Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
Who are these masters, and what are their demands? Shareholders demand protection of, and a fair return on, their investment. Customers demand delivery of promised goods and services for value received. Employees demand a safe working environment, fair compensation, and honest communication. Senior management demands adherence to direction and policies. "One's personal belief system demands truth to one's self, and our community's demand that we abide by established laws (Lester Electronics). Herein lies the potential for conflicting interests and personal pain" (Schuster & Smith, 1994).
End-State Vision
The joint company of Lester Electronics and Shang-Wa Electronics maximizes the value of the company and the shareholder wealth.
Gap Analysis
Two independent companies are merging in order to create a stronger company. With a vision of maximizing shareholders wealth there is a multitude of opportunities. As separate entities, they have developed their own financial plans to maximize their company's value and shareholders wealth. "Financial planning formulates the method by which financial goals are to be achieved" (Ross-Westerfield-Jaffe, 2004, Chapter 3, p.44). There are common elements that should be contained. A couple of major items to be addressed after evaluating the separate income and balance sheets are the capital spending and debt policy of the combined company. Mr. Lester will need to decide how to use net working capital and how the new company will raise equity (Lester Electronics)..
Mr. Lin feels that merging with Lester Electronics will create a much stronger and more viable company. "Managers should choose the capital structure that they believe will have the highest firm value, because this capital structure will be most beneficial to the firm's stockholders" (Ross-Westerfield-Jaffe, 2004, Chapter 15, p.404).
According...
Since Shang-Wa Electronics makes the electronic components, they would have large equipment (Lester Electronics). "Since the lease liability is hidden with an operating lease, the balance sheet of a firm with an operating lease looks stronger than the balance sheet of a firm with an otherwise-identical capital lease" (Ross-Westerfield-Jaffe, 2004, Chapter 21, p.596).
Shang-Wa's long-term debt is 48 times higher than LEI which the interest on this debt may be considered a cost of doing business. However, if it is too high and cannot be repaid, it is a liability. This liability could lead to liquidation if it is not monitored (Lester Electronics). "At its crudest level, debt represents something that must be repaid; it is the result of borrowing money. When corporations borrow, they promise to make regularly scheduled interest payments and to repay the original amount borrowed" (Ross-Westerfield-Jaffe, 2004, Chapter 14, p.389).
Conclusion
Lester Electronics and Shang-Wa Electronics are conducting a merger. They need to assess the financial situation of each other. The final combined company has the opportunity to maximize its wealth as well as the wealth of the future stockholders. After the strategic goals and objectives are established, a financial plan describing each of the activities, resources, equipment and materials t0hat are needed to achieve these objectives, as well as the timeframes involved will be needed. Shang-Wa Electronics has more total debt and long-term debt compared to Lester Electronics while having less net income. Lester Electronics will have the opportunity to evaluate different methods to balance this ratio like leasing equipment vice purchasing.
Shang-Wa's long-term debt is 48 times higher than LEI which the interest on this debt may be considered a cost of doing business. However, if it is too high and cannot be repaid, it is a liability. This liability could lead to liquidation if it is not monitored (Lester Electronics). "At its crudest level, debt represents something that must be repaid; it is the result of borrowing money. When corporations borrow, they promise to make regularly scheduled interest payments and to repay the original amount borrowed" (Ross-Westerfield-Jaffe, 2004, Chapter 14, p.389).
Conclusion
Lester Electronics and Shang-Wa Electronics are conducting a merger. They need to assess the financial situation of each other. The final combined company has the opportunity to maximize its wealth as well as the wealth of the future stockholders. After the strategic goals and objectives are established, a financial plan describing each of the activities, resources, equipment and materials t0hat are needed to achieve these objectives, as well as the timeframes involved will be needed. Shang-Wa Electronics has more total debt and long-term debt compared to Lester Electronics while having less net income. Lester Electronics will have the opportunity to evaluate different methods to balance this ratio like leasing equipment vice purchasing.
That this case has emerged internally gives us an opportunity to ensure that situations like this do not arise out of our control, i.e. discovered by a customer. We have the opportunity to built our compliance and audit procedures from scratch, so that the level of oversight these departments have on the firm's operations is complete, and insulates the firm against further risk. An investigation should be conducted into
In contrast, within the firm, the entrepreneur directs production and coordinates without intervention of a price mechanism; but, if production is regulated by price movements, production could be carried on without any organization at all, well might we ask, why is there any organization?" (Coase, 1937, p. 387) In simpler words if markets are so efficient why do firms exist? Coase explains, "the operation of a market costs something
One other new thing brought to the attention of companies by the Sarbanes-Oxley Act is the fact that, under this law, every public company is supposed to prove strong internal systems designed to catch an employee intending to commit fraud or flag accounting errors before a company has the opportunity to make its profits official. An addendum to this rule is the obligation of a company knowing about problems with
Roles of Directors and Duties of an Audit Committee The Board of Directors is an organization's or company's governing body that is mandated with the task of ratifying all major decisions. Generally, the Board of Directors handles all issues of major strategic importance to an organization or company. This implies that the Board of Directors needs to be involved, engaged, and supportive in all issues of strategic importance, especially with regards
January 21, 2011 -- All contracts must be signed and returned by this date. January 21-Feb 1 -- interview caterers, hotels, limo services to make certain that they are appropriate. Visit all vendors and sites. February 1-4, 2011 - book all hotel, limo and catering reservations. Pay all deposits necessary. February 7-11, 2011 -- Find backup caterer and limo service in case of problems May 2-6, 2011 -- meet with caterer, choose menu, make
role that the Board of Directors should play in IT governance. The Board of Directors will have the ultimate responsibility for IT policies within a company. It is the board of directors that determine IT policies will be put into place, and will be responsible for accurately communicating those. The model also be responsible for keeping up-to-date with developments, as well as the determination and monitoring of investments and IT