scitronics essay

Corporate Finance: SciTronics COMPONENT PERCENTAGES INCOME STATEMENT (each item is expressed as a percentage of net sales revenue) During the four-year period ended December 31, 2008, SciTronics’ managed to improve its earnings (from 3% to 6%) thanks to a decrease in operating expenses (from 64% to 59%) and constant cost of goods (30%). SALES GROWTH During the four-year period ended December 31, 2008, SciTronics’ sales grew at a 20.69 % compound rate. There were no acquisition or divestitures

Introduction SciTronics is a medical device company. In exhibit 1 and 2 financial data sources are given, which are consist of Income Statement, Balance Sheet, and Cash Flow. Financial ratios are useful indicators of a firm 's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm 's financials to those of other firms. Financial ratios can be classified according

EXECUTIVE SUMMARY In the case of Assessing a Company’s Future Financial Health, the case concentration is on SciTronics, a medical device company, performance measures based on the organization’s three primary financial data sources in Exhibit 1 & 2. Utilizing the 9 steps of corporate financial system, I will be able to analyze the financial health of the company to assess whether it will remain balance over the ensuing 3-5 years. The measures are grouped by focusing on “Financial Ratios” such as:

56 times, deterioration from 16.33 times in 2005 Leverage • SciTronics’ ratio of total assets divided by owners’ equity increase from 1.52 at year-end 2005 to 2.12 at year-end 2008. • At year-end 2008, SciTronics’ total liabilities were 58.23% of its total assets, which compares with 34.41% in 2005. • The market value of SciTronics’ equity was $175,000,000 at December 31, 2008. The total debt ratio at market was .32. • SciTronics’ earnings before interest and taxes (operating income) were $26

72% earned in 2005. 4. SciTronics had $75 mil of owner’s equity and earned $14 mil after taxes in 2008. Its return on equity was 18.67%, which represented an improvement from the 8.20% earned in 2005. (ROE2008 = 14 mil/75 mil and ROE2005 =5 mil/61 mil) Activity Ratios 1. Total asset turnover for SciTronics in 2008 can be calculated by dividing $159 mil into $244 mil. The turnover deteriorated from 1.58 times in 2005 to 1.53 times in 2008. 2. SciTronics had $66 mil invested in accounts

This paper will show how proper strategy and a step –by-step process will successfully be able to assess a company’s financial future. In this case we will be looking at performance measures based upon the income statements and balance sheets of SciTronics (A medical device company). It is imperative that the measures are

four-year period ended December 31, 2008. SciTronics’ sales grew at 21% ($244,000/$115,000) = (1+r) ^4 compound rate. There were no acquisitions or divestitures. Profitability Ratios: How Profitable Is the Company 1. SciTronics’ profits as a percentage of sales in 2008 were 5.73% (14,000/244,000). 2. SciTronics’ profits as a percentage of sales in 2005 was 3.44 %( 5,000/147,000). This represents an increase of 2. 29% from 2005. 3. SciTronics had a total of $112, 000 (75,000+20,000+7

2005.‎ ‎ 4. SciTronics had net fix assets of $18,000 (net fix assets) and sales of $244,000 in 2008. Its fixed asset ‎turnover ratio in 2008 was 13.56 (244,000/18,000), a deterioration from 16.33 (147,000/9,000) in 2005.‎ Leverage Ratios: How Soundly Is the Company Financed?‎ ‎ 1. SciTronics’ ratio of total assets divided by owners’ equity increased from 1.52 (93,000/61,000) at ‎year end 2005 to 2.12 (159,000/75,000) at year-end 2008.‎ ‎ 2. At year-end 2008, SciTronics’ total liabilities

[pic] 9- 91 1 - 412 R E V: JANUARY 2 8 , 2 0 11 Assessing a Company 's Future Financial Health Assessing the long-term financial health of a company is an important task for management in its formulation of goals and strategies and for outsiders as they consider the extension of credit, long- term supplier agreements, or an investment in a company’s equity. History abounds with examples of companies that embarked upon overly ambitious programs and subsequently

following questions to guide your analysis. 1. During the four-year period ended December 31, 2008, SciTronics’ sales grew at a _____% compound rate. There were no acquisition or divestitures. Profitability Ratio: How Profitable Is the Company? Profitability is a necessity over the long-run. It strongly influences (1) the company’s access to debt; (2) the valuation of the