Star River Electronics LTD.

1. Please assess the current financial health and recent financial performance of the company. What strengths and / or weaknesses would you highlight to Adeline Koh?
Star River Electronics financial performances are disappointing compared to the industry average. Star River sales grew 15%, 11.4%, 15.6% and 14.5% between 1998 and 2001, but the earnings did not grow correspondingly. However, the company managed to stay profitable during the past five years, and issued dividends consistently to its shareholders.
Star River production costs and expenses have increased dramatically between 2000 and 2001, due primarily to the costs generated by the old packaging equipment that had frequent shutdowns for repairs, and forced the company to have its employees work overtime. In addition, the company was not able to maintain its interest expenses due to its high amount of short-term debts (41% of its average operating profit).
Star River seems to have problems collecting payments from its cus...