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Annual report analysis: technology sector

Part 1
Review the Management Discussion and Analysis section of the latest annual report for two of the following organizations and discuss the management's perspective of the organizations future. Which organization is to be considered the leader company and the other is the challenger company?

Technology Sector: (www.google.com/finance)
- Cisco Systems, Inc.
- Nokia Corporation

Part 2
Obtain the latest two years (the years analyzed must be the same for both organizations) of the annual financial statements of the two organizations chosen in part 1.

A ratio analysis is to be completed for the two organizations. Use charts or tables to display data:
1. Measures of Operating Performance
2. Return on Assets
3. Profit Margin
4. Asset TurnOver
5. Revenue Per Employee
6. Accounts Receivable TurnOver
7. Accounts Payable TurnOver
8. Days to Pay
9. Inventory Turnover
10. Days in Inventory
11. Plant Asset Turnover

Part 3
Obtain the latest two years (the years analyzed must be the same for both organizations) of the annual financial statements of the two organizations chosen in part 1.
The ratio analysis is to be completed for the two organizations. Use charts or tables to display data.

Measures of Financial Performance:
1. Return on Common Shareholders Equity
2. Earnings Per Share
3. Price/Earnings (use end of the year numbers)

Risk Measurement
1. Current Ratio
2. Quick Ratio
3. Cash flow from operations vs. current liabilities
4. Interest Coverage Ratio

Part 4
Analyzing and explaining the quantitative and qualitative data between the two organizations, discuss the ratios in part 2 and 3.

Part 5
Using the analysis and discussion of the financial statements and ratios, analyzing and explaining the quantitative and qualitative data between the two organizations, create an industry summary that explains the key factors associated with success in the industry.

Solution Preview

Part I:
Cisco Systems, Inc.
Cisco Management Discussion and Analysis section reflects that the management of the company is expecting that the company will continue to be impacted by some of the same challenges in fiscal 2013 as were in 2012 including the impact by continued weakness in the European economy, lower global public sector spending especially with regard to the U.S. federal government and European governments, and a continued conservative approach to IT-related capital spending as the customers of IT products respond to difficult macroeconomic environments.

Nokia Corporation
The mobile communication industry is more vulnerable than before to the negative impacts of deteriorations in global economic conditions mainly due to increased competition in the global market. The slower growth rate of recovery in 2012 ...

Solution Summary

The expert examines annual report analysis for a technology sector.

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