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International Paper The Aussedat Rey Acquisition Financial Analysis Case Study Help


International Paper The Aussedat Rey Acquisition Financial Analysis Financial Analysis Case Study HelpThe monetary position of International Paper The Aussedat Rey Acquisition Financial Analysis can be evaluated by taking a look at its ratio analysis.

Declining Profitability:

We can see in appendix 1 how the earnings has been decreasing for many years after 2005. The reality that the gross earnings margin has decreased as well suggests that the cost of sales have not gone down at the very same speed. The declining net profitability, revealing a negative trend from 2006 to 2007 suggests that costs have increased far more than the company has the ability to handle given its present resources. With a long term financial obligation contributing to the interest expenditure, International Paper The Aussedat Rey Acquisition Financial Analysis is in alarming need of an alternative income stream.

Declining Liquidity:

We can see a major decreasing pattern in the current ratio too showing a fall in liquidity which is another point of concern for International Paper The Aussedat Rey Acquisition Financial Analysis specifically as it has a long term financial obligation to pay off as well. With the current properties not in a position to settle the current liabilities, we can see how the business would be in a major monetary trouble unless the cash flow enhances with extra sources of finance.

Rising Debt to Assets Ratio:

We might explore the financial condition of International Paper The Aussedat Rey Acquisition Financial Analysis further by looking at the company's total debt to total properties ratio in appendix 2. We can see how the total properties of the business have actually been declining from 2005 onwards. The long term debt has stayed at $160 million while the short term financial obligation has actually increased side by side. Such a scenario has brought International Paper The Aussedat Rey Acquisition Financial Analysis to a point where its overall debt to total possessions ratio has actually increased as well. A rising total financial obligation to total properties ratio suggests that the risk has increased in terms of the business's possessions not sufficing to cover its total liabilities. This might not be showing the overall liquidity position but provides clarity in terms of the total financial position of the business.

/Financial Feasibility