SmellsLikeTeenSpirit

*Finance Case 1*
Oracle System Corporation
Deadline report 10 March 2003
Required Text: MANAGERIAL FINANCE< GITMAN< CHAPTERS 1-4

Synopsis
This case considers the very sudden en large drop in market value of equity for Oracle System associated with two announcements in 19990. These announcements caused investors to revise their expections about the future growth of Oracle Systems, perhaps the most rapidly growing American corporation in the 1980s. your task is to evaluate the implications of these announcements en assess the financial health of the company.

Questions:
1.Information about oracle can be found on Internet (www.oracle.com), /resources/ investor relation en corporate information.
a.give a concise description of oracle’s main activities en markets
b.what were revenues en profit after tax in fiscal year 2000-2001 en 1989-1990?
c.what was the size of stockholders’ equity as at 31-5-1990 en 31-5-2001?
d.What was the highest en lowest market price during quarter 4 2001? What should you be aware of if you want to contrast this range to quarter 4 1990? (oracle’s quarter 4 is the period March 1-June 1)

2.Common sized statements en trend analysis are important tools to analyse balance sheets en income statements. Analyse these for Oracle (1985-1990). What conclusions can be drawn from benchmarking Oracle with the Industry? (exhibit 6)

3.Calculate the relevant liquidity, profitability, leverage en activity ratios for the years 1986-1990. You may use the Dupont analysis schedule.

4.What does benchmarking from Oracle compared to the competitors in exhibit 7 show?

5.Based on your answers on questions 2,3 en 4, was Oracle Systems Corporation financially healthy in September 1990?

6.In the light of your answers to question 5, why did the stock price drop by two-thirds in early 1990?

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