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The data provided for Spalton PLC includes permanent working capital, sales for the first and second years, the EBITDA at the end of the second year, and the operating cash flow before deducting financial expenses and taxes. Usually, companies adjust their operating capital depending on the prevailing market condition. Permanent working capital is the minimum capital that the company has ever operated under in a financial year, and below which the company may not operate smoothly (Welc, 2017). Earnings before interest, rates, depreciation, and amortization are essential growth measures as they help determine where the company should make stringent financial changes.
The data provided for this company cuts across two financial years and can be effectively used to project the companys future growth. The difference in sales between the first and second financial years is vital in making marketing strategies, pricing strategies, and targeting new market ventures. If there is a drop in sales, the company is declining its grip on the competitive market. As a result, it should seek ways of regaining its market share by penetrating deeper and effectively into the target market. If the company records a significant increase in sales revenue, it will gain roots in the markets. In this case, the company should maximize on increasing sales while satisfying customer needs and wants. The EBITDA at the end of the second financial year can be used to determine whether the company has become profitable or if investors should keep on funding the business. EBITDA is used to determine when a company reaches its payback period.
Reference:
Welc, J. (2017). EBITDA vs. cash flows in bankruptcy prediction on the Polish capital market. European Financial and Accounting Journal, 12(2), 91-103.
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