Crystal Meadows of Tahoe Memo

4. A gain on the sale of RE is shown as a subtraction on the stmt of cash flows because the total amount of receivable is not realized till the preparation of the cash flow report. However, it could have been added to capital but in accordance to the financial policies of the company sale of RE is shown as a subtraction on the stmt of cash flows. It should be note that these factors will enhance more consumer participation, creating loyalty to the firm’s products or services and improving investor’s confidence regarding the investment options of the firm. In addition, the policies reduce interference of regulation bodies such as government and security market authorities from frequently enquiring on the running and performance of the firm. The policies acts as self-regulators among the firms and enhance practice of moral virtues such as accountability, honesty, integrity among others

5- Actually it directly shows that though there is a certain amount of drop that has been mentioned in the workings of the resort, but the add back from cash flows will surely increase the outstanding liabilities. And it points to the aspect that in near future the resort can be very successful if every thing goes for the good of the resort.

6. It is clear from the given details that financing activities provided more than ½ of the cash increase. This is not a healthy situation for the company. Financing activities are credits that should be repaid back and that too with interest. As the total amount of financing activities is more than half of the cash increase it signifies a substantial amount of interest on loan too. However, it should be noted that the firms that had constants growth and those needed external equity financing benefited more from governance rules. Corporate profitability is a performance measure that shows the exact financial position of the firm. In this case, the situation is not favorable if the company is not able to en-cash the advantage of this extra and increases its sales volume by the next financial term.

7- Crystal Meadows do not operate lodging and most of the skiing leased from private owners and other government offices. Area of the firm has to be maintained and for maintenance they have to buy many plants and other skiing equipments and the costs of maintenance is certainly higher than that.

8- The board of directors has to keep in mind that they are operating a tourism business which is mainly dependent on skiing. The cash balance of the company has increased but still one can not say it as a good sign, as snowfall varies from year to year, and if there are no snowfall for some years than it will surely effect the business. So the board of directors has to find out alternate means of making profits from the resort.

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