Analysis of Financial Statements Simulation
The analysis of financial statements simulation presents us with the business Panorama Inc. who is seeking to form an alliance with a television manufacturing and marketing firm. Since the company’s start in 1979, Panorama has grown into the second largest producer of computers and peripherals. They have always used their product innovation to set them apart from their competitors and hope that with a smart alliance partner, their position in the global business world will change to make them a leader.
Panorama’s latest innovation is the Pan Box, which is a set-top box that enables a television set to become a user interface to the Internet and receive digital broadcasts. Panorama’s short-term goal is to sell Pan Box along with televisions. Their long-term goal is to make Pan Box the focus of convergence. To meet these goals, Panorama decided to enter into a joint venture with a television manufacturing and marketing firm. The company CFO Simon Finkel has short-listed two television companies, Lamda TV and CORAL. Panorama used two financial ratio analysis suites Stuart Mason and Wagner. We need to choose the suite that is better suited for evaluating the financials of Lambda TV and Coral. Panorama has some expectations from the alliance partner.
Panorama Inc. chose the Wagner suite of ratios to conduct an analysis of five key financial measures to use in making a decision on the company with which it would enter into an alliance. These five financial measures consisted of sales growth, profitability, turnover, liquidity and capital structure. Sales growth, as the term indicates pertains to year-over-year Earnings Before Interest and Taxes (EBIT) sales figures as compared to industry averages. Profitability ratios depict a company’s return on its investments. Turnover in Wagner’s suite of ratios is based on inventory and receivables. For liquidity evaluations the Wagner suite focuses on the current ratio. As for...