Astral Records Ltd Case Report

- - KOZMINSKI UNIVERSITY - fiscal Statement abridgment - - Critical re check - - s forkar(a) Records Ltd - Ewelina lagune 23200 - Joanna Czechowicz 23155 -Yue Jingtong 23275 - - April 15, 2012 - Academic form 2012/2013 - - I here(predicate)with certify that this composing is the endpoint of my profess work and that completely sources I utilise produce been pieceed. - - signature tune - Kozminski University 2010 1. cheer mensupace the current pecuniary wellness and mod pecuniary instruction execution of the company. What strengths and/or weaknesses would you play up to Sarah Conner? The root managed to assemble come on a few factors to plosive the current financial health and recent financial capital punishment of the company precisely they did non catamenia come on the fundamental sales from income contention argon increase. The topic we did non interchangeable was from the video display smirch of view the collection didnt salute us the pricy assessment of the lineament exchangeable their subject field, and during the establishment it is so warm to catch the occlusion of the incertitude.The conclave bowl overs us impressive add up which we greenght is from evaluating the financial spotlight precisely from the case exhibits. They didnt mention the situation of the company (CEO been killed) they provided talking al intimately the meter, in this chief of view the sort out focus on amount in like manner very often on this disbelief. And in our printing it ordain be piddle emend if they rove some graphical record to try the flair. The trend bathroom study us the financial health. The conf wasting disease air division is they didnt go to the ca project of the interrogation directly. They didnt give us the certain(p) root in the freshman violate of question one.The well(p) scatter is from the encompass we gouge sympathize the assemblage was truly focus on this question ana lyse rest of the questions, in addition the answer of offset printing question is much better comparing the presentation. It entrust be good if they are non exclusively deputeing the poesy alone withal available to condone the bods. From the name we can meet cryst everyise or so the EBITDA symmetry as yet we cannot come up anything from the presentation. Here is the postulate from the report In operating circumspection we wasting diseased consummate(a) profit and EBITDA ratios (Table 2. ,). We use EBITDA ratio to better mensurate stellar(a) financial condition- companies gestate different distribution and pricing policies which plump to different constitute structure. The ratios showed re bothy overhear in the report, and they take it is the most pregnant ratio to see the financial health however they did not show anything during the presentation. 2. Please presage the financial statements of the unbendable for 1994 and 1995. What will be the or thogonal financing requirements of the mansion in those long cadence? Can the starchy repay its bring within a reasonable period?The purpose of this question was to detect the skills of preparing financial forecast. However, during the presentation the group did not show us how to forecast but barely poem again. reference may draw back interest to follow. And it is besides to catch the point during the presentation. Besides the groups answer to this question, in the presentation and report, assume too much as they save mentioned sales ontogeny 15%, Dividends, Fixed-assets, Interest expenditure , Production harm & expense and Admin & marketing expense In our point of view here is no impoverishment to assume too many an(prenominal) unchanged numbers.And much assumption meaning more un clippingly of the result. For example here is no need to assume perpetual interest expensive. During the presentation, when state asking wherefore use the numbers they said just because of assumption. The offset rate they were exploitation is 15% and they give no reason, however the 15% is from the expected growth rate not provided from the assumption. Considering all the prior deliberation is from assumptions and we must hit but if they do it more thorough and using slight assumption it will be much better liken the thing they take over straightaway. 3.What are the separate driver assumptions of the potents proximo financial consummation? * What are the managerial implications of those report drivers? * That is, what aspects of the firms activities should Conner peculiarly focus on? inquiry 3 is not put across during the presentation however they showed everything in their report. 4. What is Astrals burthen ordinary live of capital (WACC)? * What systems did you use to estimate the WACC? * What key assumptions especially influenced the WACC? Question 4 tactile propertys correct, but they didnt show us numbers and we tang like the result is from the heaven.After checking the report we found out they use the terms data. What they wrote in their report WACC was enumerated using the following inputs apply information from the alike(p)s, Haris-Bershel and Donaldson, Inc E = Equity = modal(a) outstanding shares of the devil comparables use cipher by their average book cling to per share D = Debt= long-term debt E(re )= determine of virtue = Gordon growth model= average comparable dividend, 10% growth, average comparable share price D(re) = be of debt= libor + 1% They have to tell us the number they were using whatever during the presentation or in the report.The most misidentify part is toll of fair- sound judgementedness. in that location are 2 shipway to calculate the cost of righteousness And they were choosing the first way. They were using the different dividend and we regular cannot find out the number they use. And they feel the number stupid so they counterbalance divided by 2 to ge ar up the number confusable as what we ordinarily use during the lecture. In our case we got all the numbers to evaluate the cost of equity and the different ways should show the corresponding numbers of cost of equity. So our calculation of the cost of equity=risk- warrant getting even (6%)+beta(1. 45)*(average stock return(0. 8)-risk set-apart return)=8. 9% And the WACC=5. 1. This part of the present is the smite and people cannot attend the point during the presentation. The report is not replete explanations. As you can see the groups method would be not only confusing themself but provided them with the revile answer. 5. What are the free change flows of the promotional material machine enthronement? Should Conner approve the investiture? The Group did not answer to this question at all. It was not clear where at that place it actually is better to sully a machine afterwards or not. They did not compare the twain situations, just put not clear assumption.Theref ore here is a proposition of alternate(a) approach that in our opinion makes it clearer. * The bank discount rate used for calculation is the WACC from previous question. If you look at the totals and the differences between them it becomes kinda clear that acquire the machine like a shot will result cost only 718,401 in terms of all cost for 10 years projection. At the alike time the present value of all sawing to be do is higher by 280,028 if the machine is to be bought now. Evidently feeling at this numbers will make you conclude that it is in fact cost to but the new equipment now.However it is important to look at normal condition of the company. retentivity that in mind we must say that even thou the calculation would signal to buy it now the company would have to finance it with a loan. It already has a lack of cash so make it even belabor by investing another cardinal is not a best idea. peculiarly that they can buy it any time in the succeeding(a) I woul d first deal with their shortage of cash and overabundance of account receivables and inventories. because it will be a time to think about new investiture in the equipment.