Student
Study questions:
These questions are intended to get you started on your analysis and to focus your attention on a few critical points. They are not necessarily the final goal of your analysis.
Oracle Systems:
1. TYPO: The two quarterly figures, $230,187 and $174,673, listed as “General and admin” in Exhibit 1 should be listed as “Total operating expenses”.
2. NOTE: Exhibit 6 presents common-sized financials for the industry, not Oracle systems.
3. On a scale of 1 to 100, rate the financial health of Oracle Systems in 1989 and in 1990—justify your rating.
4. What might explain the stock price drop that occurred in 1990 and how does that influence your evaluation of Oracle Systems’ financial health?
Wilson Lumber:
1. Why does Mr. Wilson have to borrow so much money to support this profitable business?
2. Do you agree with his estimate of the company’s loan requirements? How much will he need to worry to finance his expected expansion in sales (assume 1991 sales volume of $3.6 million)?
3. As Mr. Wilson 's financial advisor, would you urge him to go ahead with, or to reconsider his anticipated expansion? As the banker, would you approve Mr. Wilson 's loan request and if so, any restrictions?
O.M. Scott & Sons:
1. Who was Scott able to achieve its rapid growth from a local to a national company? What were the key factors in its success?
2. How have the prices of Scott shares moved in the market?
3. Analyze the company’s financial condition at the end of 1961. What are its prospects for future years?
4. Project specific sales and profit figures for Scott for 1962 and 1963.
5. What action, if any, should Scott take in relation to its internal operations? Or its creditors?
The Super Project:
1. What are the relevant cash flows for General Foods to use in evaluating the Super Project? In particular, how should management deal with issues such as a) Test-market expenses? b) Overhead Expenses? c) Erosion of Jell-O contribution
These questions are intended to get you started on your analysis and to focus your attention on a few critical points. They are not necessarily the final goal of your analysis.
Oracle Systems:
1. TYPO: The two quarterly figures, $230,187 and $174,673, listed as “General and admin” in Exhibit 1 should be listed as “Total operating expenses”.
2. NOTE: Exhibit 6 presents common-sized financials for the industry, not Oracle systems.
3. On a scale of 1 to 100, rate the financial health of Oracle Systems in 1989 and in 1990—justify your rating.
4. What might explain the stock price drop that occurred in 1990 and how does that influence your evaluation of Oracle Systems’ financial health?
Wilson Lumber:
1. Why does Mr. Wilson have to borrow so much money to support this profitable business?
2. Do you agree with his estimate of the company’s loan requirements? How much will he need to worry to finance his expected expansion in sales (assume 1991 sales volume of $3.6 million)?
3. As Mr. Wilson 's financial advisor, would you urge him to go ahead with, or to reconsider his anticipated expansion? As the banker, would you approve Mr. Wilson 's loan request and if so, any restrictions?
O.M. Scott & Sons:
1. Who was Scott able to achieve its rapid growth from a local to a national company? What were the key factors in its success?
2. How have the prices of Scott shares moved in the market?
3. Analyze the company’s financial condition at the end of 1961. What are its prospects for future years?
4. Project specific sales and profit figures for Scott for 1962 and 1963.
5. What action, if any, should Scott take in relation to its internal operations? Or its creditors?
The Super Project:
1. What are the relevant cash flows for General Foods to use in evaluating the Super Project? In particular, how should management deal with issues such as a) Test-market expenses? b) Overhead Expenses? c) Erosion of Jell-O contribution