Crystal Meadows of Tahoe is the managing company of two different alpine ski resorts, and it is well known fact that the ski business is both cynical and seasonal, and throughout the USA, 94% of the total revenues are earned in the season time, and the business also depend on the snowfall of a given area too. Both Crystal Meadows and Lake Ridge are two different types of ski areas, and Lake Ridge has more capacity that the other one. And it is also a destination resort which attracts tourists from all over the country. On the other hand, Crystal Meadows has a capacity of 6500 skiers per day and the clientele consists of skiers from Northern parts of California and the Greater San Francisco Bay Area.
Here we look at the cash flows of Crystal Meadows. The net income of the company is $ 1,418,000 and the depreciation expanses of the company are $ 2,637,000. The depreciation in receivable account and decrease in prepaid are 59,000 and 6000 US dollars respectively. But if we look at the records we will see that there is an increase in AP and it is $ 245,000. Other things that have increased are accrued rent accrued comp and deferred revenue on 19,000, 152,000 and 244,000 US dollars respectively. Tax Pay has been increased to US $ 579,000, and other accruals also increased to $ 179,000 and def credits are $216,000, and the total gain on RE sale is $ 329,000.
1-The net income of the resort was not really good as it dealt with different factors. A ski resort has to deal with different things other than the customers. Most importantly the resort is popular among the residents of Northern parts of California and the Greater San Francisco Bay Area, and so there are not many takers of the resort during the recession period. And it has contributed to the dismal record of the resort.
2. Economic expectations do have an impact on the markets of stocks; however it is not apparent at this level how the cycles of business interfere with the effect of company’s face value. It is conventional among financial economists that equity’s expected return and risk premium are affected by inflation. In the given context the value of the capital assets like machinery or furniture are valued much less in terms of finance as the value of standard financing capacity has gone down with the market value. That is why depreciation expense added back to cash from ops to maintain a balance between the expenses.
3. Acc. Receivable declined by $59,000 which is treated as an add-back and this is a huge negative even. This means that the company is suffering form a huge lack of fund because its debtors are unable to payback the company its dues. The relation may exhibit no linear characteristic what is contained in the variance and standard deviation analysis. Nonetheless, the cause of all these is not apparent. Volatility may be increased by the company’s face value that is stellar or some aspects of company’s face value that may be considered stellar for that matter.