Financial analysis (5) 1. when evaluating any investment in a 15041

Financial Analysis
(5)

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1. When evaluating any investment in a firm – what is the key goal that you want to examine and
assess?

(10)

2. Mayport Industries is a well-respected and high growth firm in the communications equipment
manufacturing industry. This is, and is expected to continue to be, a very strong growth industry.
Mayport is also well known for its highly efficient production & marketing operations. Over the
next 12 – 18 months, what would you expect Mayport’s needs and issues to be?

(10)

3. After years of dominance by domestic firms in your industry, there are increasing signals of a
competitive shift. Notably, there is an increasing incursion of Southeast Asia firms, and they are
producing both a high caliber and lower cost product line. What are the implications for your firm
and its management – AND what do you recommend the firm do?

(10)

4. Elmer Corp. has approached your firm for a loan. They are pursuing a 5 yr loan intended to
support the expansion of their operations. Elmer Corp. is a very well established and a very
highly regarded firm in its industry. But it is a brand new customer for your firm and you have little
understanding of their business. Before preparing a full analysis, what key information do you
need to obtain & understand?

(5)

5. What is the most important cash flow measure of any business? Why?

(10)

6. You have been asked to provide business advice to a firm that is in a highly competitive but
mature industry environment. Despite their highly efficient operations and relatively tight cash
position, they very much want to boost their sales. They believe the best way to accomplish this is
to extend the required customer payment periods – and are ready to pursue this course of action.
For your review: assess and evaluate this plan and its implications for the firm.

(10)

7. Your firm has been asked to invest in a new, early stage firm. The firm is in a brand new industry
and, although the firm is still in its early stages, it believes it has a very promising new product.
Other new firms are also in this industry and also have their own new products. At this stage, long
term demand for products in this industry are expected to be strong.
You have been asked to evaluate this situation for your firm – before they make any investment.
What are your recommendations and why?

(10)

8. Corey & Jones Corp. is a well-established firm with a long term history of moderate but positive
performance. The firm produces high precision valves and has a very strong reputation with its
customers, who incorporate the valves into their products. Notably their regional marketing has
been very solid and reflects both their quality and their well-developed marketing and sales
relationships. Very importantly, repeat customers dominate the firm’s sales. However, the firm is

also in a highly competitive regional market, where competition is fierce, and annual sales have
stabilized at a relatively flat $5 million