Financial Statement Analysis Project
Content
Financial Statement Analysis Project
LU WANG Prof. Waitz ACC 12-001 Mar. 28
th
2010
General Information about the comany: The company I am evaluating is Yahoo! Inc. Yahoo! Inc. is a world famous technology company in Internet information industry. It is one of the most-used integrative Portals websites that provide all kinds of services like advertisements, entertainment, oneline search, and communication. Founded in 1994 by Jerry Yang and David Filo, it is the most successful online media company around the globe.
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Right now the headquarter of the company is in Sunnyvale, California, US. And it operates in more that 25 countries, provinces and territories. Yahoo’s vision is to be the center of people’s online lives by delivering personally relevant, meaningful internet experiences. Integrated
Consumer
Yahoo! Properties currently fall into five categories:1. Experiences
2.
Applications
(Communications
and
Communities) Communities) 3. Search 4. Media Products Products & Solutions 5.Mobile. The Company's Company's trademarks are Yahoo!, Y!, del.icio.us, Flickr, HotJobs, Launch, Overture. Their most competitive services are Yahoo Yahoo Mail, Yahoo News, Yahoo Yahoo Search, Search , Yahoo Yahoo Finance, Finan ce, etc. Company’s major competitors are Google, AOL and Microsoft. Yahoo!’s coustomers are widespread in the world. It doesn’t have special target customers. Major customers are people who need to search information, read news, communicate, etc. Companies and organizations use it to advertise products, expand business make decisions, etc. Besides, it corperates with many other companies like Cheggy Chegg y, Twitter, Twitter, Microsoft,etc.
The company’s financing and liquidity: The major financing source of Yahoo! Inc. is online search advertisement. It’s part part of the the Eq Equi uity ty.. Accor Accordin ding g to the the stati statisti stics, cs, 88% of its its renevu renevuee came came from from marketi marketing ng services services.. 25% comes comes from compani companies es advertis advertising. ing. Adverti Advertisers sers bid for display their advertisements advertisements on the search results.It results.It gives top billings to advertisers to were willing to bill the most. Average search results offers Yahoo! 2.5 to 3 cents
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collected per person that visit company website in average, which is far more than other similar companies like My Space, AOL and Google. It also has the largest data collection events on Web Site. Plus, it has the most page viewed, displayed ads viewed and largest amount of unique visitors. Companys are willing to advertise in Yahoo!. Yahoo! Inc. is liquided. liquided. According According to its annual financial report of year 2009, Its current ratio equals to current assets/current liabilities, which is 4,594,772/ 1,717,728 = 2.6. It reveals that the company has strong ability to pay short term debt. Its Acidtest(quick) test(quick) ratio is computed as 1,275,430(cash)+ 1,275,430(cash)+ 2,015,655(short-term 2,015,655(short-term investment)+ investment)+ 1,003,3 1,003,362(n 62(net et account account receiva receivables bles)/ )/ 1,717,7 1,717,728(c 28(curre urrent nt liabili liabilities ties)= )= 2.5. This This data measures the immediate short-term liquidity. Compare to its previous statistics of 2008, its total assets increases 9.1% while its total liabilities decreases 0.14%. It’s current ratio ascents 6.92% and the quick ratio ascents 5.56% . Compare it with Google. Inc, in 2009, Google’s Google’s current ratio is 10.61 and the quick ratio is 8.03. Both ratio is much higher than Yahoo! Inc. It shows that Google Inc. has more ability to pay its maturing obligations and to meet unexpected needs for cash. If Yahoo! Inc. paid 25% of its Account Payable, its accounts payable would decrea decrease se 25%, 25%, which which is 136 13676 769*( 9*(11-25% 25%)=1 )=102, 02,576 576.7 .75, 5, and its cash cash would would also also decrease 25%, which would be 1,275,430*(1-25%)=956,572.5. As a result, its current assests has become $4,275,914.5 and its current liabilities has become $1,667,040.75. Its previous working capital is $26,419,491, now the working capital is
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The company’s performance and profitability: The company’s profit margin is 9.26%, Return on Assets is 2.24%, Return on Equity is 5.04%. Its EPS is 0.42. The Receivables turnover is 5.92 times, approximetely every 62 days. It means that about 62 days the company can collect receivables from the customers. The company’s accounts receivable are turning over 5.92 times. The company is not efficient in collecting its accounts receivable. Because it collects its receivables around every half a year. That’s a little bit long for a Internet information company. This kind of company should have fast cash flow to innovate and creat new and novel stuff in order to keep up with the develping Internet Internet market. Yahoo! needs to change its marketing strategies and increase its sales. So that they can get more money to invest in new applications to keep up a high level. The net income of Yahoo! Inc. experienced a huge fluctuation in three years. From the end of 2007 to the end of 2008, its net income dropped from $642,005 to $424,686. That’s mostly because of the severe economic depretion during that period. Many companies were facing bankrupcy, poverty and jobless. They were lack of money and couldn’t afford online advertisements. Plus, the operating cash flows decrease, many companies cannot pay back their debts. So the company cannot collect receivables on time. Then from the beginning of 2008 to the beginning of 2009, its net income sharply went up to 605,286. On the one hand, that’s probably because the worldwide economy recovery. The recovery brings back more jobs and
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Yahoo!. Besides, Yahoo! hired a new CEO Carol Bartz to operates the company. She came up with some new direction. On July 21, 2009, Yahoo! Yahoo! launched a new version of its front page, The new page allows users to customize it through the prominent "My Favorites" panel on the left side and integrate third-party web services and launch them within one page. This new changes helps Web Web users to mange their own pages. That become more convinient convinient and personalized. personalized. It helped the company earned more money. Now it slightly decrease to 597,000. That’s probably because Yahoo! is busy expanding its business and buying many other Web Sites like Cheggy and sports sites. And it invest a lot of money in Twitter. Twitter.
The Company's Solvency Ablility Evaluation: Yahoo! Inc.’s Inc.’s debt to total assets ratio is 16.18%, and the data for last year was 17.68%. It measures the percentage of total assets provided by creditors. This data indicates company’ company’s degree of leverage. Yahoo! Yahoo! Inc just have 16% risk that company have very strong ability to meet its maturing obligations. As a top class Internet company with various kinds of elites and long history, Yahoo! is certainly to exploit new markets and expand business to survive for a long period of time, even in the recession time.
Final Overall Evaluation: I think I might invest in this company. Compare to its stock price in 2 years, and
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in a stable level to some extent. The company didn’t crash during the recession period. I guess in the long run, it will still keep its performance. That’s why it’s better to stay with Long-term investment. By analyzing its financial data, Yahoo! has very strong cash flow and capital. It is profitable profitable and liquidity. liquidity. Additionally Additionally,, the company has strong ablity to pay its debts. In order to keep its world class level, Yahoo! makes suitble adjustments, creat new products and upgrade its services according to the market. It’s a young and active company with rapid growing proformances. Especially the new leadership leadership and management management team gives new air to this industry. industry. Compare its current performance to the industry and its competitors, no matter in finance, products and innovation, Yahoo! always remain its status, and still try to do better. The market capitalization of Yahoo! is $23.2, ranked the 2nd of the class. Its 5 year long-term growth rate is 19.52%, which is a very smooth growth. In addition, its P/E ratio is 39.19%, and rank the 4th of the class. Besides, its EPS is 0.42, the revenue is 6.64 billion dollars and its gross margin is 55.55%. The recent survey shows, the competition in Internet company are still pierce. Compare Compare market market share share of searchin searching g engines, engines, Yahoo Yahoo!! takes takes about about 28.8%, 28.8%, follow follow closel closely y to Google Google,, whic which h takes takes 46% marke market. t. In 200 2009, 9, totall totally y 1,726 1,726,0 ,060 60 peopl peoplee worldwide use Yahoo search, takes 16% of the searches. Another report on mail users percentage reveals that Yahoo mail took 13% of the market, keep the steps of Outlook mail and Hotmail. Plus, the recent research shows that the strong poing of Yahoo!
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news sites. After the Yahoo! Yahoo! hired new CEO Carol Bratz on 2009, the sales and revenue sharply increased. She brought new business oppurtunities to the company and I am sure she will make some more changes. She is the exact combination of seasoned technology executive and savvy leader that the Board was looking for, and we are thrilled to have attracted such a world-class talent to Yahoo!. Overall, Yahoo! Yahoo! Inc. is a young, active and vigorous international international company, company, by evaluating the financial data of the company, I believe it's a good company for longterm investment.
Reference:
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LU WANG Prof. Waitz ACC 12-001 Mar. 28
th
2010
General Information about the comany: The company I am evaluating is Yahoo! Inc. Yahoo! Inc. is a world famous technology company in Internet information industry. It is one of the most-used integrative Portals websites that provide all kinds of services like advertisements, entertainment, oneline search, and communication. Founded in 1994 by Jerry Yang and David Filo, it is the most successful online media company around the globe.
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Right now the headquarter of the company is in Sunnyvale, California, US. And it operates in more that 25 countries, provinces and territories. Yahoo’s vision is to be the center of people’s online lives by delivering personally relevant, meaningful internet experiences. Integrated
Consumer
Yahoo! Properties currently fall into five categories:1. Experiences
2.
Applications
(Communications
and
Communities) Communities) 3. Search 4. Media Products Products & Solutions 5.Mobile. The Company's Company's trademarks are Yahoo!, Y!, del.icio.us, Flickr, HotJobs, Launch, Overture. Their most competitive services are Yahoo Yahoo Mail, Yahoo News, Yahoo Yahoo Search, Search , Yahoo Yahoo Finance, Finan ce, etc. Company’s major competitors are Google, AOL and Microsoft. Yahoo!’s coustomers are widespread in the world. It doesn’t have special target customers. Major customers are people who need to search information, read news, communicate, etc. Companies and organizations use it to advertise products, expand business make decisions, etc. Besides, it corperates with many other companies like Cheggy Chegg y, Twitter, Twitter, Microsoft,etc.
The company’s financing and liquidity: The major financing source of Yahoo! Inc. is online search advertisement. It’s part part of the the Eq Equi uity ty.. Accor Accordin ding g to the the stati statisti stics, cs, 88% of its its renevu renevuee came came from from marketi marketing ng services services.. 25% comes comes from compani companies es advertis advertising. ing. Adverti Advertisers sers bid for display their advertisements advertisements on the search results.It results.It gives top billings to advertisers to were willing to bill the most. Average search results offers Yahoo! 2.5 to 3 cents
The world’s largest digital library
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collected per person that visit company website in average, which is far more than other similar companies like My Space, AOL and Google. It also has the largest data collection events on Web Site. Plus, it has the most page viewed, displayed ads viewed and largest amount of unique visitors. Companys are willing to advertise in Yahoo!. Yahoo! Inc. is liquided. liquided. According According to its annual financial report of year 2009, Its current ratio equals to current assets/current liabilities, which is 4,594,772/ 1,717,728 = 2.6. It reveals that the company has strong ability to pay short term debt. Its Acidtest(quick) test(quick) ratio is computed as 1,275,430(cash)+ 1,275,430(cash)+ 2,015,655(short-term 2,015,655(short-term investment)+ investment)+ 1,003,3 1,003,362(n 62(net et account account receiva receivables bles)/ )/ 1,717,7 1,717,728(c 28(curre urrent nt liabili liabilities ties)= )= 2.5. This This data measures the immediate short-term liquidity. Compare to its previous statistics of 2008, its total assets increases 9.1% while its total liabilities decreases 0.14%. It’s current ratio ascents 6.92% and the quick ratio ascents 5.56% . Compare it with Google. Inc, in 2009, Google’s Google’s current ratio is 10.61 and the quick ratio is 8.03. Both ratio is much higher than Yahoo! Inc. It shows that Google Inc. has more ability to pay its maturing obligations and to meet unexpected needs for cash. If Yahoo! Inc. paid 25% of its Account Payable, its accounts payable would decrea decrease se 25%, 25%, which which is 136 13676 769*( 9*(11-25% 25%)=1 )=102, 02,576 576.7 .75, 5, and its cash cash would would also also decrease 25%, which would be 1,275,430*(1-25%)=956,572.5. As a result, its current assests has become $4,275,914.5 and its current liabilities has become $1,667,040.75. Its previous working capital is $26,419,491, now the working capital is
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The company’s performance and profitability: The company’s profit margin is 9.26%, Return on Assets is 2.24%, Return on Equity is 5.04%. Its EPS is 0.42. The Receivables turnover is 5.92 times, approximetely every 62 days. It means that about 62 days the company can collect receivables from the customers. The company’s accounts receivable are turning over 5.92 times. The company is not efficient in collecting its accounts receivable. Because it collects its receivables around every half a year. That’s a little bit long for a Internet information company. This kind of company should have fast cash flow to innovate and creat new and novel stuff in order to keep up with the develping Internet Internet market. Yahoo! needs to change its marketing strategies and increase its sales. So that they can get more money to invest in new applications to keep up a high level. The net income of Yahoo! Inc. experienced a huge fluctuation in three years. From the end of 2007 to the end of 2008, its net income dropped from $642,005 to $424,686. That’s mostly because of the severe economic depretion during that period. Many companies were facing bankrupcy, poverty and jobless. They were lack of money and couldn’t afford online advertisements. Plus, the operating cash flows decrease, many companies cannot pay back their debts. So the company cannot collect receivables on time. Then from the beginning of 2008 to the beginning of 2009, its net income sharply went up to 605,286. On the one hand, that’s probably because the worldwide economy recovery. The recovery brings back more jobs and
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Yahoo!. Besides, Yahoo! hired a new CEO Carol Bartz to operates the company. She came up with some new direction. On July 21, 2009, Yahoo! Yahoo! launched a new version of its front page, The new page allows users to customize it through the prominent "My Favorites" panel on the left side and integrate third-party web services and launch them within one page. This new changes helps Web Web users to mange their own pages. That become more convinient convinient and personalized. personalized. It helped the company earned more money. Now it slightly decrease to 597,000. That’s probably because Yahoo! is busy expanding its business and buying many other Web Sites like Cheggy and sports sites. And it invest a lot of money in Twitter. Twitter.
The Company's Solvency Ablility Evaluation: Yahoo! Inc.’s Inc.’s debt to total assets ratio is 16.18%, and the data for last year was 17.68%. It measures the percentage of total assets provided by creditors. This data indicates company’ company’s degree of leverage. Yahoo! Yahoo! Inc just have 16% risk that company have very strong ability to meet its maturing obligations. As a top class Internet company with various kinds of elites and long history, Yahoo! is certainly to exploit new markets and expand business to survive for a long period of time, even in the recession time.
Final Overall Evaluation: I think I might invest in this company. Compare to its stock price in 2 years, and
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in a stable level to some extent. The company didn’t crash during the recession period. I guess in the long run, it will still keep its performance. That’s why it’s better to stay with Long-term investment. By analyzing its financial data, Yahoo! has very strong cash flow and capital. It is profitable profitable and liquidity. liquidity. Additionally Additionally,, the company has strong ablity to pay its debts. In order to keep its world class level, Yahoo! makes suitble adjustments, creat new products and upgrade its services according to the market. It’s a young and active company with rapid growing proformances. Especially the new leadership leadership and management management team gives new air to this industry. industry. Compare its current performance to the industry and its competitors, no matter in finance, products and innovation, Yahoo! always remain its status, and still try to do better. The market capitalization of Yahoo! is $23.2, ranked the 2nd of the class. Its 5 year long-term growth rate is 19.52%, which is a very smooth growth. In addition, its P/E ratio is 39.19%, and rank the 4th of the class. Besides, its EPS is 0.42, the revenue is 6.64 billion dollars and its gross margin is 55.55%. The recent survey shows, the competition in Internet company are still pierce. Compare Compare market market share share of searchin searching g engines, engines, Yahoo Yahoo!! takes takes about about 28.8%, 28.8%, follow follow closel closely y to Google Google,, whic which h takes takes 46% marke market. t. In 200 2009, 9, totall totally y 1,726 1,726,0 ,060 60 peopl peoplee worldwide use Yahoo search, takes 16% of the searches. Another report on mail users percentage reveals that Yahoo mail took 13% of the market, keep the steps of Outlook mail and Hotmail. Plus, the recent research shows that the strong poing of Yahoo!
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news sites. After the Yahoo! Yahoo! hired new CEO Carol Bratz on 2009, the sales and revenue sharply increased. She brought new business oppurtunities to the company and I am sure she will make some more changes. She is the exact combination of seasoned technology executive and savvy leader that the Board was looking for, and we are thrilled to have attracted such a world-class talent to Yahoo!. Overall, Yahoo! Yahoo! Inc. is a young, active and vigorous international international company, company, by evaluating the financial data of the company, I believe it's a good company for longterm investment.
Reference:
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