Question: Baldwin Industries a manufacturer of construction equipment is considering the

Baldwin Industries, a manufacturer of construction equipment, is considering the purchase of KayNet Cables, one of its suppliers.
Baldwin's board of directors has given preliminary approval for the purchase, and several discussions have taken place between the management of the two companies. In preparation for the discussions, KayNet provided its financial data for the past three years and its fi nancial forecasts for the next three years. Baldwin's controller, Nora Jaynes, has analyzed KayNet's data and prepared the following ratio analysis, which compares KayNet's performance with the industry averages.

a. Assess KayNet's liquidity, citing strengths or problems.
b. Assess KayNet's profi tability, citing strengths or problems.
c. Assess KayNet's leverage, citing strengths or problems.
d. Assess KayNet's market position, citing strengths or problems.
e. Based on your assessment, do you recommend that Baldwin go forward with its acquisition of KayNet? Why or whynot?

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  • CreatedFebruary 21, 2014
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