 188 300 457 622 870 1162 1557 2090