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The combination of the decreased efficiency ratios, liquidity ratios and debt-to-equity
ratios indicates the worsened financial health of Merrill Electronics.
The key/core problem of Merrill electronics is the constant decrease of the liquidity
ratios. This can lead to the unwanted situation where Merrill electronics will not be able
to meet its short term obligations.
Exhibit 1
Financial statement
analysis
Profitability ratio's
Operating
expenses/Sales
EBIT/Sales
Profit margin
Gross margin ratio
Return on equity
Liquidity ratio's
Current ratio
Quick ratio
Cash ratio
Leverage ratio
Debt ratio
Equity ratio
Debt-to-Equity ratio
Eficiency ratio's
Working capital
Working capital ratio
Accounts reivable days
Inventory days
Accounts payable days
Cash Conversion Cycle
Asset turnover
First half
1990
15,00%
1,10%
0,30%
16,10%
0,81%
2,77
1,39
0,03
Second half
1990
13,20%
3,80%
1,87%
17,00%
8,07%
1,85
1,08
0,01
First half
1991
14,47
%3,35
%
1,35
%
17,81
%5,05
%
1,67
0,72
0,01
40,62%
59,38%
68,41%
54,84%
45,16%
121,43
%
59,52
%
40,48
%
147,03
%
3.721.020,0
0
2,77
48
58
24
83
1,62
3.883.270,0
0
1,85
48
42
22
68
1,95
3.941.400
,00 1,67
46
75
29
92
1,52
Exhebit 2
Cash Flow Forecast (x
$1000)
Net Sales
Cost of Sales (81,5%)
Gross Margin
Operating expenses:
Direct Selling (4,1%)
Advertising & promotion
(1,3%)
After sales service (4,1%)
Warehouse & shipping
(1,3%)
general administration
(4,2%)
Depreciation
(0,4%)
Total expenses
EBIT
Interest expense (1,3%)
Earnings before taxes
Corporate taxes
Earnings after taxes
Dividend payout
Cash budget from
operations
Depreciation
NWC
Capital expenditures
Debt payoff
Expected Free Cash
Flow
jul91
2545,0
00
2074,1
75
470,82
aug91
2795,0
00
2277,9
25
517,07
sep91
3995,0
00
3255,9
25
739,07
104,34
533,08
5
104,34
533,08
5
106,89
010,18
0
391,9
30
78,8
95
33,08
5
45,81
0
18,32
4
27,4
114,59
536,33
5
114,59
536,33
5
117,39
011,18
0
430,4
30
86,6
45
36,33
5
50,31
0
20,12
4
30,1
163,79
551,93
5
163,79
551,93
5
167,79
015,98
0
615,2
30
123,8
45
51,93
5
71,91
0
28,76
4
43,1
86
0,00
0
86
0,00
0
10,18
0
341,66
3 0,00
0
0,00
- 0
314,17
11,18
0
341,66
3 0,00
0
0,00
- 0
311,47
okt91
5470,0
00
4458,0
50
1011,9
nov91
6840,00
0
5574,60
0
1265,40
50
dec91
5240,0
00
4270,6
00
969,40
jan92
3025,0
00
2465,3
75
559,62
feb92
3595,0
00
2929,9
25
665,07
mrt92
4065,0
00
3312,9
75
752,02
apr92
4360,0
00
3553,4
00
806,60
mei92
4400,0
00
3586,0
00
814,00
jun92
4120,0
00
3357,8
00
762,2
00
214,84
068,12
0
214,84
068,12
0
220,08
020,96
0
806,9
60
162,4
40
68,12
0
94,32
0
37,72
8
56,5
124,02
539,32
5
124,02
539,32
5
127,05
012,10
0
465,8
50
93,7
75
39,32
5
54,45
0
21,78
0
32,6
147,39
546,73
5
147,39
546,73
5
150,99
014,38
0
553,6
30
111,4
45
46,73
5
64,71
0
25,88
4
38,8
166,66
552,84
5
166,66
552,84
5
170,73
016,26
0
626,0
10
126,0
15
52,84
5
73,17
0
29,26
8
43,9
178,76
056,68
0
178,76
056,68
0
183,12
017,44
0
671,4
40
135,1
60
56,68
0
78,48
0
31,39
2
47,0
180,40
057,20
0
180,40
057,20
0
184,80
017,60
0
677,6
00
136,4
00
57,20
0
79,20
0
31,68
0
47,5
168,9
20
53,56
0
168,9
20
53,56
0
173,0
40
16,48
0
634,4
80
127,7
20
53,56
0
74,16
0
29,66
4
44,4
46
0,00
0
280,440
88,920
280,440
88,920
287,280
27,360
1053,36
0
212,04
088,920
123,120
49,248
73,87
76
20,000
0,00
0
92
0,00
0
70
50,00
0
26
0,00
0
02
0,00
0
88
0,00
0
20
0,00
0
96
50,00
0
15,98
0
341,66
3 0,00
0
0,00
- 0
298,51
21,88
27,360
0
341,66
341,663
3 0,00
0,000
0
0,00
0,000
0
282,58 267,791
20,96
0
461,66
3 0,00
0
80,00
0
485,07
12,10
00,00
0
0,00
0
0,00
0
82,67
0
14,38 16,26
17,44
17,60
16,48
00,00
00,00
00,00
00,00
00,00
0
0
0
0
0
0,00
0,00
0,00
0,00
0,00
0
0
0
0
0
0,00
0,00
0,00
0,00
0,00
0
0
0
0
0
38,82 43,90
47,08
47,52
94,49
6
2
8
0
6
Total Expected Free Cash Flow
-1605,120
224,27
071,11
0
224,27
071,11
0
229,74
021,88
0
842,3
80
169,5
70
71,11
0
98,46
0
39,38
4
59,0