ASSESSING SCITRONICS FUTURE FINANCIAL HEALTH
GREAT LEADER SYNDICATE MBA EXECUTIVE 46 29111311 Haidir Afesina 29111328 Hendra Winata 29111329 Mita Listyatri 29111338 Andek Prabowo 29111344 Aprian Eka Rahadi 29111384 Chairunnisa Mirhelina 29111387 Franciscus Xaverius Kresna P 29111393 Agung Indri Pramantyo
Outline
EXECUTIVE SUMMARY
OBJECTIVES
ANALYSIS
CONCLUSION & RECOMMENDATION
EXECUTIVE SUMMARY SciTronics Founded in 1981, in industrial processing and manufacturing community, e.g medical device. Our group will try to analyze SciTronics financial statements and assess the performance of the company using three primary sources financial data in Exhibit 1 & 2. We analyze the health of company financial using 9 steps of the corporate financial system with a suggested step by step process to assess whether it will remainin balance over the ensuing 3-5 years
OBJECTIVES Refer to financial statements of SciTronics we will answer three broad question: 1. What is the assessment of the performance of SciTronics during the 2005-2008 period? 2. Has its financial strengths and its access to external sources of finance improved or weakened? 3. What are the 2-3 most important questions we would ask management as the result of your analysis?
ANALYZE(1) Resource from financial data in: Exhibit 1. Income Statement
ANALYZE(2) Exhibit 2. Balance Sheet Exhibit 2. SciTronics', Inc. Consolidated Balance Sheet at December 31, 2005-2008 ($ in thousands)
Cash Account Receivable Inventories Other Current Assets Total Current Assets Net Property & equipment Other Total assets
$ $ $ $ $ $ $ $
2005 9,000 42,000 21,000 10,000 82,000 9,000 2,000 93,000
Notes Payable Accounts Payable Accrued expenses Other Current Liabilities Total Current Liabilities Long-term senior debt Subordinated convertible debt Others Liabilities Owners' equity Treasury stock Owners' equity Total Liabilities & Equity
$ $ $ $ $ $
3,000 5,000 10,000 3,000 21,000 10,000
$ 18,000 $ 6,000 $ 13,000 $ 3,000 $ 40,000 $ 9,000
$ $
1,000 61,000
$ 3,000 $ 66,000
$ $ $ $ $ $ $ $ $
$ $
61,000 93,000
$ 66,000 $ 118,000
$ 71,000 $ 146,000
$ $ $ $ $ $ $ $
2006 10,000 53,000 28,000 13,000 104,000 12,000 2,000 118,000
$ $ $ $ $ $ $ $
2007 15,000 61,000 30,000 21,000 127,000 13,000 6,000 146,000
$ $ $ $ $ $ $ $
8,000 7,000 21,000 4,000 40,000 8,000 20,000 7,000 71,000
$ $ $ $ $ $ $ $ $
2008 18,000 66,000 29,000 20,000 133,000 18,000 8,000 159,000
10,000 6,000 28,000 4,000 48,000 7,000 20,000 9,000 85,000 (10,000) $ 75,000 $ 159,000
ANALYZE(3) Sales Growth 1 2
Profitability Ratio: How profitable is the company?
1 During the four year period ended December 31, 2008, SciTronics' sales grew at a compound rate. There were no acquisition or divestitures 1 SciTronics' profit as a percentage of sales in 2008 was 2 SciTronics’ profits as a percentage of sales in 2005 was This represented an increase from in 2005 3 Sci Tronics had a total of capital at year-end 2008 and earned interest but after taxes (EBIAT) during 2008. Its return on capital was in 2008 which represented an increase from the earned in 2005 4 SciTronics had of owner's equity and earned after taxes in 2008. Its return on equity was an improvement rom the earn in 2005
21% 5.74% 3.40% 2.34% $159,000 $16,000 10% 4% $75,000 $14,000 18.67% 8.20%
ANALYZE(4) 3
Activity Ratios: How Well Does the company employee its assets?
1 Total Asset turnover for ScTronics in 2008 can be calculated by dividing into The turnover deteriorated from times in 2005 to times in 2008 2 SciTronic Had in account receivables at year-end 2008, Its average sales per day were during 2008 and its average collection period was days. This an improvement from the average collection period of days in 2005. 3 SciTronics apparently needed of inventory at year-end 2008 to support its operations during 2008. Its activity during 2008 as measured by the CoGS was It therefore had an inventory turnover of times. This represented an improvement from times in 2005 4 SciTronics had net fixed assets of and sales of in 2008. Its fixed asset turnover ratio in 2008 was times, an ideterioration from times in 2005
$ 244,000 $ 159,000 1.53 1.58
$ 66,000 $ 668.49 98.73 104.29 $ 29,000 $ 74,000 2.55 2.05 $ 18,000 $ 244,000 13.56 16.33
ANALYZE(5)
4
Leverage Ratio
1
2
3 4
5
6
SciTronics' ratio of total assets divided by owners' equity increase from at year end 2005 to at year end 2008 At year end 2008, SciTronics' total liabilities were of its total assets, which compares with in 2005 The market value of SciTronics' equity was at December 31,2008. The total Debt ratio at market was SciTronics' earning before interest and taxes (operating income) was in 2008. and its interest charges were its times interest earned was 13 times. This represented an improvement from the 2005 level of times. SciTronics owed its suppliers at year-end 2008. This represented of COGS and was a decrease from at year end 2005. The company appears to be more prompt in paying its suppliers in 2008 than it was in 2005. The financial riskiness of SciTronics decreased between 2005 and 2008.
1.52 2.12 58.23% 34.41% $175,000,000 0.32 $26,000 $2,000 13 10 $6,000 8.10% 11.60%
ANALYZE(6) 5
6
LIQUIDITY RATIOS
PROFITABILITY REVISITED
1 SciTronics held of current assets at year end 2008 and owed to creditors due to be paid within one year. Its current ratio was, a decrease from the ratio of at year end 2005. 2 The quick ratio for SciTronics at year end 2008 was a decrease from the ratio of at year end 2005. 1
The improvement in SciTronics' return on equity from in 2005 to in 2008
$133,000 $48,000 2.77 3.9 2.16 2.9
8.20% 18.70%
CONCLUSION 1. SciTronic Performance can be categorized as health company because its profitability ratio that increase during the 2005-2008 period. 2. SciTronics financial strength and its access to external sources its improved.this can be seen from the financial ratios like profitability ratios and leverage ratios. 3. Questions that would ask for management a. What will the management plan to maintain total current liabilities that had been increase during period time 2005 – 2008 b. Did the company will continous expand their fix asset such as property and equipment.
RECOMMENDATION
SciTronics must always be aware based on data from financial statement, they should always keep their finance in optimum profit e.g for company expansion or investor trust
CORPORATE FINANCIAL SYSTEM Steps 1,2 : analysis of fundamental Steps 3 : Investment to support the business unit(s) strategy (ies) Steps 4 : Future Probability and Competitive Performance Steps 5: Future External Financing Needs Steps 6 : Access to Target Sources of External Finance Steps 7 : Viability of the 3-5 year plan Steps 8 : Stress test under scenarios of adversity Steps 9 : Current Financing Plan
UNIDENTIFIED INDUSTRIES A is electric utility company because have a big number of property and equipment but less inventories. B is Japanese automobile manufacturer because have a big number of cash, property and equipment and also have the largest inventories. C is Upscale apparel retailer because have a big number of cash and inventories D is Disc general Merchandise retailer because have less profit. E is Automated test equipment because need a large inventories.
Industries Japanese automobile Electric utility Disc general retailer Automated test equip Upscale apparel
Idenitifed B A D E C
