Please read the information in the case carefully. The financial statement theoretically captures the impact of the strategic decisions made by the firm. If this is true, you should be able to decipher a few strategic areas of concern by examining the financial statements.
1. What are 4 strategic issues that emerge from an analysis of the financial data. Identify each issue. Using the data, give an explanation of what the issue is and what data supports your conclusion.
2. Identify one NON-financial strategic issue that is discussed in the case.
3. After looking at all the information, what do you think is the KEY strategic issue that Motorola must address? (This doesn’t have to be from 1 or 2, but should be supported by 1 and/or 2.)
1. Four strategic issues that emerge from analyzing the financial data are. Motorola’s liquidity, Motorola’s cost of sales, Motorola’s efficiency, and its leverage. The first strategic issue is that Motorola is considerably less liquid than the typical company in the industry, Motorola’s quick and current ratio is very much lower than the average firms in the industry. The data showed that the average collection period for Motorola is at 61 days, which is slightly lower than the average of the industry which is 50 days. The second strategic issues is that Motorola’s cost of sales is way higher than many of the average firms in the industry. This results in Motorola having a slightly lower gross profit margin and also having a high indirect cost, which then results in a low net profit margin performance compared to the industry. Another strategic issue is how Motorola uses their total assets. Motorola uses it less efficiently and also less than the average of the industry. The data shown in the case shows that Motorola uses its total assets at 4.37 while the industry uses its total assets at 6.24. The last strategic issue is that Motorola is somewhat less leveraged, with a lower debt and