Reference no: EM133587633
Assignment
Recommendations regarding Gemini's growth potential
What recommendations do you have for Gemini related to expanding product lines?
What recommendations do you have regarding their distribution in the USA and outside the USA?
What recommendations do you have regarding use of capital (R 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.
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?
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?
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?
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 a2-3 page memorandum that analyzes the financial condition of Gemini Electronics and makesrecommendations relating to the company's desired expansion. The memo should be divided intosections describing important note regarding industry average ROA.
The industry average ROA in the Excel spreadsheet is correct. The industry average on page 7 of your case study is a typo.
The main objective of the case analysis is the decision regarding growth. However, that decision is highly influenced by the company's financial performance and the story (information) that the data tells.