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First Farms Corp

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Submitted By solrequiem
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Executive Summary This paper shed light on the reasons behind First Farms Corporations’ deficit in its operating cash flows and its decrease in Return on Equity (ROE) despite having a 40% increase in sales and 89% on net income. The objective of the paper is whether the management should recommend pushing through with the planned expansion of the chicken business as well as the feeds business.
After having analyzed the financial ratios and SWOT of the company, it has been decided that it is better for the company not to push through with the expansion. Despite the promising increase in sales and net income, its inventory has been problematic as it showed an inverse relationship with its sales which is where we can trace back the deficit in its operating cash flows.
It is recommended that the company seek better implementation of how it disposes it inventories as well as collect its receivables, find alternatives as how to handle increasing cost of production, and study its business environment. This could be the best alternatives that the company could do until they are in shape again to continue with expansion plans if the need arise again in the coming years.

II. Point of View For this case, the point of view of the Vice President for Finance of First Farms Corporation (FFC) will be used.

III. Case Context The First Farms Corporation started in the 1950s as a small animal feeds manufacturing plant with 15 employees in Caloocan. Since then, the company has expanded to other agribusiness products and set up nationwide facilities. The company experienced a massive growth in the 1990s as shown by the increase in revenues, net income and ROE.
As of 1994, the corporation’s product line included fresh and frozen chickens, processed meats, animal health products and feeds. It was also recognized as the leading poultry integrator in the country

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