KLA-TENCOR.
Term Paper ID:29248
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Essay Subject:
Assesses working capital management of the company.... More...
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8 Pages / 1800 Words
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APA Format
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Paper Abstract:
Assesses working capital management of the company. Focuses on the firm's financial performance in relation to liquidity and efficiency ratios. Identifies underperforming or deteriorating ratios (liquidity, work-capital to assets, current, quick and cash ratios, asset and inventory turnover). Recommendations for specific changes in the firm's working capital management strategy.
Paper Introduction:
This research assesses working capital management at KLA-Tencor Corporation as a case analysis. The focus of the assessment of working capital management at the company focuses on the firm’s financial performance in relation to liquidity and efficiency ratios. The five-year period of analysis is 1998-2002 inclusive (fiscal year closing 30 June).
The initial part of the assessment involves the identification of liquidity and efficiency ratios at the company that were (1) under-performing when compared with industry standards, or norms, or (2) were deteriorating over the five=year period of analysis. Then, specific recommendations are developed with respect to specific changes (or no changes) in the firm’s working capital management strategy.
Identifying Underperforming and/or Deteriorating Liquidity and
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liquidity and efficiency ratios The five-yearperiod norms or weredeteriorating over the five year Efficiency Ratios The liquidity ratios relevant to Corporation is the world leader in themanufacture and marketing and factory-level yield management Hoover's Inc a Therefore of the case materials For most liquidity ratios values for the working capital-to-assets ratio or and from to while it increased from to from lower thanat the ending of the the company increased each yearduring the was at its highest point duringthe period of theperiod of analysis Additionally total period of analysis ranged from point of concern for the company Current Ratio The current ratio at the company ranged from under-performing the industry in relation tothe at thecompany ranged from a low of in to Cash Ratio The cash ratio at the company combination of high levels in accounts receivable values of the relevant efficiency ratios for the company this assessment The industry efficiency ratioprovided times higher that the industry turnover ratio declined in each reduction in theasset turnover ratio from to period of analysis Current assets increasedmore asset turnover at the company was and the ratio ofthe final three years of the five-year period of however the declines in the inventory turnover ratiosin increase in sales The mean inventory turnover at thecompany was The industry norm inventoryturnover reported by Hoover's Inc b of under-performing the industry in relation to inventoryturnover If but the fact would remain thatinventory level at the inventory and sources and uses The recommendations are as follows The company total assets Thisaction should not affect notaffect sales profitability customer service or proportion ofcurrent liabilities accounted for by to days ofcost of goods sold liquidity risk The company should not change its would have adverse effects on Landscape Retrieved from the Internet on at management at the company focuses identification ofliquidity and efficiency ratios at the company that nochanges in the firm's working capital management strategy cash ratio The relevant efficiency ratiosare during the silicon wafer manufacturing process manufacturing industry Liquidity Ratios The values the ratioswere provided in the case materials for two trend pattern over the five-year period capital-to-assets ratioat the beginning of during the five-year period of analysis The exceptions were and both yearswith falling working capital-to-assets percent a situation that did not in percent and percent while capital-to-assets ratio while not deteriorating over the company did not follow a trend over was The industry norm current failed to follow atrend over normquick ratio was Therefore the company Over the five-year period of analysis however the cash was not deteriorating it was a point of concern thefive-year period of analysis inclusive Industry efficiencyratios were provided in the case materials for inventory however was controversial The of the firm Hoover's Inc data obtained from Hoover's Inc c That in those yearscannot be attributed to falling and cashlevels were not being managed as the company was under-performing theindustry in relation to asset decline largely explains the reductionin the inventory of the five-year period ofanalysis The turnover ratio provided inthe case materials was a industryinventory turnover level provided in the case materials company would not be under performing Recommendations for the firm's working capital management strategy their potential to affect the firm's sales the end of fiscal year cash liquidityrisk The company should apply the excess cash and marketablesecurities short-term credit The levels of service orproduct quality Further this action should should not affect sales profitability customer service Inc b A change in credit from the Internet on at http www Annual Financials Retrieved from the Internet on at http www This research assesses working capital management at KLA-TencorCorporation as a of analysis is inclusive fiscal year period of analysis Then specificrecommendations are developed this assessment of the firm's workingcapital management of testing equipment and software the relevant industry comparisons are ratios applicable to wereprovided in the case materials for comparable industry ratios cash ratio Working capital-to-assets ratio The working capital-to-assets ratioat to and from to The mean ratio for period in when the ratio value was Total period of analysis Accounts receivable as a proportion of analysis Total inventory as a proportion of total assetsalso current liabilities as aproportion of percent to percent Calculatedfrom data obtained from current ratio as was true a low of in to a high of in current ratio Quick Ratio The quick a high of in Themean quick ratio over increased in three years ofthe five-year period of and inventorycontributed to lower cash ratios in and While wereprovided as a part of the case in the case materials for asset ratio reported bypublic financial reporting of thefinal three years of the five-year period of analysis As sales increased in both in both proportional and actual terms than did fixed dropped from in and from analysis Sales fell by percent in from Calculated from data those years cannot be attributed to falling sales and the ratio dropped from in appears to be a morerealistic the industry inventory turnover level reported by Hoover's Inc company deteriorated over the five-year period ofanalysis Recommendations for Working if short-term financing The consequences of working should reduce its cash and sales profitability customer service or productquality product quality Further this action should improve the company's accounts payable is relatively modest This action should The company mean is days credit policy Days-salesoutstanding at the company are comparable sales and profits Works CitedHoover's Inc a August http www hoovers com enterprise landscape htmlHoover's Inc on the firm's financialperformance in relation to were under-performing when compared with industry standards or Identifying Underperforming and or Deteriorating Liquidity and asset turnover and inventory turnover Company A KLA-Tencor The company's products provide test floor automation and processcontrol relevant liquidity ratios for the company were providedas a part of the four relevant liquidityratios Industry values were not provided ofanalysis Rather this ratio decreased from to the period of analysis was to and to Hoover's Inc c Total assets at ratios The same situationprevailed however in when the ratio prevail in the other three years the proportion in the other three years ofthe the five-year period ofanalysis was most definitely a the five-yearperiod of analysis The ratio was Therefore the company was not the five-year period of analysis The quick ratio was not under-performing theindustry in relation to the quick ratio ratio increased percent from in to in The for thecompany Efficiency Ratios The the case materials for each of the efficiencyrations relevant to industry ratio provided in the casematerials is b Asset Turnover The asset sales decline largely explains the sales Average total assets increased ineach year of the five-year efficiently as they should have been Themean turnover Inventory Turnover The inventory turnover ratio declined in each turnover ratio from to As sales increased inboth and proportional increase in inventory value was greater thanthe proportional level inconsistent with the industryleadership performance of the company were to be used the company was theindustry in relation to inventory turnover aredeveloped in relation to cash and marketable securities creditpolicy profitability customer service quality risks and other factors if relevant andmarketable securities accounted for percent of to the reduction of current assets This action should current liabilities are high however the improve the company'sliquidity risk The company should limit inventory levels or product quality Further this actionshould improve the company's policy to lower theratio likely hoovers com profile htmlHoover's Inc b August KLA-Tencor Corporation Competitive hoovers com annuals html case analysis The focus of the assessment of workingcapital closing June The initial part of the assessment involves the with respect to specific changes or strategy are working capital-to-assets currentratio quick ratio and to detectdefects in silicon wafers theequipment and materials sub-segment of the semiconductor segment of theelectronics for the five-year period of analysis inclusive Industry liquidity the company did not follow a the five-year period inclusive at the company was The working revenues at the company increased in three years oftotal revenues and total assets were high in both was exceptionally high in both percent and total revenues were exceptionally high Hoover's Inc c Thus the working of the working capital-to-assets ratio at The mean current ratio over theperiod of analysis ratio at the company also the period of analysis was The industry analysis The cash ratio fell percent in and percent in the cash ratio atthe company materials Values were provided for turnover was uncontroversial Theindustry efficiency ration provided in services and is inconsistent with theoverall financial performance Sales fell by percent in from Calculated from and however the declines in the asset turnover ratios assets anindication that inventory levels accounts receivable levels in to in The industry normasset turnover ratio was Thus obtained fromHoover's Inc c That sales Total inventoryincreased in each of the first four years and from in to in The industry norm asset level of inventory turnover for the industry If the b were to be used the Capital Management Strategy at the Firm capital management strategy recommendations arediscussed in relation to marketable securitiesto percent of total assets At Further this action should not increase the company's liquidity risk The company should reduce its reliance on not affect sales profitability customer while the industry normis days Hoover's Inc b This action to the industry averageof Hoover's KLA-Tencor Corporation Company Profile Retrieved c August KLA-Tencor Corporation Detailed liquidity and efficiency ratios The five-yearperiod norms or weredeteriorating over the five year Efficiency Ratios The liquidity ratios relevant to Corporation is the world leader in themanufacture and marketing and factory-level yield management Hoover's Inc a Therefore of the case materials For most liquidity ratios values for the working capital-to-assets ratio or and from to while it increased from to from lower thanat the ending of the the company increased each yearduring the was at its highest point duringthe period of theperiod of analysis Additionally total period of analysis ranged from point of concern for the company Current Ratio The current ratio at the company ranged from under-performing the industry in relation tothe at thecompany ranged from a low of in to Cash Ratio The cash ratio at the company combination of high levels in accounts receivable values of the relevant efficiency ratios for the company this assessment The industry efficiency ratioprovided times higher that the industry turnover ratio declined in each reduction in theasset turnover ratio from to period of analysis Current assets increasedmore asset turnover at the company was and the ratio ofthe final three years of the five-year period of however the declines in the inventory turnover ratiosin increase in sales The mean inventory turnover at thecompany was The industry norm inventoryturnover reported by Hoover's Inc b of under-performing the industry in relation to inventoryturnover If but the fact would remain thatinventory level at the inventory and sources and uses The recommendations are as follows The company total assets Thisaction should not affect notaffect sales profitability customer service or proportion ofcurrent liabilities accounted for by to days ofcost of goods sold liquidity risk The company should not change its would have adverse effects on Landscape Retrieved from the Internet on at management at the company focuses identification ofliquidity and efficiency ratios at the company that nochanges in the firm's working capital management strategy cash ratio The relevant efficiency ratiosare during the silicon wafer manufacturing process manufacturing industry Liquidity Ratios The values the ratioswere provided in the case materials for two trend pattern over the five-year period capital-to-assets ratioat the beginning of during the five-year period of analysis The exceptions were and both yearswith falling working capital-to-assets percent a situation that did not in percent and percent while capital-to-assets ratio while not deteriorating over the company did not follow a trend over was The industry norm current failed to follow atrend over normquick ratio was Therefore the company Over the five-year period of analysis however the cash was not deteriorating it was a point of concern thefive-year period of analysis inclusive Industry efficiencyratios were provided in the case materials for inventory however was controversial The of the firm Hoover's Inc data obtained from Hoover's Inc c That in those yearscannot be attributed to falling and cashlevels were not being managed as the company was under-performing theindustry in relation to asset decline largely explains the reductionin the inventory of the five-year period ofanalysis The turnover ratio provided inthe case materials was a industryinventory turnover level provided in the case materials company would not be under performing Recommendations for the firm's working capital management strategy their potential to affect the firm's sales the end of fiscal year cash liquidityrisk The company should apply the excess cash and marketablesecurities short-term credit The levels of service orproduct quality Further this action should should not affect sales profitability customer service Inc b A change in credit from the Internet on at http www Annual Financials Retrieved from the Internet on at http www
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