Financial analysis of Caltron Ltd's strengths and weaknesses.

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TABLE OF CONTENTS

INTRODUCTION & PURPOSE ………………………………………………………………2

SWOT ANALYSIS ……………………………………………………………………………...3

CASH FLOW STATEMENT ANALYSIS …………………………………………………….4

RATIO ANALYSIS ……………………………………………………………………………..5

LIQUIDITY ……………………………………………………………………………………..5

ASSET UTILIZATION ………………………………………………………………………...6

DEBT UTILIZATION….…………………………………………………………………….....7

PROFITABILITY …………………………………………………………………………........8

CONCLUSIONS & RECOMMENDATION………………………………...……….…….....9

APPENDIX A …………………………………………………………………………………..12

APPENDIX B ………………………………………………………………………………......13

INTRODUCTION                                                                                

Caltron Ltd was founded by Jenny Jones in 1971. The primary objective of the company was to supply calculators to the business and science communities. In 1999, hesitant to let go of Caltron Ltd, Jones appointed her daughter-in-law Kyla Jacob-Jones to stay updated on trends and continue making improvements. However, with growing competition, troubles at Caltron Ltd began to emerge.

PURPOSE

In 2001, Caltron Ltd’s performance began to decline amongst its competitors. Many of its competitors have begun to outsource for low-cost labour. That is when the pressure ensued from their independent board members. The old equipment, expensive unions and low-wage developing countries all became factors in increasing competition. Kyla Jacob-Jones must revitalize Caltron Ltd within 2 years using her management skills with no assistance from the parent company Pulsar Computer.  If she fails, declaring bankruptcy may be unavoidable. The analysis conducted will provide an insight into the company’s financial performance within the last 3 years and will evaluate trends.

SWOT ANALYSIS:

The strengths of Caltron Ltd is their long reputation and relation to Pulsar Computer. Caltron Ltd managed to stay afloat in the microcomputer industry in the early 1980s despite the competition. Some of the weaknesses within the company is the lack of modernized equipment and the promotion of Kyla Jacob-Jones was disconcerting for board members. The opportunities that lie within the company is deciding to stay local within North America. Caltron could find a marketing strategy to differentiate themselves from its competitors who outsource. Another opportunity is the new equipment that was purchased, this will improve inventory management and hopefully reduce expenses. The major threat of this company is the increasing competition and its volatility. The company is under a lot of financial stress and is highly susceptible to bad debts.  

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CASH FLOW STATEMENT ANALYSIS

Operating Activities

Caltron Ltd has been unable to develop the necessary income from operating activities due to competition from foreign countries which has made other purchasers more inclined to cheaper calculators. The company is trying to salvage its reputation and remain in the microcomputer industry. They have added new production systems and machines with a high installment cost. The company had to employ more sales and administrative for more services and they were less competent, which is rendering to poor performance.

Financing Activities

The organization's income demonstrates ...

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