Stc - 1985

In: Business and Management

Submitted By term
Words 265
Pages 2
Science Technology Case Study
To: Harry Finson
From: Bill Watson
Date: March 10, 1985
Re: Five year financial plan review
Background and purpose
Prior to the upcoming board meeting in which the five year financial forecast will be presented, I have reviewed your projections as these will be the basis for planning the future financial policies and development of our company.
Recommendation and Summary
My recommendation is to revise the financial projections before presenting them to the board of directors. Several of the assumptions are not consistent with the company’s historical performance and do not take into account future financial conditions or potential competitive pressures.
The projection of sales growth of 30% per year is unrealistic compared to the historical growth of 12% over the past five years and our inaccurate forecasts for 1984. Sales are forecast to increase from the current level of $227 million in 1984 to $834 million in 1989. This is a compounded increase of 285% over the next five years. This exceeds the projected compound annual growth rate of 26% for industry sales from $1.6 billion to $4.0 billion. While we have made some progress in regaining market share in the printed circuit board and VLSI, several new competitors have entered the mix that will intensify the battle over market share.
|Science Technology Projection |1985 |1986 |1987 |1988 |1989 |
|Ratios |1985 |1986 |1987 |1988 |1989 |
|Current Ratio |4.5 |2.9 |2.2 |1.8 |1.6 |
|Acid Test |2.6 |1.7 |1.3 |1.1 |0.9 |
|Debt/Equity |13% |22% |33%…...

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