You are Andy Chin. Prepare the first part of the report due at 7 a.m. tomorrow to the new CEO of Star River Electronics, Ltd., Adeline Koh. This first part should detail the external funding needs required by Star River. Develop a memo (plus exhibits) to inform Ms. Koh before her conversation with the banker, Mr. Tan, tomorrow morning. Your memo should include:

A brief discussion on why Star River needs additional funding even though it is a profitable business.

Financial projections for the years 2002, 2003 and 2004 indicating Star River's need for funds. Use the sales projections given for 2002 and 2003 and generate your own revenue projections for 2004.

Size of the loan you think Star River should request from Mr. Tan. Assume that your short-term bank borrowings are currently capped at SGD100 million and that your long-term borrowings will require no principal payments until July 2005.

Results of sensitivity analysis on key parameters indicating why changes in their values may occur and how those changes will affect Star River's need for funds.

Specific talking points for Ms. Koh's conversation with Mr. Tan. Is his concern that Star River is growing beyond its financial capabilities accurate?

 

 

 

  

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(SGD 000) Sales Operating expenses: Production costs and expenses Admin. and selling expenses Depreciation Total operating expenses Operating profit Interest expense Earnings before taxes Income taxes* Net earnings Dividends to all common shares Retentions of earnings STAR RIVER ELECTRONICS LTD. Historical Income Statements Fiscal Year Ended June 30 1998 71,924 33,703 16,733 8,076 58,512 13,412 5,464 7,949 2,221 5,728 2,000 3,728 1999 80,115 38,393 17,787 9,028 65,208 14,908 6,010 8,897 2,322 6,576 2,000 4,576 2000 92,613 46,492 21,301 10,392 78,185 14,429 7,938 6,491 1,601 4,889 2,000 2,889 2001 106,042 53,445 24,177 11,360 88,983 17,059 7,818 9,241 2,093 7,148 2,000 5,148 Forecast 2002 15.0% 121,948.45 140,240.71 24.5% 50.0% 60,974.22 70,120.36 23.0% 28,048.14 32,255.36 15,260.46 19,160.46 104,282.83 121,536.18 2003 17,665.62 6,835.22 10,830.40 2,653.45 8,176.95 2,000.00 6,176.95 18,704.53 6,835.22 11,869.31 2,907.98 8,961.33 2,000.00 6,961.33 ▼ 2004 161,276.82 80,638.41 37,093.67 23,060.46 140,792.54 20,484.28 6,835.22 13,649.06 3,344.02 10,305.04 2,000.00 8,305.04 (SGD 000) Sales Operating expenses: Production costs and expenses Admin. and selling expenses Depreciation Total operating expenses Operating profit Interest expense Earnings before taxes Income taxes* Net earnings Dividends to all common shares Retentions of earnings STAR RIVER ELECTRONICS LTD. Historical Income Statements Fiscal Year Ended June 30 1998 71,924 33,703 16,733 8,076 58,512 13,412 5,464 7,949 2,221 5,728 2,000 3,728 1999 80,115 38,393 17,787 9,028 65,208 14,908 6,010 8,897 2,322 6,576 2,000 4,576 2000 92,613 46,492 21,301 10,392 78,185 14,429 7,938 6,491 1,601 4,889 2,000 2,889 2001 106,042 53,445 24,177 11,360 88,983 17,059 7,818 9,241 2,093 7,148 2,000 5,148 Forecast 2002 15.0% 121,948.45 140,240.71 24.5% 50.0% 60,974.22 70,120.36 23.0% 28,048.14 32,255.36 15,260.46 19,160.46 104,282.83 121,536.18 2003 17,665.62 6,835.22 10,830.40 2,653.45 8,176.95 2,000.00 6,176.95 18,704.53 6,835.22 11,869.31 2,907.98 8,961.33 2,000.00 6,961.33 ▼ 2004 161,276.82 80,638.41 37,093.67 23,060.46 140,792.54 20,484.28 6,835.22 13,649.06 3,344.02 10,305.04 2,000.00 8,305.04

Answer rating: 100% (QA)

MEMO To Adeline Koh CEO of Star River Electronics Ltd From Andy Chin Date Subject External Funding Needs As you are aware Star River Electronics Ltd i... View the full answer