Issue and Opportunity Identification Essay Example

lower debt to asset ratios. If we examine the time interest earned metric, we observe that TEC has a weak ratio with their operating income decreasing before interest payment. On the other hand, Shang-wa's ratio is favorable while Lester has a high operating income before interest payment, resulting in higher tax payments.

The profitability ratios indicate that TES is not achieving satisfactory returns from its assets, whereas Lester and Shang-wa are highly efficient in generating returns from their assets. Examining the return on equity reveals that TEC is not succeeding in increasing shareholder wealth, but Shang-wa is highly proficient in doing so. Lester is also capable of creating wealth for its shareholders. Taking all the ratios into consideration, it can be concluded that a merger between Lester and Shang-wa would be beneficial, resulting in increased synergy for the shareholders. By analyzing the synergy generated from the merger using these ratios, shareholder approval for the merger can be obtained. If we look at the return on equity and return on asset ratios for LEI and Shang-wa, it becomes evident that a joint endeavor between these two would lead to increased returns for the shareholders.