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Dr. Clive Vlieland-Boddy FCA FCCA MBA PhD

Sinclair Research. Dr. Clive Vlieland-Boddy FCA FCCA MBA PhD. Sinclair Research. Group Review: Suggest how the problems could have been avoided? What proposals do you have for the future? Is factoring the Accounts Receivable a good idea and what are your concerns?

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Dr. Clive Vlieland-Boddy FCA FCCA MBA PhD

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  1. Sinclair Research Dr. Clive Vlieland-Boddy FCA FCCA MBA PhD

  2. Sinclair Research Group Review: • Suggest how the problems could have been avoided? • What proposals do you have for the future? • Is factoring the Accounts Receivable a good idea and what are your concerns? • How would you respond to the banks demands? • What are your views of the R & D policies?

  3. Key Issues • What is the Company? • What is the Industry? • What is the decision to be made? • Who is to make the decision?

  4. The Company • In financial difficulties as market is saturated. • Potentially facing bankruptcy.

  5. The Industry • Barriers to entry. What are they? • Can you differentiate the product?

  6. Who is to make the decision? • The Management…. Well really Sir Clive!

  7. What is the decision to be made? • Accept or reject Alan Sugars Offer!

  8. How could the problem be avoided? • Why not repair rather than issue a new unit! • Could the saturation of the market place have been anticipated?

  9. What proposals do you have for the future? • Decision on repairing returned goods. • Better understanding of the market.

  10. Banks Position • They are unsecured!!!! • Large borrower position!!!

  11. Accounts Factoring • Can be expensive • Often seen as a week company with liquidity problems!

  12. The Banks Position • What do you think?

  13. Evaluation of Inventories • 140,000 units returned. Cost £45 + £15 (To make good) = £60. Sell for £80 less 25% = £60. This therefore has no value. • 190,000 units at Timex. Will probably have to pay to get delivery! • 30,000 cost £49 each but sell for £30. So have to reduce net realisable value to £30 each! • 470,000 of good inventories but that represents many months of probable sales.

  14. Calculation of Inventory Adjustment • Balance per Balance Sheet 36,200 • Less 140,000 @ £45 6,300 • Less 30,000 (£49-£30) 570 • Adjusted Inventory Value 29,330

  15. Land & Buildings • Leasehold interest means that the owner is not Sinclair. • Often in the event of Bankruptcy, the owner can regain control and the occupier loses all its investment.

  16. Research & Development • Represents over £5m. • Really only Development Expenditure should be capitalised. • What is it really worth in Bankruptcy?

  17. The End

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