Literature Review Women on boards and in TMTS and firm performance 111 gresses a threat of write downs Second major reason for the considerable increase was the imba lance between a high level of accounts receivables and an inappropriate level of accounts payables This discrepancy resulted from generous payment terms of six months for customers allowed for at the end of Q4 2006 in order to attract new business At the same time payment terms for CONERGY were very unfavorable Due to the on going shortage of silicon suppliers were in the position to require up front payment at that time These cash outflows before delivery led to short falls in liquidity of some customers amongst them CONERGY as they had to bridge the interim period until they in turn were repaid for the finish ed products by their customers The proceeds of the March 2007 capital increase were to be used for up front investments to secure supplies of solar grade silicon and to reduce purchasing prices 4 5 8 Liquidity Crisis CONERGY did admit that it was in a precarious si tuation only when facing the preliminary figures for the first nine months of 2007 On October 25 the company released its second profit warning within one year The announcement came unex pected and left capital markets shell shocked Citi Company Focus 2007 Oct 29 Analysts now showed the red card and responded with down grades from buy to hold or sell After the first nine months of 2007 consolidated net inco me was negative at EUR 8 8 million with revenu es of EUR 641 1 million CONERGY AG 2007 Oct 25 Once again delays in deliveries of modules allegedly had led to revenue losses of EUR 130 million Furthermore personnel costs other ope rating expenses and working capital were given as reasons for the unsatisfying earnings perfor mance CONERGY AG 2007 Oct 25 The working While revenues improved only marginally from EUR 682 3 million to EUR 719 0 million in 2007 costs grew considerably Headcount had increased fourfold from 579 employees in 2005 to 2 317 in 2007 CONERGY AG 2008 April 8 Personnel expenses in 2007 stood at EUR 112 3 million Other operating expenses again almost tripled to EUR 179 3 million 2007 which was essenti ally due to two positions Within only one year value adjustments on receivables increased from EUR 1 4 million to EUR 28 2 million mainly related to the MEMC contract but also to customers lack of creditworthiness and miscellaneous operating expenses rose dramatically from EUR 16 0 million to EUR 44 9 million encompassing a multitude of numerically minor individual items related to the Group s 68 consolidated companies CONERGY 2009 p 133 4 5 7 Dramatic increase in working capital Working capital had increased more than fivefold within only one year from EUR 46 million in 2005 to EUR 274 million in 2006 The company had fai led to reduce working capital in the following year It stood unchanged at EUR 273 million Expressed as a percentage to sales the working capital ra tio jumped from 8 percent in 2005 to 40 percent in 2006 and came down only marginally to 38 percent in 2007 Generally speaking a targeted ratio should be below 25 percent in order to in crease profitability reduce tied capital and secure sufficient liquidity CONERGY had assured to strive for a 20 percent ratio but failed to do so A first reason for the working capital increase was a sharp rise in inventories The value of inventory amounted to EUR 55 million in 2005 more than doubled to EUR 135 million in 2006 and rose to EUR 342 million in 2007 High inventories mean tied capital high storage costs and as time pro CEO optimism and overconfidence

Vorschau DIRK-Forschungsreihe Band 21 Workforce diversity and personal policies Seite 111
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