Name of the business:
The firm is called More Vino LTD.
Nature of the business:
More Vino LTD is a multilevel business. It operates four subunits: wholesaling and distribution, a retail store, a bar and a restaurant, and a delivery service.
More Vino LTD operates in the alcohol industry. The products are essentially alcohol derivatives especially wine. In addition to wine, they sell hors d’oeuvres and appetizers in the bar and the restaurant. More Vino is located in Port of Spain, Trinidad. Trinidad is one of the islands of Trinidad and Tobago, and is located at the southern-most end of the Caribbean. Port of Spain is the capital city of Trinidad but also the place where all the business
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The payable days also increases from 34 in 2006 to 51 in 2007. This may be the results of the suppliers giving more time to More Vino to pay their bills. The quick ratio of the company is 0.0 for 2007 and 0.0 for 2006. It shows that inventory is a big component of current assets. The negative cash flows from investing (827,868) in 2006 and (991,512) in 2007 is because of a high investment in fixed assets. The cash flows from financing is 10 times less from 2006 (3,773,492) to 2007 (258,740) because the company reduced its loans payable. They have a large amount of debt. The times interest earned is negative and estimated to (3.6) in 2006 and (0.4) in 2007. That means that they cannot pay their interest through their operating income, as they have a negative operating income. The debt ratio is superior to 100 percent for both years. The company has not enough cash to pay back their liabilities, thus the firm is risky, there is leverage risk. Net profit margin and operating profit margin decline and are negative because operating income and net income are negative. This net loss results from the fact that the company is new on the market so their expenses are bigger. They are not paying dividends because they report a net loss for two consecutive years.
From our analysis, we hold that the company is not liquid and very risky. It also appears that the firm is financed mainly through debt coming from shareholders. With not enough assets to cover