Ratio Analysis: Gemini Electronics

Ratio Analysis:

Liquidity

Analyzing liquidity ratios determines whether or not a corporation has enough assets to cover it’s short term liabilities. Although Gemini Electronics’ current ratio is below industry average, in general, a company a 2:1 ratio of assets to liabilities indicates that a company is in good standing to pay off it’s short term liabilities. Although this is the general rule of thumb, we need to analyze what comprises Gemini Electronics’ current assets portfolio. Upon analyzing, we can see that:
• Out of the total $1,267,311,420 of current assets in 2009, approximately 50% of it was tied into inventory accounts
• Out of the total $3,162,140,833 current assets in 2008, approximately 51% of it was tied into inventory account

can be attributed to why their finished goods inventory days is lower than the industry average. Gemini’s competitors such as LG, Samsung and Sony outsource their inventory and products, which is why the industry average in this category is 188.3 days.
Creditor

As a corporation that has many successful competitors, such as LG, Samsung and Sony, it has effectively positioned itself as an “American” tech company amidst the demise of brands Zenith and RCA. The key indictor of this is Gemini Electronics’ profitability and solvency ratios.
Gemini’s Statement of Cash Flow Analysis The largest source of cash comes from the financing section of the statements of cash flows and is from long-term debt financing. In comparison, the largest source of cash utilization comes from the acquisition of property, plant and equipment. Gemini acquired a $500,00,000 line of credit, issued from Wells Fargo Bank. These funds were used to finance the purchase of a research facility on the CIT campus and the acquisition of patents from U.S. universities. $803M of debt was acquired in 2009 to finance this expansion. Although Gemini Electronics is highly leveraged, their solvency ratios prove that their corporations have enough assets to pay their long-term