Tabcorp Holding Cashflow information Essay Example

Tabcorp Holding 3

Tabcorp Holding Cashflow information


TABCORP is alisted company in Australian it holds position 184 out of the 2000 in the country. The company’s source of income is mainly from Gambling activities, however, the company has other activites which range from media where it owns a both the radio and tv staions which cover racing (, pg 1, 2015.

Analysis of the firm’s Cash Position from 2014 to 2015

The firm’s overall cash position in 2015 was better than in 2014. The net cash flow position for the company is higher in 2015 at $399.9 million compared to $387.4 in 2014 (, pg 3, 2015). The first reason supporting the enhanced cash position is the business’ investment in new long-term assets as evidenced by the increase in its depreciation and amortization component from $164.4 million in 2014 to $173.5 million in 2015. Another significant reason for the better position was, the lower interest expense in 2014 of $81.1 million compared to 2014’s $100.6 million. The implication of this was there was less cash flowing out of the firm.

Cash Flow Management

Working Capital/ Revenue %

Working Capital Turnover

The company has very good cash flow management. The negative working capital to revenue ratio is indicative pf the company’s prudent management of its working capital. The cause for that is that Tabcorp had more current liabilities than current assets. This scenario shows that Tabcorp aggressively collected from its debtors and was slow to pay its creditors.

Accounts recievable and payment period

This provides a rough measure of the time it takes for the company to recive or pay what they owe.

Day’s Inventory

Day’s Receivables

Days Payables

Further evidence of Tabcorp’s shrewd working capital comes from its cash flow ratios. The days inventory, a ratio indicating the speed and efficiency with which the firm converts inventory to ratio is less than one day showing that the business holds less inventory and is very efficient in generating sales. The days receivables are 3.6 and 3.2 respectively. They are very small and indicative of a policy by Tabcorp to collect as early. The days payables of 61.09 and 56.57 show that the entity holds off on paying creditors as much as possible.

Liquidity Ratios

A company can be profitable but at the same time get into cashflow problems, liquidity ratios are calculated to give the idea to the stakeholders about the company’s liquidity.

Current Ratio

Quick Ratio

Gross Debt/CF

Tabcorp’s liquidity ratios are not impressive athough the company is making profits. From the liquidity ratios it is difficult for the company to obtain cash by converting its assets in case it want to settle its debts. The recommended threash hold for current ratio should be in excess of one however in our case like in 2015 the ratio is 0.73 which is below the threshold. The current ratio compares a company’s current asset to its current liabilities (Hofman and Belin, 2011, page 52). Although the raios has increased from 0.46 to 0.73 the company is likely to get into fincail difficulties in the future. The implication of this ordinarily is that the business is highly leveraged debts are more than the current assets. The company’s quick ratio looks impressive since the recommended threshold should be ideally less than one. Looking at 2015 quock ratio it stands at 0.71 which increased from 0.44, however, this does not mean that the company is doing well financially from our analysis the company is in financial difficulties and one should not rely on the acid test ratio on its own.


Tabcorp may not suit the needs of an investor who is keen on capital gains as opposed to dividends. According to the company’s chairman, the firm intends to pay out 90% of its net profit after tax (NPAT) as dividends to shareholders. This decision may be of concern to the investor because it may be indicative of a lack of enough viable avenues to reinvest profits.


Hawawini, G. and Viallet, C. (2006). Finance for Executives. Beijing: Zhongguo ren min da xue chu ban she.

Hofmann, E. and Belin, O. (2011). Supply chain finance solutions. Heidelberg: Springer., (2015). Annual Reports. [online] Available at: [Accessed 21 Nov. 2015].