Overview
The Hathaway Manufacturing Company was started in 1888 by Horatio Hathaway, a China trader, with profits from whaling in the Pacific (Livy, 2013).
A man by the name of Seabury Stanton, put a lot of his own money into the company to keep it going. After the Depression, the company start doing well again, every once in a while it would have a bad year. In the 1950s, Stanton merge the Hathaway Company with Berkshire Fine Spinning Associates Inc, a milling company. By the end of 1950 the company was not doing well (Livy, 2013).
In 1963 Warren Buffett started to buy shares in the company. After Warren Buffett took control of Berkshire Hathaway, the company operated in dual roles, textiles and investment vehicle (Livy, 2013).
In 1967,
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Buffett turned the company towards the insurance business, the National Indemnity and National Fire and Marine Insurance (Livy, 2013). The first investment in insurance was the start of Berkshire Hathaway’s rise to the investment legend it has become today. In a few years, Berkshire Hathaway would acquire GEICO General Insurance Company, which would add to Buffett’s profits through both insurance premiums and the huge cash flow that would allow further stock investments (Livy, 2013). Company Profile: Berkshire Hathaway Inc. (Berkshire), incorporated on June 16, 1998, is a holding company owning subsidiaries engaged in a number of diverse business activities. The Company is engaged in the insurance businesses conducted on both a primary basis and a reinsurance basis, a freight rail transportation business and a group of utility, and energy generation and distribution businesses (Livy, 2013). Berkshire also owns and operates a number of other businesses engaged in a variety of activities. In October 2012, Home Services acquired a 66.7% interest in the residential real estate brokerage franchise network in the United States (CSI Market, 2014). In May 2013, Berkshire acquired the remaining 20% stake in IMC International Metalworking Companies BV (Livy, 2013). The Berkshire Hathaway today does not resemble the company that Buffett bought in 1960. In 1960 the company had a market value of about $18 million and shareholder’s equity of about $22 million (Livy, 2013). Financial Statement: Over the year, Berkshire Hathaway has been able to grow revenues from $32.6B to $34.8B.
This led to a bottom line growth from $14.8B to $19.5B (CSI Market, 2014). The subsidiary companies that make up Berkshire Hathaway are GEICO, BNSF, Lubrizol, Dairy Queen, Fruit of Loom, Helzberg Diamonds, Flight Safety International and NetJets, owns half of Heinz and has an undisclosed percentage of Mars Incorporated (CSI Market, 2014). Additional has significant minority holdings in American Express, Coca-Cola Company, Wells Fargo and IBM has help grow the Berkshire Hathaway company. The average annual growth in book value of 19.7% to its shareholders for the last 49 years(compared to 9.8% from the S&P 500 with dividends included for the same period),while employing large amounts of capital and minimal debt (CSI Market, …show more content…
2014) Balance Sheet The consolidated balance sheet for the company's; railroad, utilities and energy companies and financial products shows a total current assets: 249,228,000 million and total current liabilities: 225,206,000 million. Total assets: 484,931,000 million and total stockholder’s equity: 221,890,000 million (Securities and Exchange Commission, 2014) Current Ratio: Current assets divided by current liabilities 249,228,000 / 225.206,000 = 1.10 Right now Berkshire Hathaway current ratio is not that strong, but they will be able to meet their short-term liabilities (Securities and Exchange Commission, 2014) Quick Ratio: Due to increase in current liabilities in the third quarter 2014, Quick Ratio fell to 1.62 below the company’s average (Securities and Exchange Commission, 2014) Income Statement Gross Profit Margin: In 2012 it was 30.41% and in 2013 it was 21.35% (Securities and Exchange Commission, 2014) Net Profit Margin: In 2012 it was 9.55% and in 2013 it was 11.20%. This was a 1.65% increase. The increase was due to Berkshire Hathaway acquiring some companies to increase their financial stability (Securities and Exchange Commission, 2014) Statement of Stockholder’s Equity Shareholders' equity is difference between a company's total assets and total liabilities. Berkshire Hathaway is authorized to issue 3,227,650,000 of which 1,000,000 shares will be preferred stock. The share of preferred stock will have no par value (Securities and Exchange Commission, 2014). Each share of Class “A” common stock will have a par value of $5.00; Class “B” will have a par value of $0.00033 (Securities and Exchange Commission, 2014). During the past 13 years, Berkshire Hathaway has had the highest Return on Equity (ROE) , which was 11.53% and the lowest was 1.33%.
The median was 7.03% (Securities and Exchange Commission, 2014).
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).
Conclusion
Today Berkshire Hathaway is strong than ever. In July, Buffett gave away Berkshire shares worth $2.8 billion, primarily to the Gates Foundation but also to children’s foundations (CSI Market, 2014). This company is the fifth most valuable public company in the U.S., with a market cap of nearly $350 billion. Just think the company first started out in 1888 has a textile (Livy, 2013).
References
CSI Market. (2014, December). Berkshire Hathaway. Retrieved from CSI Market:
http://csimarket.com/stocks/at_glance.php?code=BRK Livy, J. (2013, January). History of Berkshire Hathaway. Retrieved from Warren Buffett Secrets: http://www.buffettsecrets.com/berkshire-hathaway.htm Securities and Exchange Commission. (2014, February). 10K Form. Retrieved from Securities and Exchange Commission: http://ir.energytransfer.com/phoenix.zhtml?c=193925&p=irol-SECText&TEXT=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTk0Mjc0NjUmRFNFUT0wJlNFUT0wJlNRREVTQz1TRUNUSU9OX0VOVElSRSZzdWJzaWQ9NTc%3d#s4D84E9604FE332D5E0E2BB586029ED20
On May 1, 1954, Nash and Hudson joined, forming American Motors. (Foster 11) Mason was named chairman of the board, president, chief executive officer, and general manager. His assistant George Romney was named vice president, and Barrit became a director of the company.
Wolford General Partnership (WGP) operates plumbing supply business which is also an exclusive supplier for certain stable construction firms. Because of its excellent reputations and services, WGP is able to an extremely profitable entity for the business. WGP uses an accrual method of accounting and has been using June 30 fiscal year for the tax report purpose after its election of §444 since its formation.
Return on sales is decreasing and is below the industry average, but the goods news is that sales and profits have been increasing each year. However, costs of goods are increasing and more inventory is left over each year causing the return on sales to decrease. For 1995, it was 1.7% which is less than the average of 2.44% but is a lot higher than the bottom 25% of companies as seen in exhibit 3, which actually have negative sales return of 0.7%. Return on equity is increasing each year and at a higher rate than industry average. In 1995, it was 20.7%, greater than the average of 18.25% and close to the highest companies in exhibit 3, of 22.1% showing that the return in investment in the company is increasing, which is good for the owner.
under a different name of the Top Hat. Tony Smith started the company as a
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Berkshire Hathaway, Inc was a small textile company. Its chairman and CEO of the company is Warren Buffett, the world's third richest man. He invested his partnership in invests in Berkshire Hathaway at the price of $8.6 million (The Essential Buffett, p27). It took him over 35years to grow its book value from $19 per share to $37,987 per share with a rate of 24 percent compounded annually (The Essential Buffett, p44). Buffett started purchasing other businesses, which were primarily insurance companies, with profits from the declining original textile business. In 1985, the original textile business was shut down and Berkshire Hathaway started the insurance business.
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The analysis of these ratios shows how Ford stands as a company for the past five years. Return on equity (ROE) reveals how much profit a company earned in comparison to the total amount of shareholder equity on the balance sheet. For long-term investing with great rewards, companies that have high return on equity ratios can provide the biggest payoffs. This ratio also tells investors how effectively their capital is being reinvested, so it is a good gauge of management's money handling skills. Ford is showing a considerable turn around in this area this past year, which could easily be due to changes in management. They are also reasonably following the industry in this area.
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Platt, E., & Wile, R. (2013, February 14). How HJ Heinz Turned His Bankrupt Hhorseradish Buiness into a Billion Dollar Ketchup Conglomerate. Retrieved March 20, 2014, from Bussiness Insider: http://www.businessinsider.com/the-story-of-heinz-ketchup-2013-2?op=1
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