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Factory 539 China Star Technology Electronics Ltd A Financial Analysis Case Study Help


Factory 539 China Star Technology Electronics Ltd A Financial Analysis Financial Analysis Case Study HelpThe financial position of Factory 539 China Star Technology Electronics Ltd A Financial Analysis can be assessed by having a look at its ratio analysis.

Declining Profitability:

We can see in appendix 1 how the income has been declining for many years after 2005. The fact that the gross revenue margin has actually decreased as well recommends that the cost of sales have actually not gone down at the exact same speed. The declining net profitability, revealing an unfavorable trend from 2006 to 2007 suggests that costs have actually increased far more than the business has the ability to handle offered its present resources. With a long term financial obligation adding to the interest expenditure, Factory 539 China Star Technology Electronics Ltd A Financial Analysis remains in dire need of an alternative profits stream.

Declining Liquidity:

Decreasing Liquidity: We can see a major decreasing trend in the current ratio too showing a fall in liquidity which is another point of concern for Factory 539 China Star Technology Electronics Ltd A Financial Analysis especially as it has a long term financial obligation to pay off. With the existing assets not in a position to settle the current liabilities, we can see how the business would remain in a major financial trouble unless the capital improves with extra sources of finance.

Rising Debt to Assets Ratio:

We could check out the monetary condition of Factory 539 China Star Technology Electronics Ltd A Financial Analysis even more by taking a look at the company's total debt to total possessions ratio in appendix 2. We can see how the overall assets of the company have been decreasing from 2005 onwards. The long term debt has actually stayed at $160 million while the brief term financial obligation has increased side by side. Such a circumstance has brought Factory 539 China Star Technology Electronics Ltd A Financial Analysis to a point where its total debt to overall properties ratio has increased. A rising overall financial obligation to total assets ratio recommends that the risk has actually increased in regards to the company's properties not sufficing to cover its total liabilities. This might not be showing the general liquidity position but offers clarity in regards to the total monetary position of the company.

/Financial Feasibility