Stc - 1985

In: Business and Management

Submitted By term
Words 265
Pages 2
Science Technology Case Study
Memorandum
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%…...

Similar Documents

October Day 1985

...On an October day in 1985, in Muskogee, Okla., Bill Bartmann--company founder, father, community leader--stood on the floor of his factory and wept. So did his 71 employees. Their final work shift complete, they filed past Bartmann to shake his hand, return his embrace, clap one another on the shoulder, and cry some more. "I've been through some deaths in the family, including my father's," Bartmann says quietly today, "but nothing was more traumatic than that afternoon. It was the most tearful, soul-wrenching experience of my life." Bill Bartmann's business had failed. The demise of Hawkeye Pipe Services Inc ., a manufacturer of pipes for oil rigs, could not have been swifter. On July 25, OPEC's oil cartel all but crumbled. Prices dove as crude flooded the market, bringing drilling in Oklahoma to a near halt virtually overnight. For thriving Hawkeye Pipe, it was an unequivocal death sentence: July sales were $1 million, August sales were precisely zero. As Bartmann puts it, it was as if a hand had reached out from 10,000 miles away and turned off the faucet. He snaps his fingers: "It was just that quick." And so, once the company's assets had been auctioned off at yard-sale prices, Bartmann found himself in that most dreaded of entrepreneurial circumstances: ensnared in his personal guarantees, more than $1 million in debt. That's when the telephone calls started. Surly collection agents rang at all hours of the day and night, promising lawsuits, hurling insults,......

Words: 888 - Pages: 4

Driving W/Out a Dl in 1985

...“What Happened to the Monte-Carlo?” Ruth Grey ENC 1101 – Composition 1 February 10, 2010 What Happened to the Monte-Carlo? It was a sunny; warmth summer day, the sky was baby blue with the features of creamy white soft clouds. With the cool breeze blowing softly, the day was innocently inviting, so I went out for a ride. Father and dominant brothers were in the drive-way, worked strenuously on father’s broken red truck. “Oh shoot! What am I going to do now?” I silently questioned myself with one eyebrow slightly upwards. “How am I going to get to the Monte Carlo.?” I kept talking to myself as I tried to think of some tactic, to get pass father and brothers, to get to the monte carlo, parked on the street. “Where do you think, you’re going young lady?” My father asked as I was too focused on getting into the shining brown Monte Carlo. “Ahhhh! I’m getting Mama some ice cream.” The voice belonged to me as I hopped into the interior of the Monte carol and made my way to the store. That day, I was going north on Atlantic Ave in Long Beach, through a heavy street traffic. With music blasting as I yelled sang my lungs out, it was another typical short ride to the store. To ignore the fear of my father’s voice, when I cruised off the house, I went fast, too fast passing numerous cars, despite of the busy traffic as I drove down on Atlantic Ave towards my destination. One quick second, that’s all it takes for everything to go right or wrong. My dark brown eyes......

Words: 926 - Pages: 4

Pressco 1985

...Problem Decision statement The issue in this case study is should Paperco buy the new machine? Paperco has three options; the first option assumes that the rumored tax proposal is not enacted and that the new drying equipment replaces the old in December 1986. Paperco would retain all tax credits due to the fact the machine has been in service for 84 months, and continue to use a 5 yr ACRS depreciation model. This option has a positive NPV of $59,481 and an IRR of 12.69%. The second option assumes that the new tax proposal is enacted. The new drying equipment is installed in December 1986. Paperco signs a binding contract soon enough to be “grandfathered”, this allows Paperco to receive the 8% tax credit and use ACRS depreciation. At the same time, their tax rate would fall to 34%. Paperco would benefit from this more favorable “grandfathered” tax approach. Option two has a positive NPV of $111,074 with an IRR of 13.18%. The third option assumes that the new tax proposal is enacted and Paperco installs the new equipment in December 1986, but they do not sign a binding contract in time to be “grandfathered” and receive the 8% investment tax credit and use ACRS depreciation. The company will use MACRS and a depreciation period of 7 years. The NPV of the project drops to a positive $15,057 with an IRR of 12.15%. Without the “grandfathered” tax allowance the new tax legislation makes the project less beneficial than the old tax law. Engineers estimate the......

Words: 353 - Pages: 2

Science and Technology Company

...cycle of electronic products. STC enjoys 31% market share : No.1 in the design and manufacture of testers and test software for printed circuit boards; No. 2 in semiconductors test and operation Other products include a system to test electronic products in the field; cads , models and simulations. STC is located in Minneaapolis, Minnesota with sales, service, network , offices and representatives across the US , North and South America, Europe, Africa, Asia and Australia. PROBLEM STATEMENT Was the company well-positioned to finance the rapid sales growth that was anticipated? WHERE IS STC NOW? The growth of the worldwide ATE market was tremendous between 1978 and 1984. The rapid growth of 28% per year was spurred by the rapid growth of electronic products, powered in part by technological breakthroughs in computers and miniaturization. GOAL OF THE COMPANY To be the recognized international leader in providing integrated quality management systems to manufacturers of electronic devices and equipment. SWOT ANALYSIS: Strengths • Extensive software • Right products and reliability • Excellent credit rating • Dominant share of the printed circuit board test market Weakness • Forecasting problem • Losing in competition CORPORATE STRATEGIES: Sharing Resources: • Economies of Scope – STC has diversified in different types of ATEs • Transferring Competencies – STC used their knowledge and experience......

Words: 723 - Pages: 3

Nye, Susan, Barbara Priovolos, Jean-Pierre Jeannet. “the Swatch Project.” Imede Case Study, Lausanne; 1985, 6.

...Art of Co-existence, Harvard Business School. * Dallery, Y; Karaesmen, F; Saharidis, G. (2010). Centralized versus decentralized production planning. Ecole Centrale Paris Department of Industial Engineering (LGI), Paris. * Donzé, P. (2011). The comeback of the Swiss watch industry on the world market: a business history of the Swatch Group (1983-2010). Osaka University, Graduate School of Economics. * Elmaghraby, S; Moder, J. (1978). Handbook of Operations Research, Van Nostrand Reinhold, New York. * Dummler, P; Thierstein, A. (2003). Identifying and Managing Clusters - Evidence from Switzerland. Entrepreneurship, Spatial Industrial Clusters and Inter-Firm Networks - Uddevalla Symposium 2003. * Dunning, J. (1985). The eclectic pardigm of international production: a restatement and some possibile extensions. Rutgers University, New jersey. * Fallet Estelle, « Nicolas Hayek », Dictionnaire historique de la Suisse (DHS), www.dhs.ch. * Gautschi, K. (2005). The Swiss Luxury Watchmaking Industry.A general overview and a closer look at the celebrity endorsement and sponsorship communication strategy used by the leaders. HEC Lausanne. * Glasmeier, A. (2006). Flexibility and Adjustment: The Hong Kong Watch Industry and Global Change. Growth and Change, Vol. 25, N° 2: 223–246. * Goodman, A; Maro, F; Molander, R; Ojeda, J; Tompkin, O. (2010).The swiss watch cluster. The Microeconomics of Competitiveness, Harvard Business......

Words: 882 - Pages: 4

What Has or Has Not Changed Since 1985?

...Change is the act or instance of making or becoming different. Women had being through changes over the past years in regards to concern to woman's role, concern about equality, and feminist consciousness. Women have now become self conscious about themselves and have come to understand their place in religious communities and their relationship to scripture. However, this new women change is known as "feminist critical consciousness". First and foremost, when it comes to concern for woman's role, prior to early nineteenth century, women were not known in society as compared to men. It was all about men as a man's world. Women were not recognized with their roles as men but were just part of men as an attachment. They were seen as unclean and the source to sin. When they realized in understanding how unfair they've been addressed and inferior to men, some opponents started to use what's said in the bible against them on their wishes. Women however continue to realize how they were limited to many aspects of life but they were still undervalued and even the bible says and support it in a way that the head of a woman is her husband. This makes women less equal than men. Moreover, concern about equality was another issue women experienced then in the early centuries. Feminist began to promote "women studies" as women's experience was important. Women were seen as secondary while men had to lead everything in society. They were treated as minority in society and didn't have...

Words: 514 - Pages: 3

Financial Planning

...Science Technology Company Financial Projections, 1985 – 1989 Criticisms 1. No benchmark. 2. The markets to be exploited are not specified. 3. The 30% annual growth rate projection is unrealistic. First, the average growth per year of STC, as shown by the table below, is only 12% — a far cry from the 30% annual growth rate projection. Second, the division managers or STC did not provide which product lines will produce the estimated increase. Growth Percentage (per year) |Year |Percentage | |1980 - 1981 |7% | |1981 – 1982 |11% | |1982 – 1983 |20% | |1983 – 1984 |10% | |Average growth = 12% | 4. The estimated net profit from $23 million to $61 million is unfeasible. First, the increase between $23......

Words: 753 - Pages: 4

Billion Dollar Day - 1985 Review

...Analysing the video, we conclude that both those who work in the foreign exchange market or are mere speculators have to be constantly monitoring the price of currencies. These currency quotes in the international foreign exchange market can fluctuate according to economic, social environment, among others, 24 hours a day. Therefore, there are times when the currency can fluctuate within a wide margin in a short time and, depending on the variation, there is the risk of losses. In addition, such losses may be greater than the client's capital guarded in the company. In the video we found that the dealers were treated differently in each country, while in America they received commissons and could be fired, in England they did not run that risk but didn’t received commissons This need to be always focused on the market, even when everything seems to be quiet, and to be constantly analyzing the news to understand the trends that the currency will suffer is quite exhausting, this is probably way these dealers are aged between 20 and 35 years old. These dealers always have to a be at 100% to understand really well the market. For example a purchase of 20 million pounds can mean that somebody is wanting to buy English goods, as may also mean that somebody is trying to speculate that the pound will rise. It is therefore a world with many tricks where dealers help each other to keep a disguise and not devalue the currency they want to sell and where besides a lot of skill, a......

Words: 265 - Pages: 2

1985 Science Technology Company

...Science Technology Company Science Technology Company 1985 President: Bill Watson CFO: Harry Finson Questions: 1. Are the 5-year forecasts useful, given uneven growth in sales, inventories and receivables, and earnings in the past? 2. What will be the impact of a resurgence of inflation, fueled by massive budget deficits, on STC? 3. Can the company finance the rapid sales growth that is anticipated? STC • Leading manufacturer of automated test equipment (ATE) • 31% market share on testers for printed circuit boards • Second largest in semiconductor test operation • Objective: To be the recognized international leader in providing integrated quality management systems to manufacturers of electronic devices and equipment. • Strategies: o Heavy spending on research and development o Spread cost of R&D across a large number of sales o Aggressively pursue major segments of semiconductor and electronics manufacturing industries in Europe, N. America, and the Pacific Factors that Increased Market Demand for ATE • Swift and dramatic technological breakthroughs (from 1975-1984) • High competition that required speed to move a design into manufacturing at low costs, which increased the demand for ATEs • Steady increase in labor rates that pushed electronics manufacturers to automate testing • In-house testing capacity made obsolete due to the increase in number and complexity of semiconductor components • Dramatic improvement in the testing technology......

Words: 310 - Pages: 2

Pressco, Inc 1985

...NAMES: Tshilidzi Wendy Mthukwane STUDENT NO: 37213172 ASSIGNMENT: NO1 INV3701 UNIQUE NUMBER: 683992 (A) Rate of return using CAPM = Rf+Bi{E(rm)-Rf} = 0.065+1.36(0.055) =13.98 The value of spiderman Limited’s share using two stage DDM Vo= Do(1+Gs)n (1+GL) Vo=2.25(1+0.15)2 (1+0.08) = 53.74 (r-GL) (0.1398-0.08) Time | Value | Calculation | Dt or Vt | Present Value1.1398 | 1 | D1 | 2.25(1.15) | 2.5875 | 2.2701 | 2 | D2 | 2.25(1.15)2 | 2.9756 | 2.2905 | 3 | D3 | 2.2591.15)2 (1.08)/(0.1398-0.08) | 53.74 | 41.3657 | Total 45.93 (B) FCFE= Cash from Operating Activities 31660 Less Investment in Fixed Capital 12000 Plus Net Borrowing 22000 __________ 41660 Number of Outstanding Shares = Payment of Cash Dividend = 6750 =3000 Recent Dividend Pay 2.25 FCFE per share = 41660 =13.87 3000 (C) Yr0 41660 =13.87 Yr1 41660 + 0.15 = 47909/3000 = 15.97 Yr2 47909 + 0.15 = 55095/3000 = 18.37 Yr3 55095 + 0.08 = 59503/3000 = 19.83 13.87 + 15.97 + 18.37 + 19.83 __ = 50.26 (1.1398) (1.1398)2 (1.1398)3 (1.1398)3 (D) * I will recommend that Louis Lane invest on investment C, since it has a higher intrinsic value than that of investment A. * Investment A has a lower intrinsic value, to intrinsic value of investment C, but is higher that Market value. * Investment C has much higher intrinsic value to A and to the market price (E) * Based on bet, I......

Words: 324 - Pages: 2

Stc Presentation

...limited their ability to finance their working capital requirements STC is approaching the prudent limit of debt financing in relation to its equity Our Recommendation STC needs to raise more equity by positioning itself for an IPO. To do so, the company needs to: – Increase their operational effectiveness to free up working capital – Improve financial performance through asset and liability management 2 Agenda Background The Finson Plan A New Financial Strategy Results 1. Background 2. Evaluating the CFO’s (Harry Finson) Five-year Plan 3. Developing a New Financial Strategy 4. Results 3 1. Background Science Technology Company Science Technology was an early pioneer in the design, manufacture and use of electronic measuring instruments Product Categories: Systems for testing electronic circuits and components Equipment for measuring and analyzing noise and vibration Audiometric devices Time 1915: Founding Pioneer of electronic measuring instruments 1915 – 1945: Pre-war Era Little serious competition Growth resulted from R&D “We don’t want to grow too large” 1945 – Present: Post-war Era Explosive industry growth Entry of a number of competitors 4 1. Background Current Business Environment By 1974, the competitive landscape had changed Fluke AGR: 35% ROE: 18% Sales: $26.3M HP Annual GR: 20% - 25% Teradyne Growth ROE: 15% Sales: $661M AGR: 22% ROE: 20% Sales: $40.7M STC AGR: 8% ROE: 7% Sales: $45M ROE 5 1.......

Words: 2640 - Pages: 11

Export Promotion and the Nigerian Economy: an Emperical Analysis (1985-2012)

...Export promotion and the Nigerian economy: an Emperical analysis (1985-2012) By Oladipo Comfort 09291068 A research project submitted to the Department of Economics, Faculty of Social Sciences, University of Abuja. Abuja- Nigeria. In Partial Fulfillment of the Requirements for the award of Bachelor of Science (B.sc) Degree in Economics. July, 2014.   Declaration I declare that this project has been written by me (Oladipo Comfort) and that it is a record of my own research work. To the best of my knowledge and belief. It has not been previously presented in any form whatsoever and in any applications for a bachelor of science (economics). All sources of information collected and materials used have been duly acknowledged by means of proper references. Comfort Oladipo Date Certification/ Approval page This research has been read and approved by the under mentioned signatories to meet the requirement for the award of Bachelor of Science (Bsc) economics. __________________ ______________ Dr. G.O Wafure Date Project supervisor __________________ ______________ Dr. Sule Magaji Date Head of Department __________________ ______________ External Supervisor Date Dedication This research work is whole heartedly dedicated with high honor, reverence and special thanks to the almighty God, my helper, protector, provider and my all in all. Also, to my father, Mr.......

Words: 11252 - Pages: 46

Pressco, Inc (1985)

...| Balanced Scorecard BasicsThe balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance.  While the phrase balanced scorecard was coined in the early 1990s, the roots of the this type of approach are deep, and include the pioneering work of General Electric on performance measurement reporting in the 1950’s and the work of French process engineers (who created the Tableau de Bord – literally, a "dashboard" of performance measures) in the early part of the 20th century.The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system. The “new” balanced scorecard transforms an organization’s strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis. It provides a framework that not only provides performance measurements, but helps planners identify......

Words: 1088 - Pages: 5

Stc Case Studies

...Technology Company -1985 ------------------- Model Answer: Science And Technology Co. Case Bill Watson as President of Science Technology Company (STC) should ask the Chief Financial Officer, Harry Finson, to fine tune and rehash the 5 year financing plan Harry prepared. This is to address the following issues and concerns: A. Projected thirty percent (30%) increase in annual sales Historically in a strong ATE market, STC was able to increase its sales on a compound annual growth rate of 12% only. In 1983, the company posted its highest sales increased thus far (20%). Preceding year (1984) however was below average at 10%. Industry wise, sales forecast is better and is expected to grow by 26% in the next four years. The 30% increase in annual sales projection prepared by the company’s division managers and Harry therefore is over stretched and very optimistic. A financial plan anchored on this simple projection without any detailed basis would be very risky for STC. It is suggested that projected sales growth is somewhere between historically what STC had achieved to industry growth forecast i.e. 12+ to 26%. B. Competition and the Industry While STC is optimistic about the long term prospects for the ATE industry, competition was intensifying over the past years. Citing VLSI test market as an example, in 1977 when STC decided to enter this new field, there were only two firms competing in the market with a combined 80% market share. STC spent huge......

Words: 609 - Pages: 3

Case Brief New Jersey vs. T.L.O., 1985

...Case Citation: New Jersey v. T.L.O., 1985 Parties: The state of New Jersey, Plaintiffs/Appellants T.L.O., Defendant/Appellee Facts: A 14 years old female student identified as T.L.O was caught smoking in the school bathroom. During the investigation at school, the schools principal asked to see her purse and found incriminating evidence. That evidence was used against her in juvenile court to find her guilty of delinquency. Procedural History: T.L.O appealed the juvenile courts decision and the New Jersey Appellate Court affirmed that the evidence was legal and thus admissible. She appealed again, and the New Jersey Supreme Court reversed, saying the search was unreasonable and the evidence must be suppressed. The state of New Jersey then asked the U.S. Supreme Court to review the case. Issue 1: Does a search of a student by a school official while on the school’s premises violate the students 4th amendment? Issue 2: Does the school official need a warrant to search student belongings while on the premises? Holdings: Issue 1: No. A search of a student by a school official while on the schools premises does not violate the students 4th amendment. Issue 2: No. The school official does not need a warrant to search student belongings while on the premises. Reasoning: Appellants advanced the following theories in support of their decision Issue 1: Students do have 4th Amendment rights at school, but they are balanced with the schools......

Words: 443 - Pages: 2

Girl's Shoes | Visualizza altro | 220 albums more