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Internal Gaming Technology: Evaluation of Liquidity

Based on financial statements of Internal Gaming Technology and their background answer the questions below:

b. Detailed evaluation of:

(1) Short-term liquidity (current debt-paying ability).
(2) Cash forecasting and pro forma analysis.
(3) Capital structure and solvency.
(4) Return on invested capital. Your analysis should yield inferences for each
(5) Asset turnover (utilization).
(6) Profitability and equity analysis.

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Internal Gaming Technology: Financial Statement Analysis
The following analysis is based on the financial statements of International Game Technology (NYSE: IGT) for the years ending September 30, 2006, 2007, 2008, 2009 and 2010.

Ratios 2010 2009 2008 2007 2006
Short-term liquidity
Current ratio 2.06 1.98 2.00 1.86 1.10
Working capital (in millions, $) $ 620.10 $ 609.20 $ 733.40 $ 595.50 $ 129.10
Quick ratio 1.90 1.72 1.70 1.65 0.97
Cash forecasting
Cash from operations per share $ 1.99 $ 1.86 $ 1.58 $ 2.49 $ 1.85
Cash per share $ 0.53 $ 0.50 $ 0.86 $ 0.79 $ 0.87
Free cash flows $ (474.79) $(552.19) $(568.54) $(354.04) $ 102.78
Free cash flows to equity $(1,086.90) $(836.90) $ 50.50 $ 238.80 $ 46.40
Capital structure and solvency
Debt ratio 0.69 0.75 0.81 0.65 0.48
Debt to equity 2.25 3.07 4.22 1.87 0.91
Long term debt to equity 1.77 2.48 3.38 1.39 0.30
Short term debt to total debt 0.21 0.19 0.20 0.25 0.67
Financial leverage ratio 3.25 4.08 5.01 2.87 ...

Solution Summary

Internal gaming technology is examined. An evaluation of Liquidity, cash forecasting, capital structure, return on investment capital and asset turnover are determined.

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