ASSIGNMENT: INDIVIDUAL CANDELA CORPORATION CASE

Assignment: Individual Candela Corporation Case Karen Cordner ACC/230 September 25, 2011 Tarsha Bowie

ASSIGNMENT: INDIVIDUAL CANDELA CORPORATION CASE

Assignment: Individual Candela Corporation Case The Candela Corporation prides itself as an innovator of the advancement, development, and the commercialization of affordable aesthetic laser systems. The Candela Corporation technology makes affordable products for cosmetic and medical applications. Many dermatologists, physicians, cosmetic surgeons, and personal care providers use their product. The lasers systems include treatment and removal of unwanted hair, rosacea, port wine stains, veins, and rejuvenate skin and wrinkles. The Candela Corporation has a mission statement. This mission statement, like many those of many other businesses, includes the words teamwork, superior, supportive, and ethical (Candela Corporation, 2005). Because Baby Boomers are postponing retirement in favor of extending their careers, and competition to keep those careers is fierce; Candela Corporation's mission statement could look include images with wording such as youthful, invigorating, and enhancing. Baby Boomers not only are likely to be a target for the Candela Corporation's product; they are also a target as investors. Investors will most likely have more interest in the financial wellbeing of Candela Corporation than in its product. An investor can begin its investigation of the Candela Corporation's financial fitness by looking at its Consolidated Statement of Cash Flows. The Consolidated Statement of Cash Flows for the years 2002, 2003, and 2004 discloses financial information about the company. For example, in 2002 Candela Corporation suffers a considerable net loss. The net cash used in operating activities for 2002 is also negative. However, 2003 and 2004 show cash flows increase significantly, particularly in net income. Candela Corporation disposes of discontinued items in 2004 adding to net cash used in operating activities.

ASSIGNMENT: INDIVIDUAL CANDELA CORPORATION CASE

As the potential investor continues to examine the cash flows from operating activities, he or she will notice the loss from discontinued items decreased significantly from 2002 and 2003. Adjustments to depreciation and provision for bad debt increase each year. Typically one would expect an increase in bad debt as revenues increase. Looking at 2004 one can see that Candela Corporation did not suffer a tax loss; consequently, the provision for deferred taxes coincides with income, unlike 2002 and 2003. Continuing down the list one can see the tax benefit from exercised stock options are significantly more in 2004 than 2003, nearly twice the amount. Changes in cash flows from operating activities for Candela Corporation include changes in assets and liabilities. The knowledgeable Baby Boomer investor will take note that Candela Corporation has taken on more in the way of accounts receivables, less in notes receivables, and has an increase the inventory in 2004. Therefore, one can assume that management is paying down its debt, increasing its inventory, and has risked more by allowing clients to pay debt over time. One can also assume that Candela Corporation is managing its accounts payable and payroll expenses more efficiently in 2004. The decrease in both these line items is the proof. Although many may find the portion of Candela Corporation's Consolidated Statements of Cash Flows regarding operating activities most interesting; there is more to review. Next on the list is the portion concerning cash flows from investing and financing activities. Candela Corporation shows less investing in property, plant, and equipment in 2004 than 2002 and 2003. Visiting the financing activities show Candela Corporation earnings from issuing common stock in 2002 and 2003 was higher than in 2004. Candela Corporation has not repurchased stock since 2002. The year 2004 shows that Candela Corporation is current on the line item for net borrowings.

ASSIGNMENT: INDIVIDUAL CANDELA CORPORATION CASE

As an investor reviewing the Consolidated Statement of Cash Flows of Candela Corporation, one would proceed with caution. Although Candela Corporation is showing a profit one would want to evaluate the years since 2004. Although Baby Boomers may need to compete with a more youthful society, all age groups have been affected by the downward spiral in the economy; therefore, Candela may not be the best place for an investor to place his or her funds. The importance of laser technology is undeniable; however, when looking to invest in a bleak economy, one may choose to consider a more marketable product or service.

ASSIGNMENT: INDIVIDUAL CANDELA CORPORATION CASE

References Candela Corporation. (2005, September). Candela Corporation Business Ethics Program. Retrieved from http://www.candelalaser.com/about/biz_conduct_ethics_09-2005.pdf Fraser, L. M., & Ommiston, A. (2007). Understanding Financial Statements (8th ed.). New York, NY: Prentice Hall.