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Intel's Financial Statement Analysis

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The 2010 Intel Annual Report can be found at the following Web site: www.pearsonhighered.com/fraser. Using the annual report, answer the following questions:

(a) Using the Intel Annual Report, calculate key financial ratios for all years presented.
(b) Using the library, find industry averages to compare to the calculations in (a).
(c) Write a report to the management of Intel. Your report should include an evalu­ ation of short-term liquidity, operating efficiency, capital structure and long-term solvency, profitability, market measures, and a discussion of any quality of finan­ cial reporting issues. In addition, strengths and weaknesses should be identified, and your opinion of the investment potential and the creditworthiness of the
firm should be conveyed to management.

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Solution Preview

(a) See excel attached for key financial ratios.
(b) I used industry averages or Texas Instrument ratios when an industry average was not available.

Dear Management of Intel,

I have reviewed the key financial ratios for Intel and compared these to industry means (averages) or Texas Instruments if the industry does not readily publish a comparable ratio. My observations are shown below.

Liquidity

Like the industry, Intel's liquidity is very strong. Typically, a current and quick ratio above one is adequate and Intel is above 2 in all years shown. This is along the industry average.

Operating efficiency

The inventory turnover, the key for a manufacturer, is better than the industry. It hovers around 4 turns a year, turning the ...

Solution Summary

Your tutorial is 457 words and a spreadsheet of key financial ratios and industry comparisons.

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Financial Statement Analysis: Intel Annual Report

1. The 2010 Intel Annual Report can be found at the following website: www.pearsonhighered.com/fraser.
a. Using the consolidated statements of operations, analyze the profitability of Intel by preparing a common-size income statement and by calculating any other ratios deemed necessary for the past three years. Be sure to calculate sales growth and operating expense growth for each two-year period presented.
b. Using the consolidated statements of stockholders' equity for Intel, explain the key reasons for the changes in the common stock, accumulated other comprehensive income, and retained earnings accounts. Evaluate these changes.
c. Prepare a summary analysis of the Statements of Cash Flows for all three years.
d. Analyze the Consolidated Statements of Cash Flows for Intel for 2010, 2009, and 2008.

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