as an equities analyst, was recently brought in as assistant to the
chairman of the board of Microdrive Inc., a manufacturer of
computer components. During 2016, Microdrive had doubled its plant
capacity, opened new sales offices outside its home territory, and
launched an expensive advertising campaign. Ravi was assigned to
evaluate the impact of the changes in in 2016 & 2017. In fact,
a large loss occurred in 2016, rather than the expected profit. As
a result, its managers, directors, and investors are concerned
about the firm’s survival. Ravi must prepare an analysis of where
the company is now, what it must do to improve its financial
health, and what actions to take. Your assignment is to help him
answer the questions listed in the spreadsheet attached, using the
recent financial information shown there. Please provide clear
explanations (maximum 30 words for each the 5 questions) in the
spaces provided in the 'Questions' worksheet of the
spreadsheet.
- Ravi Bose An Nsu Business Graduate With Few Years Experience As An Equities Analyst Was Recently Brought In As Assist 1 (91.04 KiB) Viewed 28 times
sheet
Course name: Managerial Finance
Case: Ravi Bose, an NSU business graduate with few years' experience as an equity analyst, was recently brought in as assistant to the chairman of the board of Microdrive Industries, a manufacturer of computer components. During 2016, Microdrive had doubled its plant capacity, opened new sales offices outside its home territory, and launched an expensive advertising campaign. Ravi was assigned to evaluate the impact of the changes in in 2016 & 2017. In fact, a large loss occurred in 2016, rather than the expected profit. As a result, its managers, directors, and investors are concerned about the firm's survival. Ravi must prepare an analysis of where the company is now, what it must do to improve its financial health, and what actions to take. Your assignment is to help him answer the following questions, using the recent financial information. Please provide clear explanations (maximum 30 words for each the following 5 questions) Q1 What are some potential problems and limitations of financial ratio analysis? Q2 How does Microdrive's asset management performance, esp. the utilization of assets stack up against that of other firms in its industry Q3 How does Microdrive compare with the industry with respect to financial leverage? What can you conclude from these ratios? Q4 Comment on the profitability ratios of Microdrive compared to the industry average. Also, comment on the trend that Microdrive follower Q5 What happened to Microdrive's MVA and EVA? Should Microdrive management be concerned about the trend in MVA and EVA? Explai