Financial statement analysis

Dan Inc. is a publicly traded company involved in selling personal computers (PCs), servers, data storage devices, network switches, software, computer peripherals, HDTVs, cameras, printers, MP3 players, and electronics built by other manufacturers. The company is well known for its unique organization capital and innovative supply chain management. With the publication of the latest financial statements for the year to 30 Jan 2017, the CEO made a brief statement and it includes the following two points:

• The company was performing well and it has a highly talented management.
• One of the key success factor of our management is the adoption of working capital management strategy. We believe that managing investment in working capital lead to managing long-term investment efficiently and effectively and hence creating value to our share holder.

The CEO expressed a desire to make Dan Inc. the leading technology firm company through a rapid expansion i.e. short cut to growth via acquisition. He plans to acquire his direct competitor so as to increase Dan Inc. market share.

Given below are extracts from the recent financial statements, some ratios, and other financial information for Dan Inc.

Dan Inc.

Year ending 30 November financial ratios

	2015	2016	2017	Industry KPI
NPM (%)	23	22	19	16
TAT	079	085	1.01	0.8
ROA (%)	18.17	18.7	19.2	12.8
Current Ratio	080	065	063	0.6
Total liability / Total assets ratio (%)	40	46	51	52
Share $	93	94.5	95	------
Days Inventory Held	36	37	31	40
Days A/R Outstanding	50	49	42	60
Days A/P Outstanding	43	43	33	34

Required:

Prepare a report for the Dans board of directors. In your report you should

1. Critically evaluate Dan Inc.s performance and conclude whether the chief executive officers opinion has the greater validity.
2. State clearly any limitations and assumptions that you made in your calculations.
3. Marks will be awarded for Professional format, structure and presentation of the report.