Case Name :      Astral Records Ltd., North America: Some Financial Concerns

Authors :           Robert F. Bruner, Kenneth Eades, Robert M. Conroy

Source :             Darden School of Business

Case ID :           UV0076

Discipline :        Finance

Case Length :    09 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

This case allows students’ to exercise their abilities in financial forecasting and analysis, and capital projects analysis. It offers a good omnibus review of foundational tools and concepts. In August 1993, a new CEO joins this small manufacturer of compact disks to discover that the firm is in the midst of a financial crisis, induced by rapid growth. The CEO asks an analyst for help with five tasks: (1) review historical performance of the firm; (2) forecast financing requirements for the next two years; (3) exercise the forecasting model to identify key-driver assumptions; (4) estimate Astral’s weighted-average cost of capital; and (5) analyze a proposed investment in a packaging machine. The student in the role of the analyst must offer insights and recommendations based on the work.