In July 2001, a new CEO joins this small manufacturer of CD-ROMs and DVDs to discover that the firm is in the midst of a financial crisis, induced by rapid growth. The CEO asks an analyst for help with five tasks: (1) review historical performance of the firm; (2) forecast financing requirements for the next two years; (3) exercise the forecasting model to identify “key driver” assumptions; (4) estimate Star River's weighted average cost of capital; and (5) analyze a proposed investment in a packaging machine. The analyst must offer insights and recommendations based on the work. The aim of the case is to exercise students’ abilities in financial forecasting and analysis and in the analysis of capital projects. Generally, the case offers a good omnibus review of foundational tools and concepts.
Star River Electronics Ltd. Available to Purchase
This case is derived from materials originally prepared by Robert F. Bruner, Dean and Charles C. Abbott Professor of Business Administration, Robert Conroy, Paul M. Hammaker Research Professor of Business Administration, and Kenneth Eades, Professor of Business Administration. The firms and individuals in the case are fictitious. The financial support of the Batten Institute is gratefully acknowledged. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation.
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Bruner RF, Conroy RM, Eades KM, Carr S (2017;), "Star River Electronics Ltd.". Darden Business Publishing Cases, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/case.darden.2016.000286
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