COMPARATIVE FINANCIAL ANALYSIS: LESTER ELECTRONICS, INC.
Comparative Financial Analysis: Lester Electronics, Inc.
Donna-Lee Cummings Dennis
University of Phoenix
“Changes in capital structure benefit the stockholder if and only if the value of the firm increases”. (Ross-Westerfield-Jeffe) This document provides a financial analysis of four major manufacturing corporations, focusing specifically on profitability, liquidity, leverage and activity to assist Lester Electronics’ Inc. in determining business strategy to position the organization to maximize its shareholders wealth and the value of the firm.
Background and Situational Analysis
Lester Electronics, Inc. (LEI) is a consumer and industrial electronics parts master distributor. In 1978 Lester entered into an exclusive distribution contract with Shang-wa Electronics (SWE) for US distribution of their product line. This venture has proven to be successful, as both organizations have experienced increased growth and profitability.
Having become a publicly traded corporation in 1984, Lester has a successful rating of BAA and today the company is experiencing revenues of approximately $500 million a year. (Scenario One)
Currently, Lester is considering the possibility of a joint venture with Shang-wa Electronics (SWE). Coincidently, at the same time, Transnational Electronics Corporation, one of the leading competitors, is potentially considering Shang-wa Electronics for takeover; Lester Electronics, Inc is being acquisitioned by Avral Electronics S.A., another leading competitor.
This paper will provide a comparative financial analysis of the four companies referenced above. This comparative financial analysis will outline the categories of profitability, liquidity, leverage and activity for each company. From the results a number of various alternatives will be identified, explored and...