Tesu

Tesu ZZ

1. What issues does Tesu face?

2. What are Tesu’s strengths?

3. What does the financial statement reveal

4. What is the most urgent problem and how should the consultant adres it?

5. What other issues should the consultant worry about?

1. What issues does Tesu face?

* Only one more month until 25.000 needs to be paid in taxes, with 50 in cash in the bank.

* Dependent on one big customer

* One-trick pony:

* Best selling products is 45% of total revenues.

* Best selling product dependent on one supplier. Material cost of this product represents largest portion of total cost per unit.

* Most important parts of the best selling product are not being supplied

* Cash-flow is out of balance. Supplier are paid within a month, while customers pay within two months. This, plus the time that it takes to produce the units leaves Tesu short of gash constantly.

* Cash shortage

* Operation costs>sales

* Production machinery is very old and unreliable

2. What are Tesu’s strengths?

Committed workers, since they are shareholders.

3. What does the financial statement reveal

* Negative net income= loss

* Current ratio= current assets/ current liabilities

2011= 1,69

2012= 1,19

Unhealthy low (for a capital intense company) and declining (-30%)

* Days inventory= inventory/ (operation costs/365)

2012: 803.384/ (3891939/365)= 75,3 days

2011: 1010936/ (3610330/365)= 102,2 days

The days of inventory is declining sharp (-26%), shortly the won’t have enough inventory to keep busy.

* Capital Intensity = sales revenue/ fixed assets

2011=15,48 times

2012=19,09 times

Capital Intensity rises (+23,3%) which tells us Tesu is becoming increasingly vulnerable to (negative) fluctuations in in revenue.

* Working capital turnover= sales revenue/ working capital (=current assets-current liabilities)

2011= 3352162/ (1301194-767533)=6,28 times->15,9%...