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Sample of Solution
Caltron was established in 1971 by Jenny Jones to provide quality electronic calculators to the scientific and business communities. Caltron was 100% owned by the Pulsar Computers, yet it was not performing financially well as compared to the other calculator manufacturer, Pulsar still kept its interests integrated into Caltron. With the rapid growth of microcomputer industry, most of the calculator producers in North America moved their assembly lines to abroad to reduce labor costs. Whereas Caltron committed to remaining integrated at the same place and reduced its labor costs with the automation of its manufacturing processes.
In the year 2002 the company heavily invested in the renovation and the automation of the pieces of equipment, due to such automation less skilled workers lacked production.
The current ratio of Caltron indicates that it is in the zone of Solvency as the company has established greater current liabilities as compared to the current assets and it is well below the industry average. Furthermore, the company is also lacking liquid assets that can safeguard it against any current obligations.