HP is an American multinational information technology company founded by William Hewlett and David Packard. It provides hardware, software, and services to consumers, small and medium businesses, and large enterprises. The document includes HP's income statements from 2008 to 2014 which show trends in revenue, costs, expenses, profits, and other financial metrics over this period. It also compares some of HP's key financial ratios to IBM over the same time frame.

1. ↗
Hewlett – Packard Company
1. Nguyen Phan Dang 332976
2. Phu Lam Thanh Tuan
3. Nguyen Huu Tung

2. Background information
↗ *HP Company is an American multinational information
technology.
↗ *The company was founded by William "Bill" Redington
Hewlett and David "Dave" Packard.
↗ *Corporation headquartered in Palo Alto, California, USA.

3. What does HP company do?
↗ *It provides hardware, software and services to
consumers, small and medium businesses (SMBs)
and large enterprises, including customers in the
government sector, health and education.

4. Fiscal Period Oct08 Oct09 Oct10 Oct13 Oct14
Revenue 114.552 126.033 112.298 111.454
Cost of Goods Sold 89.699 87.524 95.956 86.38 84.839
Gross Profit 28.665 27.028 30.077 25.918 26.615
Gross Margin % 24.22 23.59 23.86 23.08 23.88
Selling, General, & Admin. Expense 13.326 11.613 12.718 13.267 13.353
Advertising -- -- -- -- --
Research & Development 3.543 2.819 2.959 3.135 3.447
Other Operating Expense 1.323 2.46 2.921 2.385 2.63
Operating Income 10.473 10.136 11.479 7.131 7.185
Operating Margin % 8.85 8.85 9.11 6.35 6.45
Interest Income -- -- -- -- --
Interest Expense -- 721 505 621
Other Income (Expense) 628
Other Income (Minority Interest)
Pre-Tax Income 10.473 9.415 10.974 6.51 6.557
Tax Provision 2.144 1.755 2.213 1.397 1.544
Tax Rate % 20.47 18.64 20.17 21.46 23.55
Net Income (Continuing Operations) 8.329 7.66 8.761 5.113 5.013
Net Income (Discontinued Operations)
Net Income 8.329 7.66 8.761 5.113 5.013
Net Margin % 7.04 6.69 6.95 4.55 4.50
Preferred dividends
EPS (Basic) 3.35 3.21 3.78 2.64 2.66
EPS (Diluted) 3.25 3.14 3.69 2.62 2.62
Shares Outstanding (Diluted) 2,567.0 2,437.0 2,372.0 1,950.0 1,912.0
Depreciation, Depletion and Amortization 3.356 4.78 4.82 4.611 4.334
EBITDA 13.829 14.916 16.299 11.742 11.519
Income statement

5. 2008 - 2009 2009 - 2010 2010 - 2013 2013 - 2014
Change Change in % Change Change in % Change Change in % Change Change in %
Revenue N/a N/a 11.481 10% -13.735 -11% -0.844 -1%
Cost of Goods Sold -2.175 -2% 8.432 10% -9.576 -10% -1.541 -2%
Gross Profit -1.637 -6% 3.049 11% -4.159 -14% 0.697 3%
Gross Margin % -0.63 -3% 0.27 1% -0.78 -3% 0.8 3%
Selling, General, & Admin. Expense -1.713 -13% 1.105 10% 0.549 4% 0.086 1%
Advertising -- -- -- -- -- -- -- --
Research & Development -0.724 -20% 0.14 5% 0.176 6% 0.312 10%
Other Operating Expense 1.137 86% 0.461 19% -0.536 -18% 0.245 10%
Operating Income -0.337 -3% 1.343 13% -4.348 -38% 0.054 1%
Operating Margin % 0 0 0.26 3% -2.76 -30% 0.1 2%
Interest Income -- -- -- -- -- -- -- --
Interest Expense -- -- -216 -30% 116 23%N/a N/a
Other Income (Expense) -- -- -- -- -- -- -- --
Other Income (Minority Interest) -- -- -- -- -- -- -- --
Pre-Tax Income -1.058 -10% 1.559 17% -4.464 -41% 0.047 1%
Tax Provision -0.389 -18% 0.458 26% -0.816 -37% 0.147 11%
Tax Rate % -1.83 -9% 1.53 8% 1.29 6% 2.09 10%
Net Income (Continuing Operations) -0.669 -8% 1.101 14% -3.648 -42% -0.1 -2%
Net Income (Discontinued Operations) -- -- -- -- -- -- -- --
Net Income -0.669 -8% 1.101 14% -3.648 -42% -0.1 -2%
Net Margin % -0.35 -5% 0.26 4% -2.4 -35% -0.05 -1%
Preferred dividends -- -- -- -- -- -- -- --
EPS (Basic) -0.14 -4% 0.57 18% -1.14 -30% 0.02 1%
EPS (Diluted) -0.11 -3% 0.55 18% -1.07 -29% 0 0
Shares Outstanding (Diluted) -130 -5% -65 -3% -422 -18% -38 -2%
Depreciation, Depletion and
HP CHANGE IN %

6. Fiscal year is Jan - Dec. 2008 - 2009 2009-2010 2010 - 2013 2013 - 2014
Change Change in % Change
Change in
% Change Change in % Change
Change in
%
I Net Sales or Revenues -7.87 -8% 4.11 4% -0.12 0% -6.96 -7%
Cost Of Goods Sold (COGS) -6 -10% 1.89 4% -2.61 -5% -4.86 -9%
I Gross Profit -1.87 -4% 2.22 5% 2.5 5% -2.1 -4%
Research & Developent Expense -0.52 -8% 0.21 4% 0.2 3% -0.79 -13%
Selling General & Adin Expense -2.44 -10% 0.89 4% 1.66 8% -0.32 -1%
Income before Depreciation Depletion
Amortization 1.07 7% 1.14 7% 0.63 3% -0.99 -5%
Depreciation Depletion Amortization -- -- -- -- -- -- -- --
Non Operating Income 0.08 6% 0.41 27% -0.79 -41% 1.53 133%
Interest Expense -271 -40% -34 -8% 34 9% 82 20%
I Pretax Incoe 1.42 8% 1.58 9% -0.2 -1% 0.47 2%
Provision for Income Taxes 0.33 8% 0.18 4% -1.85 -38% 1.19 39%
inority Interest -- -- -- -- -- -- -- --
Investent Gains Losses -- -- -- -- -- -- -- --
Other Incoe -- -- -- -- -- -- -- --
Income before Extraordinaries & Disc
Operations 1.1 9% 1.4 10% 1.65 11% -0.73 -4%
Extraordinary Items & Discontinued
Operations -- -- -- -- -- -- -- --
I Net Incoe (Profit/Loss) 1.1 9% 1.4 10% 1.65 11% -4.46 -27%
Average Shares used to copute Diluted EPS -0.04 -3% -0.05 -4% -0.19 -15% -0.09 -8%
Average Shares used to compute asic EPS -0.03 -2% -0.06 -5% -0.18 -14% -0.09 -8%
Income before Nonrecurring Items 1.1 9% 1.4 10% 3.13 21% -1.26 -7%
Income fro Nonrecurring Ites -- -- -- -- -- --
I Earnings Per Share asic Net 1.05 12% 1.57 16% 3.37 29% -3.09 -21%
I Earnings Per Share Diluted Net 1.08 12% 1.51 15% 3.42 30% -3.04 -20%
EPS Diluted before Nonrecurring Ites 1.08 12% 1.51 15% 4.76 41% 0.25 2%
Preferred Dividends Acc Pd -- -- -- -- -- -- -- --
Dividends Coon -- -- -- -- -- -- -- --
Dividend Per Share Coon 0.25 13% 0.35 16% 1.2 0.48 0.55 15%
IBM CHANGE IN %

7. Significant change in % of both companies
1/ COGS in 2008
It’s a huge change When the IBM's number is -6% when its
competitor is only -2%
2/ COGS in 2014
Still a significant change. The percentage of COGS of HP in
2014 is -2%, when its big competitor's number is -9%( The
different in COGS in 2014 is -7%)
3/ Amortization in 2014
HP's Amortization is pretty low ( 1%) when the number of
IBM is totally high (reached a peak in 2010 with 7%).
=>>> It's one of the biggest change in %

8. HP FINANCIAL RATIOS
Short term Solvency 2008 2009 2010 2013 2014
Current ratio 0.9771 1.2218 1.0968 1.1064 1.1466
Quick ratio 0.8283 1.0793 0.9659 0.9736 0.9999
Cash ratio 0.1918 0.3088 0.2212 0.2672 0.3460
Long term Solvency
Debt ratio 0.6564 0.6471 0.6751 0.7420 0.7410
Times interest earned #VALUE! 0.0141 0.0227 0.0115 #DIV/0!
Cash coverage ratio #VALUE! 0.0207 0.0323 0.0189 #DIV/0!
Asset management ratios
inventory turnover 11.3846 14.2826 14.8401 14.2871 13.2251
Days’ sales inventory 32.0609 25.5555 24.5955 25.5475 27.5990
Receivables turnover 0 7.7353 8.7736 8.0104 7.0084
Days’ sales in receivable #DIV/0! 47.1863 41.6020 45.5657 52.0806
Total asset turnover 0 0.9978 1.0123 1.0627 1.0799
Profitability ratios
Profit margin #DIV/0! 0.0669 0.0695 0.0455 0.0450
Return on assets 0.0735 0.0667 0.0704 0.0484 0.0486
Return on equity 0.2139 0.1891 0.2166 0.1875 0.1875

9. LIQUIDITY RATIO 2008 2009 2010 2013 2014
Current ratio 1.1546 1.3594 1.1864 1.2790 1.2480
Qiuick ratio 1.0910 1.2903 1.1260 1.2214 1.1949
Cash ratio 0 0.3383 0.2628 0.2670 0.2141
FINANCIAL LEVERAGE RATIOS
Debt ratio 0.8771 0.7913 0.7958 0.8183 0.8978
Times interest earned 0.0237 0.0423 0.0493 0.0467 0.0368
Cash coverage ratio 0.0596 0.1056 0.1205 0.1130 0.0951
ASSET MANGEMENT RATIOS
Inventory turnover 21.4704 20.8715 21.9837 22.1861 22.0905
Days' sales inventory 17.0002 17.4880 16.6032 16.4517 16.5230
Receivables turnover 8.5786 8.0606 8.3434 8.2780 7.7325
Days' sales in receivables 42.5475 45.2820 43.7474 44.0927 47.2034
Total asset turnover 0.9462 0.8784 0.8803 0.7903 0.7895
PROFITABILITY RATIOS
Profit margin 0.1190 0.1402 0.1485 0.1652 0.1295
Return on assets 0.1126 0.1232 0.1307 0.1306 0.1023
Return on equity 0.9154 0.5901 0.6401 0.7187 1.0008
IBM FINANCIAL
RATIOS

10. Current ratio
As we can see in the graph, the growth IBM's current ratio is seemed higher than HP
company and this numbers are increasing by the year ( 2008-2014).

11. *REASONS
+The IBM's company has steadily shifted its business mix by
exiting markets
+ focusing on higher-value, more profitable markets ( business
intelligence , data analytics , business continuity , security)
+resulting in a higher quality revenue stream and higher profit
margins.

12. Profit margin

13. Debt ratio
*REASON
+ 2013 IBM acquired SoftLayer Technologies, a web hosting
service, in a deal worth around $ 2 billion
+ IBM Invest more money in this project in the following
year.

14. Quick ratio

15. Cash ratio

16. Time interest earned

17. Cash coverage ratio

18. Inventory turnover

19. Days’ sales in receivables

20. Receivable turnover

21. Total asset turnover

22. Return on assets
0.0735
0.0667
0.0704
0.0484 0.0486
0.1126
0.1232
0.1307 0.1306
0.1023
0.0000
0.0200
0.0400
0.0600
0.0800
0.1000
0.1200
0.1400
2008 2009 2010 2013 2014
HP
IBM

23. Return on equity

24. Comparing financial ratios of industry and HP Company in 2014

27. 2008 2009 2010 2013 2014
Average inventory 4018.94 4018.06 4018.23 4018.02 4018.21
Inventory turnover 0.0223 0.0218 0.0239 0.0215 0.0211
Production cycle 16353.73 16756.47 15284.66 16978.22 17287.40
Average accounts receivable 16.429 16.2335 17.2055 15.903 14.881
Account receivable turnover -- 6.2385 6.6900 6.2966 6.4728
Collection cycle -- 58.5075 54.5594 57.9677 56.3902
Average account payable 13.3535 13.2995 13.0775 12.9045 13.8465
Account payable turnover 6.7173 6.5810 7.3375 6.6938 6.1271
Accounts payable cycle 54.3376 55.4627 49.7445 54.5282 59.5713
Cash conversation cycle #VALUE! 16759.52 15289.48 16981.66 17284.22
CASH CONVERSION CYCLE

31. CONCLUSION
According to the given numbers, we can see that IBM is such a big competitor of HP The
growth of HP's ratios were seemed less much more than the other from 2008-2014. But, in
the present and nearly future, HP company tries more developed and focusing in many big
inventions and projects. especially is On October 6, 2014, Hewlett-Packard announced plans
to split the PC and printers business from its enterprise products and services business. With
those projects, HP company will be more profitable and favorite in worldwide.

32. http://csimarket.com/Industry/industry_Profitability_Ratios.php?ind=1002
http://csimarket.com/Industry/industry_Efficiency.php?ind=1002
http://csimarket.com/Industry/industry_Profitability_Ratiosc.php?ind=1002
http://www.bondsquawk.com/2012/11/14/bond-investments-hewlett-packard-bonds-offer-
value-amid-headwinds/
http://amigobulls.com/stocks/HPQ/balance-sheet/annual
http://amigobulls.com/stocks/IBM/income-statement/annual
http://quicktake.morningstar.com/stocknet/bonds.aspx?symbol=hpq
http://www.gurufocus.com/term/other_operating_charges/HPQ/Other%2BOperating%2BExp
ense/Hewlett-Packard%2BCo
http://www.gurufocus.com/financials/IBM&affid=45223
http://www.gurufocus.com/financials/HPQ
http://amigobulls.com/stocks/HPQ/cash-flow/annual
REFERENCES