Star River Electronics Ltd
9 Pages Posted: 21 Oct 2008
In July 2015, 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.
Rev. Oct. 25, 2016
Star River Electronics Ltd.
On July 5, 2015, her first day as CEO of Star River Electronics Ltd., Adeline Koh confronted a host of management problems. One week earlier, Star River's president and CEO had suddenly resigned to accept a CEO position with another firm. Koh had been appointed to fill the position—starting immediately. Several items in her in-box that first day were financial in nature, either requiring a financial decision or with outcomes that would have major financial implications for the firm. That evening, Koh asked to meet with her assistant, Andy Chin, to begin addressing the most prominent issues.
Star River Electronics and the Optical-Disc-Manufacturing Industry
Star River Electronics had been founded as a joint venture between Starlight Electronics Ltd., United Kingdom, and an Asian venture-capital firm, New Era Partners. Based in Singapore, Star River had a single business mission: to manufacture high-quality optical discs as a supplier to movie studios and video game producers.
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Keywords: capital investment, forecasting, ratio analysis
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