Wait a second!
More handpicked essays just for you.
More handpicked essays just for you.
The discipline of accounting
Introduction to Corporate Finance/ chapter
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Comprehensive Problem: Sun Microsystems
Comprehensive Problem: Sun Microsystems
A complete analysis conducted on the financial statements and status of Sun Microsystems exposed key issues determined to be of great import to shareholders. After examining the research findings and analysis, it seems that Sun Microsystems finances have not maintained a steady incline. In fact, it had definitely experienced some highs and lows in its return on investment and stockholders’ equity over a four- year evaluation spanning the years 1998 through 2001. In an effort to decipher the problems within the company’s operations, data from the following reports and ratios offered considerable clues.
To collect relevant data, the annual percentage change in net income per common share diluted, net income/net revenues, the major income statement accounts to net revenues, return on stockholders’ equity, the price/earnings (P/E) ratio, and the book values per share for each year numbers were examined. In order for Sun Microsystems to see a greater return in its bottom line assets, it must consider an alternative approach in operating its organization.
The following is a comprehensive view of the finances of Sun Microsystems from 1998-2001. Sun Microsystems has experienced significant fluctuations in performance. The annual percentage change in net income per common share diluted and profit margins were as follows:
Table 1
Percentage change in net income per common share-diluted
1999 $ .31 2000 $ .55 2001 $ .27
1998 $ .24 1999 $ .31 2000 $ .55
$ .07 $ .24 $-.28
+29.2% +77.4% -50.9%
Table 2
Profit Margin
1998 1999 2000 2001
7.66% 8.72% 11.79% 5.08%
Sun Microsystems saw tremendous growth in net income between 1999 and 2000 leading up to a sharp decline between 2000 and 2001. The income statements show increased revenues in 2001, contradicting the data above. Further analysis provides an explanation for the deceleration of income growth in spite of increased revenue. The ratios of several expenses to net revenues were taken for 2000 and 2001.
Table 3
Percent of net revenue
2000 2001
Net revenues $15,721 $18,250
Cost of sales $7,549 48.02% $10,041 55.02%
Research and development 1,630 10.37 2,016 11.05
S, G, and A 4,072 25.90 4,544 24.90
Provision for income taxes 917 5.83 603 3.30
The main contributing factor to the decline in the return on stockholders’ equity (25.37% to 8.73%) was the decline in the profit margin (11.79% vs. 5.08%). The decrease in asset turnover (1.11 to 1.00) made a small contribution to the decline, as did the decline in the debt ratio (48.4% to 41.8%).
Ratios for return on assets and return on equity offer support for the loss in stockholders’ equity. Return on assets went from 13.1 in 2000 to 5.1 in 2001 and return on equity dropped from 25.4 in 2000 to 8.7 in 2001. Return on equity represents return on assets divided by the difference of 1 and debts/assets.
One look at the common-size income statements for these companies can tell a story. While Jones Apparel Group was lagging at year ended 1998, even with a restructuring charge on Liz Claiborne’s income statement, 1999 was a different story. Huge growth at Jones lead to revenues double of that one year ago while Liz, while increasing, was quickly falling behind. The growth for both of these companies continued into the year ended 2000, but Jones Apparel Grou...
In 1986 and 1987, MiniScribe ranked top 25%, then declined slightly to the median in 1988. The reason for the decrease in 1988 can be the drop of the net income or the increased competition in the market. The results may be acceptance at first glance, but if we take our analysis in the profit margin to this ratio, it can be found that MiniScribe’s return on stockholders’ equity was actually lower than the number they provided. The Company had a history of using various kinds of methods to “make the number” instead of creating the maximum value of shareholders’ equity. From the long-term point of view, this will harm the shareholders’
This project displays the evaluation of the financial performance of a publicly traded US Corporation, based on the information that is found. It will include some of the most important financial statistics that that company has on their most recent 10k reports. Once all the financial information of that company has been collected, a conclusion will be drawn based on the finding as well as comparing those stats to the stats of their leading competitors.
In conclusion, a company’s financial statements regarding its financial position are critical to all concerned. First and foremost, these financial statements provide critical tools for companies to make decisions to improve its share value in the global market of fierce competition. Secondly, they provide accountability to shareholders and stakeholders in the company providing better stability in its business practices and requirements regarding the Securities Exchange Commission (SEC) and General Accepted Accounting Principles (GAAP). Lastly, financial statements paint a picture that gives a measurable to the success of a dream once birthed long ago by an entrepreneur to get an idea to the marketplace with great expectations of striking it rich.
To get the Return on equity, you take net income and divided by the average shareholder equity. The net income for the quarter of Sept 2014 which was $18,468 million (Securities and Exchange Commission, 2014). The average shareholder equity for the quarter that ended in Sept 2014 was $235,731 million. So the annualized return on equity for the quarter that ended in Sept 2014 was 7.83% (Securities and Exchange Commission, 2014).
The process may be difficult and take some time but to develop a true sense of the company’s status the need for ratio analysis and financial statements must be done in order to find the underlying issues which found that the company is losing money.
Return on equity has decreased over the last three years and as much as 5%. Despite the decrease, BP is right on track with than the industry average of 22%.
This paper will discuss the information found in the financial statements such as, balance sheet, income statement, statement of cash flows, and statement of stockholders’ equity. The financial statements will show the relation to planning, controlling, and decision making. Also, the paper will discuss some the reports and ratios that can be developed by analyzing the statements. The statements mostly used by managerial accounting are: budgets, forecast, variance reports, and ratios to name a few.
This purpose of this paper was to evaluate the financial statements of IBM Corporation during the past five years to assess the future profitability of the company. Unfortunately, this report only reflects up to four years, as appose to a five year analysis. I used Plaza College Library along with Queens Library to do my research. This helps me with the data base I needed to access and wasn’t able to at home. My professor helped me with my research; he helped me understand the things I didn’t understand. He also guided me to web pages that help me with my research. I used many search engines such as IBM company web page, Google, ProQuest, MSN Money, and Yahoo Finance. IBM web page was the best because most of my information came for the company web pages. Google was helpful because it help me find my company information that wasn’t on the web page. ProQuest is good for data base but it wasn’t helpful to my research. MSN money was very helpful I was able to get my 10k report and many other things. Yahoo Finance, I was able to get all my finance information without a problem. All the information I received, I was able to put in it in my research paper to create a 10 to 12 page research paper. In this paper I have applied knowledge of business concepts, information literacy techniques, and critical thinking.
As investors it is important to understand the company in which you are looking at. One of the most common mistakes made is people only see the current trends of the company and do not research previous years. In doing this they are not getting the true picture of the company and it is important to understand the cash flows of the company in and out. In order to do that one should look at the statement of cash flows, as it will provide information as to where the company spends its money. This assignment will be looking at “Eat at My Restaurant,” which is a case study that compares three different well-known companies. The companies in which we will look at are Panera Bread, Starbucks, and Yum Brands, Inc.
The most recent edition covers approximately 4.7 million active corporate federal income tax returns, including those owned or controlled by foreign persons. The publication profiles corporate performance in two analytical tables for each industry. Table I reports operating and financial information for all corporations, those with and without net income. Table II provides the same information as Table I, but only for corporations with net income. It provides 50 performance indicators for each industry. At the end of each industry section, performance indicators for the last ten years are shown.
When computing financial relationships, a good indication of the company's financial strengths and weaknesses becomes clear. Thus they however facilitate year-on-year comparison to develop insights into trends. Examining these accountingratios ratios over time provides some insight as to how effectively the business is being operated.
Recognition of revenue and income has become a key subject for both of determination of financial performance and basic investigation in accounting theory. There are several reasons for increasing the attention of recognition of revenue. One of the reasons is that between 1990s and 2000s, Internet Companies value the revenue and they considered that revenue is more crucial than income. Second reason for revenue has gained more attentions is that company’s buildup their business structures that involved complicated agreement of goods and services and the confusion of customer contracts. Financial information can get easily because of the changing of the reporting environment, which provides a lot of appropriate and reasonable information at
Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.
The company’s gross margin was down 1.1 percentage points both for the fourth quarter as well as the year. Net income for the quarter was down from $ 3.7 billion to $ 3.6 billion and down from $ 11.7 billion to $ 11.4 billion for the year. The company spent 4 % more on R&D and marketing