Star Rivers

Initial Assessment: An initial look at the rest analytic thinking reveals that the annual sales- reaping run has been holding around 15%. This is perhaps the only good nakeds from the analysis. A work discontinuity makes its appearance in FY 2000 as a drop in in operation(p) margin. This was a result of a 21% subjoin in production costs and expenses and a 20% annex in admin and selling expenses. There was also an inexplicable 95% enlarge in inventory. This jump in inventory and operating expenses appears to submit been financed through debt, as the debt/equity and debt/total jacket overstep ratios increased during this period. Since the sales growth rate has held steady, there has been no draw down on the excess inventory, thus draw play up considerable capital. The ratio analysis also shows that some(prenominal) the new and quick ratios indicate that there may be cash-flow problems in the near future. The company appears to be experiencing a frizzly decrement in efficiency, and to be financing that inefficiency through debt. fiscal calculate: The financial foreshadow for FYs 2002 and 2003 ar shown in accompaniment A. These were forecast using the percent-of-sales method, averaging the most recent two years to tolerate the primary ratios, with a few exceptions.

This forecast shows that plot maintaining the incumbent levels of operating efficiency, depreciation of existing equipment, and purchasing the new videodisc equipment will require additional funds on the succumb back of SGD 11M for 2002 and a further 25M in 2003. This means that sorcerer River cannot p ay off its loan in a likely period. sensi! bility analysis shows that, while maintaining the current sales growth rate of 15%, the need for additional funds in 2002 is 2003 are relatively insensitive to operating expenses, requiring that operating expenses, as a percentage of sales, be reduced from 50% to under 40% in 2002, and reduced further in 2003, in ordinate to avoid the need for additional financing. Further sensitiveness analysis shows that...If you want to get a full essay, order it on our website: BestEssayCheap.com

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