Preview

Electro Industries

Good Essays
Open Document
Open Document
1492 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Electro Industries
Case Introduction
Electro Industries are a large diversified manufacturer of computer systems, industrial electronics, electronic components and consumer electronics and a supplier of a broad range of services.

Problems confronting Electro
• Electro has incurred its first loss for the company in 15 years, despite sales growth of 20%. The net loss in 1974 was $5.7 million on sales of $875 million
• Operational expenses and administrative expenses soared.
• Stock price is low from 1968 till 1973. Interest expenses increased because majority of the debt was short term and there was an increase in interest rate. Interest expense rose from 0.54 % to 3.7% of total sales
• Decentralized structure of operations provides lesser control on the operational efficiency at the divisions.

Corporate cash flow situation
Overall, from the balance sheet, we can see that the cash available in 1974 is 2.89% of the total sales, which is lower than that of 1973.
• Only K, N, Q, T, W & X have increase in their positive cash flows, and U & V have an improvement in their cash flows but it is still negative. All other products have had a decrease in their cash flows in 1974 as compared to 1973.
• All these have managed to increase their market share, except Q.
• K, Q, V & W have high market growth rate. N, T & U have medium growth and X has low market growth rate.
In 1974, the highest cash flow was seen in products A,B, D, L,N, P, S. All others had a decrease in their cash flow as compared to 1973’s cash flows.
Product Group Quadrant Changes Market Share Change from 1973 to 74’ Long term Market Growth Cash
Flow
A Cash Cow Increased by 4.8% Low (7.5%) 6.3
B Dog Increased by 26% Low (7.3%) 1.2
D Cash cow, moving into Dog Quadrant Decreased by 1.9% Very Low (2.8%) 1
L Cash Cow Increased by 13.5% Very Low (2.8%) 3.7
N Star Increased by 7.7% Medium 9(12%) 1.3
P Cash Cow (borderline with star quadrant) Increased by 3.8% Medium (9.5%), 1.9
S Question Mark Increased by

You May Also Find These Documents Helpful

  • Good Essays

    Cologne Haefren Baum Case

    • 924 Words
    • 4 Pages

    Although the sales of the company have declined significantly their cost of goods sold has remained high, especially between 1994 and 1995 the company had a decline in sales and an increase in cost of goods sold. This is evidence the company is having problems passing costs to its consumers. The company is not very asset intensive and its decrease in total asset turnover can be due to their decrease in sales, however their rather low total asset turnover which is also decreasing from 2.1 to 1.5 shows their assets are not being used very efficiently. As a result of their sales decrease their Fixed Asset turnover also decreased from 7.0 to 5.4. The decrease in sales and increase in competition also means more shelf time for their inventory which has increased from 103 to 129, which makes Haefren Baum’s price cutting strategy questionable. The company is already experiencing a loss of revenue due to their lower prices; however this is not stimulating the number of different sales because the inventory is sitting in the…

    • 924 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    ACC/291 March 25,2012 Liquidity Ratios Current Ratio: Current Assets/Current Liabilities 2005 $14,555,092/ $6,974,752= 2.09:1 2004 $14,643,456/ $6,029,696=2.43:1 Acid Test Ratio: Cash+ Short-Term Investments + Receivables (Net)/ Current Liabilities 2005 $305,563 + $283,583 +$6,133,663/ $6,974,752= .96:1 2004 $357,216 + $133,504 + $5,775,104/ $6,029,696=1.04:1 Receivables Turnover: Net Credit Sales/ Average Net Receivables 2005 $50,823,685/ ($6,133,663 + 5,775,104/2) $50,823,685/ $5,954,384= 8.54 times 2004 $46,044,288/($5,775,104+6,569,344/2) $46,044,288/ $6,172,224=7,46 times Inventory Turnover: Cost of Goods Sold/ Average Inventory 2005 $42,037,624/ ($7,850,970+$7,854,112/2) $42,037,624/$7,852,541=5.35 times 2004 $37,480,050/ ($7,854,112+8,074,880/2) $37,480,050/ $7,964,496=4.71 times Profitability Ratios Current Assets 2004 2005…

    • 1563 Words
    • 7 Pages
    Satisfactory Essays
  • Good Essays

    Cost Accounting Cc2 Unit 2

    • 2988 Words
    • 12 Pages

    Operating cash flow before working capital changes has largely fluctuated, increasing to a peak in 2006 and falling again. The highest point can be observed in 2008. Finance costs have decreased in 2008 by almost half. Stores and stocks increase at a steady rate but show a spike in 2008. Trade debts reach a peak in 2006 and then fluctuate. Other receivables, however, show an increase. Net cash from operating activities shows a peak in 2006. The greatest addition to plant, property and equipment is witnessed in 2008. Net cash used in investing activities reaches a peak t 2008. Net cash used in financing activities shows an upward trend with a peak in 2008. Cash and cash equivalents show a peak in 2008, with a smaller peak in 2006. *CC5 FIVE-YEAR GROWTH RATES Sales and net-income have increased over the years but the per-share results are different because the number of shares goes up considerably in 2008, reducing per-share values and making growth rates negative. No dividends were paid in the first two years and as a result, the growth in dividends per share has been 100%. Equity per share has shown a growth over the years. Issuing more shares has resulted in lower sales and net income per share. The negative effect is especially felt on net income per share. This is not a good sign for the company, as it will negatively affect share prices financial markets. Financing the expansion in 2008 with a growth in equity seems to have been an unreasonable…

    • 2988 Words
    • 12 Pages
    Good Essays
  • Good Essays

    Fly-by-Night Case

    • 567 Words
    • 3 Pages

    There were many signals shown in the financial statements and other exhibits in the case that represented poor cash flow through Year 14. The most obvious of them all is that the collectability of the accounts receivables was problematic. It seemed as if Fly-by-Night had a good system of collecting their sales on account from year 9 to year 10 as the accounts receivable number decreased during those years. However, the accounts receivable account increased by more than six times through years ten and fourteen. Because of this poor system of collecting accounts receivable, Fly-by-Night’s cash flow would suffer. The same can be said about the inventory account. Because the amount of inventory increased by almost five times through years twelve and fourteen, the cash would continue to decrease at the same rate.…

    • 567 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Manzana

    • 1120 Words
    • 5 Pages

    declining over the years. We can see the following as per the Trend Analysis of Quarterly Financial…

    • 1120 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    Electro Inc

    • 1148 Words
    • 5 Pages

    This relates to the budgeting problem, how to reasonably distribute the production within restrict of total 120,000 EWUs, this can either calculate by solver using Excel or list two equations. The basic principle is…

    • 1148 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    case study

    • 315 Words
    • 2 Pages

    If $10 million worth of stockholder's equity is replaced with debt the earnings per share will…

    • 315 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Question 1: Construct 1988 Statements of Cash Flow for MiniScribe.(assume that 1988 depreciation expense is $6)…

    • 4096 Words
    • 16 Pages
    Satisfactory Essays
  • Powerful Essays

    Global Electronics

    • 3084 Words
    • 13 Pages

    The purpose of this case is to allow the reader to identify the behavioral variables that can determine the success of implementing an ABC system. There are several case studies that have been performed to examine technicalities in regards to ABC models and how profitability can be determined by the product, customer, or service. This case study focuses on how behavior can impact implementation because of the evidence that ABC has had high implementation failure rates and these failures have occurred mainly due to behavioral variables. We will discuss the background of Global Electronics, Inc. and their situation and then we will expand upon the signs that reveal that a costing system is not supporting management decision making. We will discuss the differences between traditional volume-based cost systems and ABC systems in terms of their ability to support decision-making in addition to the steps related to designing an ABC model.…

    • 3084 Words
    • 13 Pages
    Powerful Essays
  • Satisfactory Essays

    The total current liabilities have also decreased compared? The results compare to revenue of $7.51 billion and net quarterly profit of $1.05 billion or $1.16 per diluted share in the year ago. In March 28 2009 the company posted revenue of $8.16 billion and net quarterly profit of $1.21 billion or $1.33 per diluted share.…

    • 356 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Electrotechnology

    • 1110 Words
    • 5 Pages

    Transformers are simple, energy transfer devices that are widely used for power transmission. Depending on how well they are made and designed, they can be nearly 100% efficient.…

    • 1110 Words
    • 5 Pages
    Good Essays
  • Good Essays

    My division had another great year last year. We all worked hard, and the results were there. But again we got no reward for our hard work. It's very frustrating.…

    • 461 Words
    • 2 Pages
    Good Essays
  • Good Essays

    In the case of Danforth and Donnely, multiple questions are brought up concerning whether or not certain events count as cash flows. One such argument is whether or not the marketing costs of Blast should be considered as a cash flow. Another cash flow argument concerns the working capital required for Blast. The new product would also use excess production facilities and building space and could conceivably incur cash flows. Erosion from sales of current laundry products is also argued as being a possible cash flow. Finally, the question of debt, as funding for the project, is questioned of being a cash flow. The question of cash-flow-or-not for each of these dilemmas can be answered by looking at some of the the principles of corporate Finance.…

    • 371 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    16. List the amount of cash flows from each of the 3 activities: Operating, Investing, and Financing for the 2 most recent years. What was the increase or decrease in cash for each of these years? –…

    • 1524 Words
    • 8 Pages
    Powerful Essays
  • Good Essays

    Electrical Department

    • 5528 Words
    • 23 Pages

    Steam – is an invisible gas generated by adding heat energy to water in boiler. Enough energy must be added to raise the temperature of the water to the boiling point.…

    • 5528 Words
    • 23 Pages
    Good Essays