Pegasus Technologies Case Study Questions And Sample Answers

  1. Briefly analyze the data provided in Exhibit 1 for each of the four potential suppliers.

(Compare the figures with industry averages where necessary.)

The analysis of Reese Corporation

The Reese Corporation being the largest manufacturer of the LCD panels that the panel of Linda Wang had for consideration, becomes the company with the highest sales of $6548.00 Million for the last year, and also the highest fixed assets of $1091.80 million.

The price earnings ratio of Reese depicts a figure higher of 18.50 than the Industry’s average price earnings ratio of 12.00. This positively gives the investors a suggestion that they are expecting a higher growth in earnings in the future as compared to other companies like Capozzi Manufacturers which has a lower price earnings ratio.

The Corporation’s liquidity ratio measuring the corporation’s ability to pay short-term obligations depicts a lower current ratio of 1.89 as compared to the industry’s current ratio of 2.19. This shows that the corporation may not meet its short term obligations in time.

The other area of the corporation’s indication of short term liquidity, that is, the ability of the Reese Corporation to meet its short-term obligations with its most liquid assets is rated higher at 1.14 as compared to the industry’s which is 1.08 to mean that the corporation is in the best position to meet its short-term obligations with its most liquid assets.

On the analysis of the corporation’s average collection period of 29 days and the industry’s is 30 days shows that the approximate amount of time the corporation takes to receive payments owed is less than the industry’s and therefore, it does not take the corporation very long to be able to turn its receivables into cash.

The Reese’s inventory turnover is 12.65 while the industry’s is 12.50. This higher figure for the inventory turnover shows that the corporation’s measure of the number of times its inventory is used or sold over a particular period is fairly good within the industry. Hence, implying that the corporation experiences either an ineffective buying or strong sales.

The corporation’s percentage on the net profit margin that reflects the company’s revenue which are kept as net income, that is, the percentage of its revenue remaining after all the operating expenses, taxes, interest, and the preferred stock dividends (not common stock dividends) have been deducted from its total revenue is 9.48% while the industry’s is 6.57%. The higher net profit margin shows the more effective the corporation is at converting its revenue into actual profit.

The low percentage rate of sales (2.30%) the corporation shows in terms of its expenditure in Research and Development (R&D) compared to the industry’s 3.9% depicts a low emphasis on the corporation efforts to assess the trending market issues and concerns, consumer’s tastes and preferences within the industry.

The analysis of Capozzi Manufacturing

The Capozzi Company is the second among the four companies in consideration in terms of the year annual sales of $1850.05 million, and a net fixed asset base of $212.90 million.

The price earnings ratio of Capozzi Manufacturing depicts a lower figureof 6.45 than the industry’s average price earnings ratio of 12.00. This impacts negatively on the investors by giving a suggestion that they are expecting a lower growth in earnings in the future as compared to any other company that the team of Linda is considering since it has the lowest price earnings ratio among the four companies.

The Capozzi’s liquidity ratio which is the measuresof the company’s ability to pay short-term obligations depicts a lower current ratio of 2.12 as compared to the industry’s current ratio of 2.19. This shows that the company may not meet its short term obligations in time as compared to a company like Kruger which has a higher current ratio of 2.56.

Another area of the company’s indication of short term liquidity, that is, the ability of the Capozzi Manufacturing to meet its short-term obligations with its most liquid assets is rated lower at 1.02 as compared to the industry’s which is 1.08 to mean that the company is not in the best position to meet its short-term obligations with its most liquid assets.

On the analysis of the company’s average collection period of 26 days (the lower average collection period among the four companies) and the industry’s is 30 days shows that the approximate amount of time the company takes to receive payments owed is less than the period rated for the industryand therefore, it takes the company very few days to be able to turn its receivables into cash like no any other company under consideration.

The Capozzi’s inventory turnover is 12.34 while the industry’s is 12.50. This lower figure for the inventory turnover shows that the company’s measure of the number of times its inventory is used or sold over a particular period is low within the industry. Hence, the corporation experiences either an effective buying or weak sales.

The company’s percentage on the net profit margin which is reflecting the company’s revenue kept as net income, that is, the percentage of its revenue remaining after all the operating expenses, taxes, interest, and the preferred stock dividends (not common stock dividends) have been deducted from its total revenue is 6.78% while the industry’s is 6.57%. The higher net profit margin shows the more effective the corporation is at converting its revenue into actual profit.

The high percentage rate of sales (4.67%) the company shows in terms of its expenditure in Research and Development (R&D) compared to the industry’s 3.9% depicts a great initiative by the company to ensure that the industry’s trending concerns and issues of the consumers are put incorporated in its operations to ensure effective and efficient business maneuvers.

The analysis of Kruger Corporation

The Kruger Corporation is the second last among the companies under consideration in terms of the previous year’s sales of $593.70 with a fixed asset base of $75.80 million.

The price earnings ratio of Kruger Corp. depicts a lower figureof 7.15 than the Industry’s average price earnings ratio of 12.00. This portray a negative signal to the investors that they should expect lower growth in earnings in the future as compared to other companies like the Payne Company which has the highest price earnings ratio among these four companies under consideration.

The Corporation’s liquidity ratio which measures the corporation’s ability to pay short-term obligations depicts a higher current ratio of 2.56 as compared to the industry’s current ratio of 2.19. This shows that the corporation meets its short term obligations in time.

A second area of the corporation’s indication of short term liquidity, that is, the ability of the Kruger Corporation to meet its short-term obligations with its most liquid assets is rated higher at 1.28 as compared to the industry’s which is 1.08 to mean that the Kruger Corporation is in the best position to meet its short-term obligations with its most liquid assets.

On the analysis of the corporation’s average collection period of 28 days and the industry’s is 30 days shows that the approximate amount of time the corporation takes to receive payments owed is less than the industry’s and therefore, it does not take the corporation very long to be able to turn its receivables into cash.

The Kruger’s inventory turnover is 11.96 while the industry’s is 12.50. This lower figure for the inventory turnover shows that the corporation’s measure of the number of times its inventory is used or sold over a particular period rates low within the industry. Hence, the corporation experiences either an effective buying or weak sales.

The corporation’s percentage on the net profit margin which reflects the company’s revenue kept as net income, that is, the percentage of its revenue remaining after all the operating expenses, taxes, interest, and the preferred stock dividends (not common stock dividends) have been deducted from its total revenue is 7.35% while the industry’s is 6.57%. The higher net profit margin shows the more effective the corporation is at converting its revenue into actual profit.

The high percentage rate of sales (8.29%) that the corporation shows in terms of its expenditure in Research and Development (R&D) compared to the industry’s 3.9% depicts a great effort made by the corporation to assess the trending market issues and concerns, consumer’s tastes and preferences within the industry for better service to its customers.

Download full Pegasus Technologies Case Study Questions And Sample Answers Paper or order a plagiarism free paper at an affordable price. 

Order Unique Answer Now

Add a Comment

Your email address will not be published. Required fields are marked *