BackgroundTony 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.Assignment HelpIn its 30-year history, Electronic Equipment Venture (EEV) has seen a number of ups and downs, but the performance has been declining steadily in the past decade. Tony has taken the analyses of the income and balance sheet you provided and spent several days digesting the massive amount of information. This includes the analysis of the company’s financial position, operating results, resource flows, and industry comparison.Now Tony would like you to condense the information and create a presentation. Tony has asked you to create a strengths, weaknesses, opportunities, and threats (SWOT) analysis and a risk analysis for the company. Using all of the financial statements and the SWOT analysis, provide a recommendation for the direction of the company in both the short term and long term. Be sure to be specific on which financial ratios and figures within the financial statements you are utilizing. Click here to view the Electronic Equipment Venture balance sheet.Electronic Equipment First Balance Sheet (In Thousands) 200320042005 FcstAssets Cash 300130100Accounts Receivables 540067008800Inventory 6700900012000Total Current Assets 124001583020900 Net Plant & Equipment 150015301700Total Assets 139001736022600 Liabilities Accounts Payables 300031004800Notes Payables 4506001200Accured Taxes 300350900Current portion of long-term Debt 200200200Total Current Assets 395042507100 Long-term Debt 180017001600Shareholders equity 81501141013900Total Liabilities and Net Worth 139001736022600Click here to view the Electronic Equipment Venture income statement.Electronic Equipment VentureIncome Statement Thousands200820092010 (Fsct)Net Sales98800108000113500Cost of good soldTotal cost of good sold685008025085425Gross Profit303002775028075%31%26%25% ExpensesGeneral & Administrative350053005700Marketing750085009000 Operating Expense99001061011120Total Expenses209002441025820 Income Before Taxes940033402255Taxes37601336902Net Income564020041353 Headcount Direct 208024002500 Indirect320350400Total Headcount240027502900 Products200820092010 FcstSalesMargin%SalesMargin%SalesMargin%Electronic Equipment Television4000100025%350090026%5000104521% Computers5000240048% 5200230044%7600330043% Medical2300150065%3500200057%4000180045% Automotive15000320021%16000280018%15400300019%Electronic Equipment Total26300810031%28200800028%32000914529% Electronic Equipment Parts Television12000320027%13000305023%12000223019% Computers445001300029%500001050021%480001050022% Medical6000350058%7000370053%7500370049% Automotive10000250025%9800250026%14000250018%Electronic Equipment Parts Total725002220031%798001975025%815001893023% Total988003030031%1080002775026%1135002807525%Assignment DetailsIn the presentation, include the following:The ratios used to do the analysis of EEV’s financial performance Based on your analysis, what you did to improve the performance of EEV Provide 3-4 recommendations Tony should make to the board for improving performanceThe total presentation should include the following:An introduction Statement of situation status Summary of findings 3-4 recommendationsPPT presentation: 10-15 slides; 300-400 words speaker notes per slide
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