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Background
Tony Fortune, a tenured and well-respected turnaround guru, pondered his latest employment offer as he was driving home from an eventful meeting with a number of key electronic equipment executives. He had been asked to assume the presidency at a poorly performing company, Electronic Equipment Venture (EEV), which is owned by Electronic Equipment USA. Certainly he could refuse, but Tony flourished on reinventing and remolding underperforming companies. During the last 10 years, he was instrumental in overseeing three successful business turnarounds, four consolidations of business units, and five successful divestitures. This latest endeavor, based on his understanding, would be a challenge because the board of directors was seeking concrete data that would allow a quick resolution to the company’s problems.
Electronic Equipment Venture is a producer of electronic equipment dating back to the 1970s. During the company’s first 30 years, it was a pioneer in the development, design, and manufacturing of electronic equipment. The competitive environment changed tremendously in the late 1990s, however, and EEV’s market share eroded from 75% to 25% as other firms recognized this untapped market. Reacting to the loss in market share and unacceptable deterioration in profitability, management attempted to revitalize the company by increasing the level of research and development as well as acquiring two smaller but more sophisticated firms.
With the added research and development, along with the additional resources, profitability continued to worsen. Faced with slow stock growth at Electronic Equipment USA, primarily because of EEV, the board of directors has been pressed to make a decision regarding EEV. Recognizing that factual data is crucial to the decision process, the board proceeded with authorizing management to employ the appropriate resources needed to conduct the evaluation and valuation of EEV.
Accepting this challenge and knowing he has only 5 weeks to complete the analysis, Tony spent several days developing a strategy for generating a proper and thorough valuation and evaluation of the firm’s financial position.
Assignment Help
In its 30-year history, Electronic Equipment Venture (EEV) has seen a number of ups and downs, but the performance has been declining steadily in the past decade. Tony has taken the analyses of the income and balance sheet you provided and spent several days digesting the massive amount of information. This includes the analysis of the company’s financial position, operating results, resource flows, and industry comparison.
Now Tony would like you to condense the information and create a presentation. Tony has asked you to create a strengths, weaknesses, opportunities, and threats (SWOT) analysis and a risk analysis for the company. Using all of the financial statements and the SWOT analysis, provide a recommendation for the direction of the company in both the short term and long term. Be sure to be specific on which financial ratios and figures within the financial statements you are utilizing.
Click here to view the Electronic Equipment Venture balance sheet.
Electronic Equipment First | ||||||||
Balance Sheet | ||||||||
(In Thousands) | ||||||||
2003 | 2004 | 2005 Fcst | ||||||
Assets | ||||||||
Cash | 300 | 130 | 100 | |||||
Accounts Receivables | 5400 | 6700 | 8800 | |||||
Inventory | 6700 | 9000 | 12000 | |||||
Total Current Assets | 12400 | 15830 | 20900 | |||||
Net Plant & Equipment | 1500 | 1530 | 1700 | |||||
Total Assets | 13900 | 17360 | 22600 | |||||
Liabilities | ||||||||
Accounts Payables | 3000 | 3100 | 4800 | |||||
Notes Payables | 450 | 600 | 1200 | |||||
Accured Taxes | 300 | 350 | 900 | |||||
Current portion of long-term Debt | 200 | 200 | 200 | |||||
Total Current Assets | 3950 | 4250 | 7100 | |||||
Long-term Debt | 1800 | 1700 | 1600 | |||||
Shareholders equity | 8150 | 11410 | 13900 | |||||
Total Liabilities and Net Worth | 13900 | 17360 | 22600 | |||||
Click here to view the Electronic Equipment Venture income statement.
Electronic Equipment Venture | |||||||||||||||||||
Income Statement | |||||||||||||||||||
Thousands | |||||||||||||||||||
2008 | 2009 | 2010 (Fsct) | |||||||||||||||||
Net Sales | 98800 | 108000 | 113500 | ||||||||||||||||
Cost of good sold | |||||||||||||||||||
Total cost of good sold | 68500 | 80250 | 85425 | ||||||||||||||||
Gross Profit | 30300 | 27750 | 28075 | ||||||||||||||||
% | 31% | 26% | 25% | ||||||||||||||||
Expenses | |||||||||||||||||||
General & Administrative | 3500 | 5300 | 5700 | ||||||||||||||||
Marketing | 7500 | 8500 | 9000 | ||||||||||||||||
Operating Expense | 9900 | 10610 | 11120 | ||||||||||||||||
Total Expenses | 20900 | 24410 | 25820 | ||||||||||||||||
Income Before Taxes | 9400 | 3340 | 2255 | ||||||||||||||||
Taxes | 3760 | 1336 | 902 | ||||||||||||||||
Net Income | 5640 | 2004 | 1353 | ||||||||||||||||
Headcount | |||||||||||||||||||
Direct | 2080 | 2400 | 2500 | ||||||||||||||||
Indirect | 320 | 350 | 400 | ||||||||||||||||
Total Headcount | 2400 | 2750 | 2900 | ||||||||||||||||
Products | 2008 | 2009 | 2010 Fcst | ||||||||||||||||
Sales | Margin | % | Sales | Margin | % | Sales | Margin | % | |||||||||||
Electronic Equipment | |||||||||||||||||||
Television | 4000 | 1000 | 25% | 3500 | 900 | 26% | 5000 | 1045 | 21% | ||||||||||
Computers | 5000 | 2400 | 48% | 5200 | 2300 | 44% | 7600 | 3300 | 43% | ||||||||||
Medical | 2300 | 1500 | 65% | 3500 | 2000 | 57% | 4000 | 1800 | 45% | ||||||||||
Automotive | 15000 | 3200 | 21% | 16000 | 2800 | 18% | 15400 | 3000 | 19% | ||||||||||
Electronic Equipment Total | 26300 | 8100 | 31% | 28200 | 8000 | 28% | 32000 | 9145 | 29% | ||||||||||
Electronic Equipment Parts | |||||||||||||||||||
Television | 12000 | 3200 | 27% | 13000 | 3050 | 23% | 12000 | 2230 | 19% | ||||||||||
Computers | 44500 | 13000 | 29% | 50000 | 10500 | 21% | 48000 | 10500 | 22% | ||||||||||
Medical | 6000 | 3500 | 58% | 7000 | 3700 | 53% | 7500 | 3700 | 49% | ||||||||||
Automotive | 10000 | 2500 | 25% | 9800 | 2500 | 26% | 14000 | 2500 | 18% | ||||||||||
Electronic Equipment Parts Total | 72500 | 22200 | 31% | 79800 | 19750 | 25% | 81500 | 18930 | 23% | ||||||||||
Total | 98800 | 30300 | 31% | 108000 | 27750 | 26% | 113500 | 28075 | 25% | ||||||||||
Assignment Details
In the presentation, include the following:
- The ratios used to do the analysis of EEV’s financial performance
- Based on your analysis, what you did to improve the performance of EEV
- Provide 3-4 recommendations Tony should make to the board for improving performance
The total presentation should include the following:
- An introduction
- Statement of situation status
- Summary of findings
- 3-4 recommendations
PPT presentation: 10 slides; 300 words speaker notes per slide
I will need references in apa format.
pls 100% original, thanks
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