Case Analysis of Star River Electronics Ltd.”

4074 words 17 pages
Case Overview:
Star River Electronics Ltd.

Star River Electronics Ltd. is a large manufacturer and supplier of CD-ROMS based in Singapore. It was founded as a joint venture between an Asian venture capital firm, New Era Partners and Starlight Electronics Ltd, UK. It has enjoyed a great deal of success in the past, due in large part to their excellent reputation for producing high-quality discs.

But due to recent emerge of Digital Video Disks (DVDs) Star River Electronics does need to face some problems. The conditions got worsen with the recent resignation of their former CEO. The new CEO Adeline Koh needs to face these problems. Digital Video Disks (DVDs) are expected to cut into the CD-ROM market in the very near future, but with 5%
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The higher the number the better. Star rivers asset turnover has been decent over the years.

Inventories to COGS:
Inventories to COGS ratio is the Percentage of cost of sales attributable to average inventory. A decreasing number indicates higher efficiency in use of resources; an increasing number suggests potential cash flow problems due to greater sums tied up in inventory. In our analysis, we found that there is a significant inventory problem. Star River’s inventory to COGS was as high as 119.30% in the last year. What it shows is that the inventory that they are creating is becoming outdated before they are able to sell it.

Payable to COGS The ratio analysis of Star River shows that they have been able to decrease their payables account, meaning they are paying more of their obligations at the current time.
The Days in Accounts Receivable Ratio:
The days in accounts receivable ratio is, as the name implies, the calculation of how many days of cash are locked up in receivables. Receivables are the money is that is owed the company. This calculation shows the average number of days it takes to collect your accounts receivable. Another problem we found with their ratios is that they are having problems collecting on their receivables. What this will ultimately lead to is a cash inflow problem.

Liquidity ratio:
Current ratio:
The current ratio is a financial ratio that measures whether or not a firm has enough

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