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Case 1 Northland Cranberries Despite being a publicly traded company only since 1987, Northland Cranberries (USA) of Wisconsin Rapids, Wisconsin, is one of the world's

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Case 1 Northland Cranberries Despite being a publicly traded company only since 1987, Northland Cranberries (USA) of Wisconsin Rapids, Wisconsin, is one of the world's largest cranberry growers. Despite its short life as a publicly traded company, it has engaged in an aggressive growth strategy. As a consequence, the company has taken on significant amounts of both short-term and long-term debt. The following information is taken from recent annual reports of the company. Northland Cranberries Current Year Prior Year Current asuits $ 6,745.759 $ 5,508,054 Total assets 107 744,751 83,074,339 Current Labilities 10.168,565 4,484,687 Total liabilities 73 118 204 49,948.787 "Shareholders' equity 34 020.547 33.125,552 Net sales 21.783 060 18/051,355 Cost of goods sold 13,057 276 8.751,220 Interest expense 3,64008 2.303.792 Income tax experi 1,051,000 1.917_000 Net income 1,581,707 2.942.954 Instructions a. Evaluate the company's liquidity by calculating and analyzing working capital and the current ratio. b. The following discussion of the company's liquidity was provided by the company in the Management Discussion and Analysis section of the company's annual report. Comment on whether you agree with management's statements, and what might be done to remedy the situation. The lower comparative current ratio in the current year was due to $3 million of short-term borrowing then outstanding which was incurred to fund the Yellow River Marsh acquisitions last year. As a result of the extreme seasonality of its business, the company does not believe that its current ratio or its underlying stated working capital at the current, fiscal year-end is a meaningful indication of the Company's liquidity. As of March 31 of each fiscal year, the Company has historically carried no significant amounts of inventories and by such date all of the Company's accounts receivable from its crop sold for processing under the supply agreements have been paid in cash, with the resulting cash received from such payments used to reduce indebtedness. The Company utilizes its revolving bank credit facility, together with cash generated from operations, to fund its working capital requirements throughout its growing season

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