You are Andy Chin. Prepare the first part of the report due at 7 a.m. tomorrow to
Question:
You are Andy Chin. Prepare the first part of the report due at 7 a.m. tomorrow to the new CEO of Star River Electronics, Ltd., Adeline Koh. This first part should detail the external funding needs required by Star River. Develop a memo (plus exhibits) to inform Ms. Koh before her conversation with the banker, Mr. Tan, tomorrow morning. Your memo should include:
A brief discussion on why Star River needs additional funding even though it is a profitable business.
Financial projections for the years 2002, 2003 and 2004 indicating Star River's need for funds. Use the sales projections given for 2002 and 2003 and generate your own revenue projections for 2004.
Size of the loan you think Star River should request from Mr. Tan. Assume that your short-term bank borrowings are currently capped at SGD100 million and that your long-term borrowings will require no principal payments until July 2005.
Results of sensitivity analysis on key parameters indicating why changes in their values may occur and how those changes will affect Star River's need for funds.
Specific talking points for Ms. Koh's conversation with Mr. Tan. Is his concern that Star River is growing beyond its financial capabilities accurate?