Hewlett Packard Company

Hewlett Packard Company

Nguyen Phan Dang 332976Phu Lam Thanh TuanNguyen Huu Tung

Today out group will present u about hewlett parkard company and its financial information

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.

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.

Fiscal PeriodOct08Oct09Oct10Oct13Oct14Revenue114.552126.033112.298111.454Cost of Goods Sold89.69987.52495.95686.3884.839Gross Profit28.66527.02830.07725.91826.615Gross Margin %24.2223.5923.8623.0823.88Selling, General, & Admin. Expense13.32611.61312.71813.26713.353Advertising----------Research & Development3.5432.8192.9593.1353.447Other Operating Expense1.3232.462.9212.3852.63Operating Income10.47310.13611.4797.1317.185Operating Margin %8.858.859.116.356.45Interest Income----------Interest Expense--721505621Other Income (Expense)628 Other Income (Minority Interest)Pre-Tax Income10.4739.41510.9746.516.557Tax Provision2.1441.7552.2131.3971.544Tax Rate %20.4718.6420.1721.4623.55Net Income (Continuing Operations)8.3297.668.7615.1135.013Net Income (Discontinued Operations)Net Income8.3297.668.7615.1135.013Net Margin %7.046.696.954.554.50Preferred dividendsEPS (Basic)3.353.213.782.642.66EPS (Diluted)3.253.143.692.622.62Shares Outstanding (Diluted)2,567.02,437.02,372.01,950.01,912.0Depreciation, Depletion and Amortization3.3564.784.824.6114.334EBITDA13.82914.91616.29911.74211.519

Income statement

In the screen is the income statement of HP from 2008 2014.

2008 - 20092009 - 20102010 - 20132013 - 2014Change Change in %Change Change in %Change Change in %Change Change in %RevenueN/aN/a11.48110%-13.735-11%-0.844-1%Cost of Goods Sold-2.175-2%8.43210%-9.576-10%-1.541-2%Gross Profit-1.637-6%3.04911%-4.159-14%0.6973%Gross Margin %-0.63-3%0.271%-0.78-3%0.83%Selling, General, & Admin. Expense-1.713-13%1.10510%0.5494%0.0861%Advertising----------------Research & Development-0.724-20%0.145%0.1766%0.31210%Other Operating Expense1.13786%0.46119%-0.536-18%0.24510%Operating Income-0.337-3%1.34313%-4.348-38%0.0541%Operating Margin %000.263%-2.76-30%0.12%Interest Income----------------Interest Expense-----216-30%11623%N/aN/aOther Income (Expense)---------------- Other Income (Minority Interest)----------------Pre-Tax Income-1.058-10%1.55917%-4.464-41%0.0471%Tax Provision-0.389-18%0.45826%-0.816-37%0.14711%Tax Rate %-1.83-9%1.538%1.296%2.0910%Net Income (Continuing Operations)-0.669-8%1.10114%-3.648-42%-0.1-2%Net Income (Discontinued Operations)----------------Net Income-0.669-8%1.10114%-3.648-42%-0.1-2%Net Margin %-0.35-5%0.264%-2.4-35%-0.05-1%Preferred dividends----------------EPS (Basic)-0.14-4%0.5718%-1.14-30%0.021%EPS (Diluted)-0.11-3%0.5518%-1.07-29%00Shares Outstanding (Diluted)-130-5%-65-3%-422-18%-38-2%Depreciation, Depletion and Amortization1.42442%0.041%-0.209-4%-0.277-6%EBITDA1.0878%1.3839%-4.557-28%-0.223-2%

HP CHANGE IN %

This is show the change of HP company in the financial sheet from 2008 - 2014

Fiscal year is Jan - Dec.2008 - 20092009-20102010 - 20132013 - 2014ChangeChange in %ChangeChange in %Change Change in %Change Change in %I Net Sales or Revenues-7.87-8%4.114%-0.120%-6.96-7%Cost Of Goods Sold (COGS)-6-10%1.894%-2.61-5%-4.86-9%I Gross Profit-1.87-4%2.225%2.55%-2.1-4%Research & Developent Expense-0.52-8%0.214%0.23%-0.79-13%Selling General & Adin Expense-2.44-10%0.894%1.668%-0.32-1%Income before Depreciation Depletion Amortization1.077%1.147%0.633%-0.99-5%Depreciation Depletion Amortization----------------Non Operating Income0.086%0.4127%-0.79-41%1.53133%Interest Expense-271-40%-34-8%349%8220%I Pretax Incoe1.428%1.589%-0.2-1%0.472%Provision for Income Taxes0.338%0.184%-1.85-38%1.1939%inority Interest----------------Investent Gains Losses----------------Other Incoe----------------Income before Extraordinaries & Disc Operations1.19%1.410%1.6511%-0.73-4%Extraordinary Items & Discontinued Operations----------------I Net Incoe (Profit/Loss)1.19%1.410%1.6511%-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 Items1.19%1.410%3.1321%-1.26-7%Income fro Nonrecurring Ites------------I Earnings Per Share asic Net1.0512%1.5716%3.3729%-3.09-21%I Earnings Per Share Diluted Net1.0812%1.5115%3.4230%-3.04-20%EPS Diluted before Nonrecurring Ites1.0812%1.5115%4.7641%0.252%Preferred Dividends Acc Pd----------------Dividends Coon----------------Dividend Per Share Coon0.2513%0.3516%1.20.480.5515%

IBM CHANGE IN %

This is show the change of IBM company in the financial sheet from 2008 - 2014

Significant change in % of both companies

1/ COGS in 2008Its a huge change When the IBM's number is -6% when its competitor is only -2%2/ COGS in 2014Still 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 2014HP'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 %

in the graph, we can see that it's a significant change in Cost Of Good sold (COGS) in 2008 of both companies. When the IBM's number is -6 when its competitor is only -2.137.*On the other hand, there still a big different in COGS's numbers in 2014. The percentage of COGS of HP is -2%, when its big competitor's number is -9%( The different in COGS in 2014 is -7%)>>>> COGS includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good.According to these numbers, we can easily recognize that IBM was more developed They invest more money in many projects and made more profit than the other at these time.* AmortizationNext is the Amortization in 2010. Following the chart, we can see that the growth HP's Amortization is pretty low ( 1%) when the number of IBM is totally high it reached a peak in 2010 with 7%. It's one of the biggest change of both companies.

HP FINANCIAL RATIOSShort term Solvency20082009201020132014Current ratio0.97711.22181.09681.10641.1466Quick ratio0.82831.07930.96590.97360.9999Cash ratio0.19180.30880.22120.26720.3460Long term SolvencyDebt ratio0.65640.64710.67510.74200.7410Times interest earned#VALUE!0.01410.02270.0115#DIV/0!Cash coverage ratio#VALUE!0.02070.03230.0189#DIV/0!Asset management ratiosinventory turnover11.384614.282614.840114.287113.2251Days sales inventory32.060925.555524.595525.547527.5990Receivables turnover07.73538.77368.01047.0084Days sales in receivable#DIV/0!47.186341.602045.565752.0806Total asset turnover00.99781.01231.06271.0799Profitability ratiosProfit margin#DIV/0!0.06690.06950.04550.0450Return on assets0.07350.06670.07040.04840.0486Return on equity0.21390.18910.21660.18750.1875

This is the fiancial ratio of HP company from 2008 2014

LIQUIDITY RATIO20082009201020132014Current ratio1.15461.35941.18641.27901.2480Qiuick ratio1.09101.29031.12601.22141.1949Cash ratio00.33830.26280.26700.2141FINANCIAL LEVERAGE RATIOSDebt ratio0.87710.79130.79580.81830.8978Times interest earned0.02370.04230.04930.04670.0368Cash coverage ratio0.05960.10560.12050.11300.0951ASSET MANGEMENT RATIOSInventory turnover21.470420.871521.983722.186122.0905Days' sales inventory17.000217.488016.603216.451716.5230Receivables turnover8.57868.06068.34348.27807.7325Days' sales in receivables42.547545.282043.747444.092747.2034Total asset turnover0.94620.87840.88030.79030.7895PROFITABILITY RATIOSProfit margin0.11900.14020.14850.16520.1295Return on assets0.11260.12320.13070.13060.1023Return on equity0.91540.59010.64010.71871.0008

IBM FINANCIAL RATIOS

This is the IBM financial ratios from 2008 - 2014

Current ratioAs 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).

The reason why was that, in the period 2008-2014, The IBM's company has steadily shifted its business mix by exiting markets such as PCs , hard disk drives and DRAMs and focusing on higher-value, more profitable markets such as business intelligence , data analytsics , business , security, cloud computing , virtualization and green solutions, resulting in a higher quality revenue stream and higher profit margins.investment

*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.

Profit margin

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.

2008 20014 both companies lookes stable, but IBM higher than HP 0.143 average by the years .The main reason which lead to these numbers are in the couple years ago, IBM company focused in many projects to expand their brand name and make more profit. Especially is in 2013 IBM acquired SoftLayer Technologies, a web hosting service, in a deal worth around $ 2 billion and IBM has invested more money in this project in the following year. That why The number of Debt Raio of IBM is higher than the HP.

Quick ratio

2008 2014 quick ratio of both company were stable, however general HP lower than IBM average 0.2077

Cash ratio

Cash ratio of both company were not different at all from 2008 2013, but in 2014 we can see that HP got more cash 0.131 cover liability than IBM

Time interest earned

Cash coverage ratio

Inventory turnover

In general from 2008 2014, inventory turnover of IBM more higher than HP, it means IBM less inventory than HP by the years.

Days sales in receivables

In general from 2008 2014 Days sale in inventory of HP higher than IBM, it means customer of HP took more time at an average 27 days to pay for their credit card.

Receivable turnover

Receivable turnover of both companies are not stable, in 2010 HP at peak 8.7736, IBM at peak 8.5786, average HP took 8 times per year to collect payment from customer.

Total asset turnover

Look in the graph we can see asset turnover of HP increased by the year and IBM decrease by the year, it mean HP use better their asset to generate revenue.

Return on assets

2008 2014 The assets of HP was generating average 6 cents per investment dollar in profit, whereas IBM was generating average 11 cents per investment dollar in profit.

Return on equity

2008- 2014 ROE of HP looked more steady than IBM, there is quite far distance between 2 companies, we can see that IBM took more profit to generate for the owners than HP.

Comparing financial ratios of industry and HP Company in 2014

Current Ratio of HP lower than industry 0.533 Quick ratio of HP higher than Industry 0.569 about debt ratio HP higher than industry 1.9

Look the inventory turnover HP lower than industry 6.27 in receivable turnover HP lower 0.8 than industry, total asst turnover of HP higher than industry 0.21

HP gained bad profit lower than industry 10%, and also lower 0.08 return on assets than Industry, finally HP took less profit for owners than industry 13 cents per dollar.

20082009201020132014Average inventory4018.944018.064018.234018.024018.21Inventory turnover0.02230.02180.02390.02150.0211Production cycle16353.7316756.4715284.6616978.2217287.40Average accounts receivable16.42916.233517.205515.90314.881Account receivable turnover--6.23856.69006.29666.4728Collection cycle--58.507554.559457.967756.3902Average account payable13.353513.299513.077512.904513.8465Account payable turnover6.71736.58107.33756.69386.1271Accounts payable cycle54.337655.462749.744554.528259.5713Cash conversation cycle#VALUE!16759.5215289.4816981.6617284.22

CASH CONVERSION CYCLE

As you can see this is the trends of Account receivable, inventory turnover, production cycle, average accounts receivable

There are trends of Account receivable turnover, collection cycle, average account payable and account payable turnover.

And finallly we got trend of cash conversion cycle, we can see that the trend of the time betwween when HP pay for raw materials and when it receives payment for its produc is higher by the years from 2010 2014.

CONCLUSIONAccording 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.

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 But, in the present and nearly future, HP company tries more developed and focusing in many big inventions and projects.

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%2BExpense/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