Financial and Non-financial Analysis: Electronic Equipment Venture EEV

Anonymous
timer Asked: Feb 23rd, 2019
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Question Description

1,200–1,500 words + Excel spreadsheet

The financial team has been properly selected and charged to proceed with their analysis of EEV's financial statements. In the course of their evaluation, they will be assessing the firm's operating performance, benchmarking their competitors, and looking at the industry using financial ratios as their source of measurement. However, the chief executive officer (CEO) of Electronic Equipment USA agrees with numerous practitioners who promote the use of nonfinancial measures as well as financial measurements to evaluate the performance of a given firm. Nevertheless, Tony agrees that nonfinancial measurements can be valuable, and he tends to support the premise that when evaluating operating performance, benchmarking competitors, and comparing industry results, nonfinancial measurements have little measurable value.

The CEO of the parent company agrees with numerous practitioners who promote the use of nonfinancial measures as well as financial measurements to evaluate the performance of a given firm. Nevertheless, Tony agrees that nonfinancial measurements can be valuable, and he tends to support the premise that when evaluating operating performance, benchmarking competitors, and comparing industry results, nonfinancial measurements have little measurable value.

Tony has asked you to present a position paper comparing the effectiveness and reliability of using financial measures as opposed to nonfinancial measures. Include the following:

  • Provide an analysis of the utilization of assets in terms of efficiency (or inefficiency).
  • What are measurements associated with returns and activity ratios?
    • Explain why you selected each specific measurement.
  • Then, review the electronic equipment industry using financial ratios.
    • Assess the firm's operating performance against these ratios.
  • Research the financial reports of 1 company in the electronic equipment industry, and compare it with the performance of Electronic Equipment Venture.
  • Include an Excel spreadsheet to support your analysis.
  • Use this information to support your position, and compare the effectiveness and reliability of using financial measures as opposed to nonfinancial measures.

Click here to view the EEV balance sheet.

Click here to view the EEV income statement.

Electronic Equipment Venture Income Statement Thousands 2008 98800 Net Sales Cost of good sold Total cost of good sold Gross Profit % 2009 2010 (Fsct) 108000 113500 68500 30300 31% 80250 27750 26% 85425 28075 25% 3500 7500 9900 20900 5300 8500 10610 24410 5700 9000 11120 25820 Income Before Taxes Taxes Net Income 9400 3760 5640 3340 1336 2004 2255 902 1353 Headcount Direct Indirect Total Headcount 2080 320 2400 2400 350 2750 2500 400 2900 Expenses General & Administrative Marketing Operating Expense Total Expenses Products Sales 2008 Margin % Sales 2009 Margin % Sales 2010 Fcst Margin % Electronic Equipment Television Computers Medical Automotive Electronic Equipment Total 4000 5000 2300 15000 26300 1000 2400 1500 3200 8100 25% 48% 65% 21% 31% 3500 5200 3500 16000 28200 900 2300 2000 2800 8000 26% 44% 57% 18% 28% 5000 7600 4000 15400 32000 1045 3300 1800 3000 9145 21% 43% 45% 19% 29% Electronic Equipment Parts Television Computers Medical Automotive Electronic Equipment Parts Total 12000 44500 6000 10000 72500 3200 13000 3500 2500 22200 27% 29% 58% 25% 31% 13000 50000 7000 9800 79800 3050 10500 3700 2500 19750 23% 21% 53% 26% 25% 12000 48000 7500 14000 81500 2230 10500 3700 2500 18930 19% 22% 49% 18% 23% Total 98800 30300 31% 108000 27750 26% 113500 28075 25% FIN600 Phase 1 Assignment Set B FIN600 Phase 1 Assignment Set B
Scenario: Electronic Equipment Venture (EEV) 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. Electronic Equipment Venture Financial Statements

Tutor Answer

Robert__F
School: UC Berkeley

Please let me know if there is anything needs to be changed or added. I will be also appreciated that you can let me know if there is any problem or you have not received the work. Please let me know if there is anything needs to be changed or added. I will b...

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Anonymous
Thanks, good work

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