Case 24 Star River Electronics LTD Questions

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STAR RIVER ELECTRONICS LTD.

Questions
1. Assess the current financial health and recent financial performance of the company. What
strengths and/or weaknesses would you highlight to Adeline Koh?
2. Forecast the firms financial statements for 2002 and 2003. What will be the external
financing requirements of the firm in those years? Can the firm repay its loan within a
reasonable period?
3. What are the key driver assumptions of the firms future financial performance? What are the
managerial implications of those key drivers? That is, what aspects of the firms activities
should Koh focus on especially?
4. What is Star Rivers weighted-average cost of capital (WACC)? What methods did you use
to estimate WACC? What are the key assumptions that especially influence WACC?
5. What are the free cash flows of the packaging machine investment? Should Koh approve the
investment?

Use Case_24.xls.

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