Polaroid Observations
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Observations
Cash from operations is positive in 98 and 99 and becomes Negative in 00 – a clear sign of weakness for a mature business – not unusual for a young startup.
Loss in 98 to a small profit and a larger profit in 00.
Inventory increased in 00 using up operating cash and this may be a sign of weak sales resulting in unintentional building of inventory.
Receivables decline which provides cash but may also be a sign of sales weakness or more aggressive collections to compensate for weak cash position.
Investing activities are using cash.
Asset replacement exceeds depreciation suggesting that they are replenishing fixed assets.
Cash from operations is not sufficient to cover fixed asset purchases so they are being funded from other sources.
Sale of other assets is providing funds to pay for some of the fixed asset replacement.
No new debt was issued in 98 or 00. In 99, some new debt was financed re-financing 200M of other L.T. Debt – Perhaps this suggest an inability to borrow due to weak cash flow from operations and profits.
Cash dividend is paid all three years. In 98 and 99, the dividend is paid when there is not adequate cash from operations to cover fixed asset purchases. They are paying dividends by selling off assets, added ST and LT debt. In 00 they pay dividends with negative cash from operations. This is clear sign of weakness.
Treasury stock purchased using up almost half of the cash from operations in 98. There would need to be a very good business purpose to do this given the weak cash position. We cannot determine the business purpose from this statement.