How might that influence its expansion capability

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Reference no: EM133589600

Assignment: Gemini Electronics Case Analysis

Use the Excel spreadsheet provided to conduct a financial analysis of Gemini Electronics. Use this analysis to inform your decisions about the company. Assuming the role of Sarah McIvor, CA, prepare a 2-3 page memorandum that analyzes the financial condition of Gemini Electronics and makes recommendations relating to the company's desired expansion. The memo should be divided into sections describing:

I. Liquidity: Use the current and cash ratios to evaluate Gemini's ability to cover their short-term liabilities (up to 12 months). As compared to industry averages, what do these ratios tell you about Gemini's financial position and how might that influence its expansion capability?

II. Asset management: Consider the various inventory ratios, A/R and A/P ratios, cash conversion cycle, and asset turnover. Do these support Gemini's desire to expand? If so, how? If not, why not?

III. Long-term debt paying ability: Examine Gemini's debt and long-term debt to total capitalization ratios. What do these tell about Gemini's use of debt vs. equity to fuel its growth and its ability to be sustainable going forward? Also consider Gemini's TIE and cash flow coverage ratios. How do all these ratios impact Gemini's expansion potential?

IV. Profitability: Use the three profit margin ratios and items in the horizontal and vertical income statement and balance sheet to evaluate Gemini's performance. Look also at ROA and ROE as compared to industry averages.

V. Recommendations regarding Gemini's growth potential

Question 1. What recommendations do you have for Gemini related to expanding product lines?

Question 2. What recommendations do you have regarding their distribution in the USA and outside the USA?

Question 3. What recommendations do you have regarding use of capital (R&D, marketing, reducing days to pay A/P, potential acquisitions, etc.) and sources of capital (debt vs. equity)?

Reference no: EM133589600

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