The financial team has been properly selected and charged to proceed with their analysis of EEV's financial statements. In the course of their evaluation, they will be assessing the firm's operating performance, benchmarking their competitors, and looking at the industry using financial ratios as their source of measurement. However, the chief executive officer (CEO) of Electronic Equipment USA agrees with numerous practitioners who promote the use of nonfinancial measures as well as financial measurements to evaluate the performance of a given firm. Nevertheless, Tony agrees that nonfinancial measurements can be valuable, and he tends to support the premise that when evaluating operating performance, benchmarking competitors, and comparing industry results, nonfinancial measurements have little measurable value.

The CEO of the parent company agrees with numerous practitioners who promote the use of nonfinancial measures as well as financial measurements to evaluate the performance of a given firm. Nevertheless, Tony agrees that nonfinancial measurements can be valuable, and he tends to support the premise that when evaluating operating performance, benchmarking competitors, and comparing industry results, nonfinancial measurements have little measurable value.

Tony has asked you to present a position paper comparing the effectiveness and reliability of using financial measures as opposed to nonfinancial measures. Include the following:

• Provide an analysis of the utilization of assets in terms of efficiency (or inefficiency).
• What are measurements associated with returns and activity ratios?
  • Explain why you selected each specific measurement.
• Then, review the electronic equipment industry using financial ratios.
  • Assess the firm's operating performance against these ratios.
• Research the financial reports of 1 company in the electronic equipment industry, and compare it with the performance of Electronic Equipment Venture.
• Include an Excel spreadsheet to support your analysis.
• Use this information to support your position, and compare the effectiveness and reliability of using financial measures as opposed to nonfinancial measures.

Electronic Equipment Venture Balance Sheet (In Thousands) 2008 2009 2010 Fcst Assets Cash Accounts Receivables Inventory Total Current Assets 300 5400 6700 12400 130 6700 9000 15830 100 8800 12000 20900 Net Plant & Equipment Total Assets 1500 13900 1530 17360 1700 22600 Liabilities Accounts Payables Notes Payables Accured Taxes Current portion of long-term Debt Total Current Liabilities 3000 450 300 200 3950 3100 600 350 200 4250 4800 1200 900 200 7100 Long-term Debt Shareholders equity Total Liabilities and Net Worth 1800 8150 13900 1700 11410 17360 1600 13900 22600 FIN600 Assignment List B Electronic Equipment Venture Income Statement Thousands 2008 98800 Net Sales Cost of good sold Total cost of good sold Gross Profit % 2009 2010 (Fsct) 108000 113500 68500 30300 31% 80250 27750 26% 85425 28075 25% 3500 7500 9900 20900 5300 8500 10610 24410 5700 9000 11120 25820 Income Before Taxes Taxes Net Income 9400 3760 5640 3340 1336 2004 2255 902 1353 Headcount Direct Indirect Total Headcount 2080 320 2400 2400 350 2750 2500 400 2900 Expenses General & Administrative Marketing Operating Expense Total Expenses Products Sales 2008 Margin % Sales 2009 Margin % Sales 2010 Fcst Margin % Electronic Equipment Television Computers Medical Automotive Electronic Equipment Total 4000 5000 2300 15000 26300 1000 2400 1500 3200 8100 25% 48% 65% 21% 31% 3500 5200 3500 16000 28200 900 2300 2000 2800 8000 26% 44% 57% 18% 28% 5000 7600 4000 15400 32000 1045 3300 1800 3000 9145 21% 43% 45% 19% 29% Electronic Equipment Parts Television Computers Medical Automotive Electronic Equipment Parts Total 12000 44500 6000 10000 72500 3200 13000 3500 2500 22200 27% 29% 58% 25% 31% 13000 50000 7000 9800 79800 3050 10500 3700 2500 19750 23% 21% 53% 26% 25% 12000 48000 7500 14000 81500 2230 10500 3700 2500 18930 19% 22% 49% 18% 23% Total 98800 30300 31% 108000 27750 26% 113500 28075 25% FIN600 Phase 1 Assignment Set B FIN600 Phase 1 Assignment Set B