Carrefour Case Analysis

The purpose of this outline is to highlight how Carrefour has financed its growth over the last four years i. e. 1968 through 1971 with the help of the command of Sources and occasions (Exhibit 1). In addition, the financing needs for the projected growth of the company will be reported and study briefly. For this purpose Pro-forma Income Statements (Exhibit 2) and Pro-forma Balance Sheets (Exhibit 3) have been prepared for the next four years (1972 through 1975). From 1968 to 1971, Carrefour has utilise trade notes extensively as a source of cash.former(a) significant sources of funds are Other occurrent Liabilities, Accounts payable, Shareholders integrity and Long term debt. Most of the sources have been utilized to fund Building and besides to generate more cash for the firm. A good portion of the sources have also been used to fashion 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 gross growth of 35% Carrefour would be able to support its debt and still earn fair amounts of loot including dividend payouts. However, huge amount of debt and interest expense might be risky and could lead to negative allowance if the actual revenue growth falls below the expected value of 35%. Exhibit 1 CARREFOUR STATEMENT OF SOURCES AND USES 1968 to 1971 1968 1971 Change Source/Use Intangible Assets 0 1 1 Use Land 14 28 14 Use Buildings & Equipment 50 202 152 Use Other Fixed Assets 21 49 28 Use Total Fixed Assets 85 279 194 less Depreciation 10 63 53 Source Net Fixed Assets 75 216 141 Investments & Advances 5 19 14 Use inscription 30 107 77 Use Acounts Receivable 2 4 2 Use Other Current Assets 58 124 66 Use Cash 18 151 133 Use Total Current Assets 108 386 278 organic ASSETS 188 622 434 Shareholders Equity 39 112 73 Source Special Provisions 0 1 1 Source long-term Debt 26 64 38 Source Accounts Payable 0 77 77 Source Trades notes (noninterest) c 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 except Revenues and Int Rates developed 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 5 0 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 ccc 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