Comparative Financial Analysis Report


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Comparative Financial Analysis Report

  1. 1. Derek Cheung Chris Gow Mark Poon
  2. 2. Sharp’s History <ul><li>Sharp Corporation is a Japanese electronics manufacturer, founded in 1912 </li></ul><ul><li>Since the invention of the Ever-Sharp pencil it has developed into one of the leading electronics companies in the world </li></ul><ul><li>In 1925 Sharp developed Japan’s first radio </li></ul><ul><li>In 1931 Sharp expands internationally and opens its overseas outlets </li></ul><ul><li>In 1937 during the WWII the demand for radios grew because the desire for news grew which helped Sharp expand on its communication technology </li></ul>
  3. 3. Sharp’s History <ul><li>In 1953 Sharp created the first Japan television set </li></ul><ul><li>In 1959 Sharp becomes a full-range electronics manufacurer </li></ul><ul><li>In 1964 Sharp produced the world’s first electronic calculator </li></ul><ul><li>In 1990 Sharp became a trillion yen company (around 10 billion usd) </li></ul><ul><li>In 1991 Sharp focuses on LCD research and development </li></ul><ul><li>In 2000 Sharp’s mobile share increase </li></ul><ul><li>In 2005 Sharp plans to focus on solar cell production </li></ul>
  4. 4. Sharp’s Products and Services <ul><li>LCDs </li></ul><ul><li>TV Panels </li></ul><ul><li>Blu-ray disc player and dvd players </li></ul><ul><li>Solar panels </li></ul><ul><li>Home appliances </li></ul><ul><li>Digital copeiers </li></ul><ul><li>Data projectors </li></ul><ul><li>Calculators </li></ul><ul><li>Mobile phones and PDAs </li></ul>
  5. 5. Toshiba’s History <ul><li>Toshiba Corporation is a multinational conglomerate manufacturing headquartered in Tokyo, Japan </li></ul><ul><li>The company's main business is in Infrastructure, Consumer Products, and Electronic devices and components. </li></ul><ul><li>Toshiba is the world's fifth largest personal computer manufacturer, after Hewlett-Packard and Dell of the U.S., Acer of Taiwan and Lenovo of China </li></ul><ul><li>In 1939, the company merged with one of Japan's largest producers of heavy electrical machinery and was renamed Tokyo Shibaura Electric Co. Ltd </li></ul>
  6. 6. Toshiba’s History <ul><li>Toshiba America, Inc. (TAI) is the holding company for one of the nation's leading group of high technology companies </li></ul><ul><li>Toshiba Corporation's roots are in Tokyo Electric Works, founded by Hisashige Tanaka, the Thomas Edison of Japan, in 1875 </li></ul><ul><li>Tanaka's company grew to become one of Japan's largest producers of heavy electrical machinery, based on his dream of developing technology that would benefit people everywhere </li></ul><ul><li>1978, the company, which had become a leading, integrated electrical equipment manufacturer, was officially renamed &quot;Toshiba.&quot; </li></ul>
  7. 7. Toshiba’s Products and Services <ul><li>Digital Video Recorders </li></ul><ul><li>HD TV’s </li></ul><ul><li>Laptop Computers and Accessories </li></ul><ul><li>Projectors and Electronic Components </li></ul><ul><li>Printers, Faxes, and Scanners </li></ul><ul><li>DVD Players </li></ul><ul><li>Gaming Notebooks and Network Cameras </li></ul><ul><li>Mobile Audio Players </li></ul><ul><li>Broadcasting Systems and Office Solutions </li></ul>
  8. 8. Sony’s History <ul><li>Sony Corporation is a multinational conglomerate (large company that consist of diverse divisions) corporation headquartered in Minato, Tokyo, Japan </li></ul><ul><li>Sony is one of the world's largest media conglomerates with revenue exceeding US $88.7 billion as of 2008 </li></ul><ul><li>Sony is one of the leading manufacturers of electronics, video, communications, video game consoles, and information technology products for the consumer and professional markets </li></ul><ul><li>Sony Corporation is the electronics business unit and the parent company of the Sony Group, which is engaged in business through its five operating segments—electronics, games, entertainment (motion pictures and music), financial services and other </li></ul>
  9. 9. Sony’s History <ul><li>These make Sony one of the most comprehensive entertainment companies in the world </li></ul><ul><li>Sony's principal business operations include Sony Corporation (Sony Electronics in the U.S.), Sony Pictures Entertainment, Sony Computer Entertainment, Sony BMG, Sony Ericsson, and Sony Financial Holdings </li></ul><ul><li>In August 1955, Tokyo Telecommunications Engineering released the Sony TR-55, Japan's first commercially produced transistor radio </li></ul><ul><li>In May 1956, the company released the TR-6, which featured an innovative slim design and sound quality capable of rivalling portable tube radios </li></ul>
  10. 10. Sony’s Products and Services <ul><li>Playstation 1, 2, 3 and PSP </li></ul><ul><li>Cameras and Camcorders </li></ul><ul><li>Desktop and Notebook Computers </li></ul><ul><li>Mobile Phones and PDA’s </li></ul><ul><li>T.V. And Home Entertainment </li></ul><ul><li>MP3 Players and Portable Electronics </li></ul><ul><li>DVD Players which Include Blue-Ray Discs </li></ul><ul><li>Projectors and Digital Imaging </li></ul><ul><li>Car Audio and GPS </li></ul>
  11. 11. Challenges Sharp Faces Today <ul><li>Sharp sees fiscal 2008 profit off 41% on cell phones: Nikkei </li></ul><ul><li>Net profit decline 41% on year to 60 billion yen ($590 million) for the 12 months ending March 2009 </li></ul><ul><li>There are many competitors out there that can offer better features and plans than Sharp </li></ul><ul><li>Sharp is still brainstorming a plan to try and react to this problem to increase its profits back to its original or even higher </li></ul>
  12. 12. Challenges Toshiba Faces Today <ul><li>Lowering chip prices is hurting Toshiba profit </li></ul><ul><li>Toshiba has stopped producing HD DVD products because they have been out-competed by Sony’s blue ray. </li></ul>
  13. 13. Challenges Sony Faces Today <ul><li>Sony unable to make profits from the LCT-TV business because of the declining unit price caused by the reduction in sizes of TV screens and the fierce price-cutting competition. </li></ul><ul><li>cut 8,000 jobs, close manufacturing sites because of the global recession. </li></ul>
  14. 14. Financial Ratio Comparison 10.7% 12% 8.44% Return on common shareholder’s equity $0.59 $0.45 $0.498 Earnings per share of common stock 3% 2% 3.3% Return on assets 6.5% 22% 16.71% Operating Expensive ratio 10.90 times 6.29 times 18.24 times Price-earning ratio $5.97 $3.64 $6.017 Book value per share 6.30 times 5.70 times 4.935 times Account receivable turnover 6.41 times 6.97 times 5.98 times Inventory Turnover $10.07 Billion $-56605000 $2.27billion Working Capital 70% 83% 59% Debt Ratio 0.99:1 0.70:1 0.83:1 Quick Ratio 1.24:1 0.98:1 1.148:1 Current Ratio Sony Toshiba Sharp Ratio or Other Measurement
  15. 15. Current Ratio <ul><li>The higher current ratio means that the company has higher ability to pay back their debt, Sony has the highest current ratio of 1.24:1 which means that For every dollar of current liabilities, Quality has 1.24 of current assets. While, Toshiba has a current ratio of 0.98:1 which means that the amount of current liabilities exceeds the current assets. Ideally a company would not want to have current liabilities higher than current assets because if all debt had to be paid back in the short-run, the company would not have to ability to do it. </li></ul>1.24:1 0.98:1 1.148:1 Current Ratio Sony Toshiba Sharp Ratio or Other Measurement
  16. 16. Quick Ratio <ul><li>All three companies have ratios which are lower than 1:1 which means that the quick assets does not have the ability to pay off its liabilities. A company would not want to have its quick ratio lower than 1:1 because if the company faces a bad period (ex. Cannot sell inventory) then the company will not have the ability to pay off current debt. </li></ul>0.99:1 0.70:1 0.83:1 Quick Ratio Sony Toshiba Sharp Ratio or Other Measurement
  17. 17. Debt Ratio <ul><li>Debt ratio means that the percentage of liabilities a company requires to finance its assets. The higher the debt ratio means that the company is in bad shape, once a company reaches an extremely high debt ratio, the creditors may demand repayment which may lead to bankruptcy. Typically a debt ratio which is lower than 1 or 100% means that the company needs less debt to finance its assets. Toshiba has a debt ratio percentage of 84% which means that the company rely on 83% of debt to finance its assets, this is below 100% which means that the company is doing well, but at the same time this number is also getting close to 100% which means that the company should be careful. Sharp has the lowest debt ratio percentage of 59% which means that Sharp only rely on 59% of debt to finance assets, Sharp is doing the best in terms of the debt ratio. </li></ul>70% 83% 59% Debt Ratio Sony Toshiba Sharp Ratio or Other Measurement
  18. 18. Working Capital <ul><li>Working capital is the amount of working liquidity a company has, basically the more working capital you have means that you have more funds to operate your company. Working capital can also determine your ability to pay back debt in the future. Sony has the highest working capital of over 10 billion which means that it has 10 billion dollars to expand, improve its operations and products. Toshiba has negative working capital which means that the company will not have the ability to pay off its debts, threatening its ability to continue operation and which means that it may lead to bankruptcy. </li></ul>$10.07 Billion $-56605000 $2.27billion Working Capital Sony Toshiba Sharp Ratio or Other Measurement
  19. 19. Inventory Turnover <ul><li>All three companies are doing a good job in managing their inventories as shown in the ratios. They all have relative close ratios which mean that they manage their inventory well and have the ability to get rid of their inventory in time. </li></ul>6.41 times 6.97 times 5.98 times Inventory Turnover Sony Toshiba Sharp Ratio or Other Measurement
  20. 20. Account Receivable Tunover <ul><li>Sony has the highest account receivable turnover which means that they have a very tight credit policy. Sharp has lower ratio than Toshiba and Sharp. This may indicate that the company has a collection problem part of which is due to bad debts. Although Sharp has the lowest account receivable turnover, over the past few years, its account receivable turnover has increased which is a sign that Sharp realizes that there is an issue with their collection of accounts receivable. </li></ul>6.30 times 5.70 times 4.935 times Account receivable turnover Sony Toshiba Sharp Ratio or Other Measurement
  21. 21. Return on Assets Ratio <ul><li>The return on assets ratio shows how profitable a company's assets are in generating revenue. Sharp and Sony has a similar percentage. This means that the two companies are profitable and they are currently competing against each other. In the past 2 years Sharp’s return on assets ratio have been increasing which is a sign that shows that they need to focus on better investments. </li></ul>3% 2% 3.3% Return on assets Sony Toshiba Sharp Ratio or Other Measurement
  22. 22. Price Earning Ratio <ul><li>The higher the P/E ratio means that the more money the investor is expecting for return. Sharp has a high P/E ratio which means that the expected earnings per share is $18.24 while Toshiba only has a P/E ratio of $6.29. A P/E ratio of 0-10 indicates that either the stock is undervalued or the company’s sales have declined. A P/E ratio of 10-17 is usually the fair value while a P/E ratio of 17-25 means that the company earnings have increased. </li></ul>10.90 times 6.29 times 18.24 times Price-earning ratio Sony Toshiba Sharp Ratio or Other Measurement
  23. 23. Return on common shareholder’s equity <ul><li>Toshiba has the highest percentage of return on common shareholders equity. This means the company is more likely to be the one that is capable of generating cash internally. The company has the highest earning of profit in comparison to the total amount of shareholder equity. Sharp has a low return on common shareholders equity which means that to company is earning a smaller profit in comparison to the shareholders. </li></ul>10.7% 12% 8.44% Return on common shareholder’s equity Sony Toshiba Sharp Ratio or Other Measurement
  24. 24. Why Invest in Sharp? <ul><li>a leading supplier of silicon photovoltaic (PV) solar cells for a number of years. </li></ul><ul><li>Worldwide Top 20 Semiconductor Sales Leaders: Rank 20 </li></ul><ul><li>Offering Solar TV: uses about one-third the power, and about one-half the annual energy consumption. </li></ul><ul><li>Thinnest LCD TV and is energy efficient . </li></ul>
  25. 25. Why Invest in Toshiba? <ul><li>Revolutionizing gaming Laptop. Release of the Qosmio X305 may interest many gaming consumers and will generate a lot of profit from this product. </li></ul><ul><li>Product of the Year. Toshiba’s Strata CTX100-S digital business communication system has been named 2004 Product of the Year Award. </li></ul>
  26. 26. Why Invest in Sony? <ul><li>Due to the many products that Sony has invented, many consumers believe that Sony is one of the best electronic producers in the world </li></ul><ul><li>Consumers believe that Sony will create better products that will allow them to maximize their profits </li></ul><ul><li>Sony is a fast-growing company and they have a long-standing joint venture with Samsung </li></ul><ul><li>Sony has also released their newest product the Blu-Ray disc and has been very popular among the consumers </li></ul>
  27. 27. Most Reliable Company to Invest in? <ul><li>Sharp is the most reliable company to invest in because they are becoming a global leader in solar, providing the systems to power more homes and businesses than any other solar manufacturer in the world. </li></ul><ul><li>Environmental benefits and highly reliable. </li></ul>