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Comparative Financial Analysis Report Sony_ Toshiba_ _ Sharp

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Comparative Financial Analysis Report Sony_ Toshiba_ _ Sharp Powered By Docstoc
					Derek Cheung
 Chris Gow
 Mark Poon
Sharp’s History
Sharp Corporation is a Japanese electronics manufacturer,
 founded in 1912
Since the invention of the Ever-Sharp pencil it has
 developed into one of the leading electronics companies in
 the world
In 1925 Sharp developed Japan’s first radio
In 1931 Sharp expands internationally and opens its
 overseas outlets
In 1937 during the WWII the demand for radios grew
 because the desire for news grew which helped Sharp
 expand on its communication technology
Sharp’s History
In 1953 Sharp created the first Japan television set
In 1959 Sharp becomes a full-range electronics manufacurer
In 1964 Sharp produced the world’s first electronic calculator
In 1990 Sharp became a trillion yen company (around 10 billion
 usd)
In 1991 Sharp focuses on LCD research and development
In 2000 Sharp’s mobile share increase
In 2005 Sharp plans to focus on solar cell production
       Sharp’s Products and
             Services
LCDs
TV Panels
Blu-ray disc player and dvd players
Solar panels
Home appliances
Digital copeiers
Data projectors
Calculators
Mobile phones and PDAs
 Toshiba’s History
Toshiba Corporation is a multinational
 conglomerate manufacturing
 headquartered in Tokyo, Japan
The company's main business is in
 Infrastructure, Consumer Products, and
 Electronic devices and components.
Toshiba is the world's fifth largest
 personal computer manufacturer, after
 Hewlett-Packard and Dell of the U.S.,
 Acer of Taiwan and Lenovo of China
In 1939, the company merged with one of
 Japan's largest producers of heavy
 electrical machinery and was renamed
 Tokyo Shibaura Electric Co. Ltd
Toshiba’s History
Toshiba America, Inc. (TAI) is the holding company for one of
 the nation's leading group of high technology companies
Toshiba Corporation's roots are in Tokyo Electric Works,
 founded by Hisashige Tanaka, the Thomas Edison of Japan, in
 1875
Tanaka's company grew to become one of Japan's largest
 producers of heavy electrical machinery, based on his dream of
 developing technology that would benefit people everywhere
1978, the company, which had become a leading, integrated
 electrical equipment manufacturer, was officially renamed
 "Toshiba."
Toshiba’s Products and
Services
Digital Video Recorders
HD TV’s
Laptop Computers and Accessories
Projectors and Electronic Components
Printers, Faxes, and Scanners
DVD Players
Gaming Notebooks and Network Cameras
Mobile Audio Players
Broadcasting Systems and Office Solutions
Sony’s History
Sony Corporation is a multinational conglomerate (large company that
 consist of diverse divisions) corporation headquartered in Minato,
 Tokyo, Japan
Sony is one of the world's largest media conglomerates with revenue
 exceeding US $88.7 billion as of 2008
Sony is one of the leading manufacturers of electronics, video,
 communications, video game consoles, and information technology
 products for the consumer and professional markets
Sony Corporation is the electronics business unit and the parent
 company of the Sony Group, which is engaged in business through its
 five operating segments—electronics, games, entertainment (motion
 pictures and music), financial services and other
Sony’s History
 These make Sony one of the most comprehensive
  entertainment companies in the world
 Sony's principal business operations include Sony
  Corporation (Sony Electronics in the U.S.), Sony
  Pictures Entertainment, Sony Computer
  Entertainment, Sony BMG, Sony Ericsson, and
  Sony Financial Holdings
 In August 1955, Tokyo Telecommunications
  Engineering released the Sony TR-55, Japan's first
  commercially produced transistor radio
 In May 1956, the company released the TR-6,
  which featured an innovative slim design and
  sound quality capable of rivalling portable tube
  radios
Sony’s Products and
Services
Playstation 1, 2, 3 and PSP
Cameras and Camcorders
Desktop and Notebook Computers
Mobile Phones and PDA’s
T.V. And Home Entertainment
MP3 Players and Portable Electronics
DVD Players which Include Blue-Ray
 Discs
Projectors and Digital Imaging
Car Audio and GPS
Challenges Sharp Faces
Today
Sharp sees fiscal 2008 profit off 41% on cell phones:
 Nikkei
Net profit decline 41% on year to 60 billion yen ($590
 million) for the 12 months ending March 2009
There are many competitors out there that can offer better
 features and plans than Sharp
Sharp is still brainstorming a plan to try and react to this
 problem to increase its profits back to its original or even
 higher
Challenges Toshiba Faces
Today
Lowering chip prices is hurting
 Toshiba profit
Toshiba has stopped producing HD
 DVD products because they have
 been out-competed by Sony’s blue
 ray.
Challenges Sony Faces
Today
Sony unable to make profits from
 the LCT-TV business because of
 the declining unit price caused by
 the reduction in sizes of TV
 screens and the fierce price-
 cutting competition.
cut 8,000 jobs, close
 manufacturing sites because of the
 global recession.
Financial Ratio Comparison
Ratio or Other Measurement         Sharp         Toshiba         Sony
         Current Ratio             1.148:1        0.98:1        1.24:1
         Quick Ratio               0.83:1         0.70:1        0.99:1
          Debt Ratio                59%            83%           70%
       Working Capital           $2.27billion   $-56605000   $10.07 Billion
      Inventory Turnover         5.98 times     6.97 times    6.41 times
  Account receivable turnover    4.935 times    5.70 times    6.30 times
     Book value per share          $6.017         $3.64          $5.97
      Price-earning ratio        18.24 times    6.29 times    10.90 times
   Operating Expensive ratio       16.71%          22%           6.5%
       Return on assets             3.3%           2%             3%
 Earnings per share of common      $0.498         $0.45          $0.59
               stock
Return on common shareholder’s     8.44%           12%          10.7%
             equity
Current Ratio
The higher current ratio means that the company has higher
  ability to pay back their debt, Sony has the highest current
  ratio of 1.24:1 which means that For every dollar of current
  liabilities, Quality has 1.24 of current assets. While, Toshiba
  has a current ratio of 0.98:1 which means that the amount of
  current liabilities exceeds the current assets. Ideally a
  company would not want to have current liabilities higher
  than current assets because if all debt had to be paid back in
  the short-run, the company would not have to ability to do it.

    Ratio or Other    Sharp          Toshiba         Sony
     Measurement
     Current Ratio    1.148:1        0.98:1          1.24:1
Quick Ratio
All three companies have ratios which are lower than 1:1
  which means that the quick assets does not have the ability
  to pay off its liabilities. A company would not want to
  have its quick ratio lower than 1:1 because if the company
  faces a bad period (ex. Cannot sell inventory) then the
  company will not have the ability to pay off current debt.



    Ratio or Other    Sharp         Toshiba         Sony
     Measurement
     Quick Ratio      0.83:1        0.70:1         0.99:1
  Debt Ratio
Debt ratio means that the percentage of liabilities a company
  requires to finance its assets. The higher the debt ratio means that
  the company is in bad shape, once a company reaches an
  extremely high debt ratio, the creditors may demand repayment
  which may lead to bankruptcy. Typically a debt ratio which is
  lower than 1 or 100% means that the company needs less debt to
  finance its assets. Toshiba has a debt ratio percentage of 84%
  which means that the company rely on 83% of debt to finance its
  assets, this is below 100% which means that the company is doing
  well, but at the same time this number is also getting close to
  100% which means that the company should be careful. Sharp has
  the lowest debt ratio percentage of 59% which means that Sharp
  only rely on 59% of debt to finance assets, Sharp is doing the best
  in terms of the debt ratio.
       Ratio or Other     Sharp          Toshiba           Sony
        Measurement
         Debt Ratio        59%             83%             70%
 Working Capital
Working capital is the amount of working liquidity a
 company has, basically the more working capital you have
 means that you have more funds to operate your company.
 Working capital can also determine your ability to pay back
 debt in the future. Sony has the highest working capital of
 over 10 billion which means that it has 10 billion dollars to
 expand, improve its operations and products. Toshiba has
 negative working capital which means that the company
 will not have the ability to pay off its debts, threatening its
 ability to continue operation and which means that it may
 lead to bankruptcy.
     Ratio or Other      Sharp        Toshiba         Sony
      Measurement
    Working Capital   $2.27billion   $-56605000   $10.07 Billion
Inventory Turnover
All three companies are doing a good job in
  managing their inventories as shown in the
  ratios. They all have relative close ratios
  which mean that they manage their inventory
  well and have the ability to get rid of their
  inventory in time.
  Ratio or Other       Sharp       Toshiba       Sony
  Measurement
Inventory Turnover   5.98 times   6.97 times   6.41 times
Account Receivable Tunover
Sony has the highest account receivable turnover which
 means that they have a very tight credit policy. Sharp has
 lower ratio than Toshiba and Sharp. This may indicate that
 the company has a collection problem part of which is due
 to bad debts. Although Sharp has the lowest account
 receivable turnover, over the past few years, its account
 receivable turnover has increased which is a sign that Sharp
 realizes that there is an issue with their collection of
 accounts receivable.
   Ratio or Other       Sharp        Toshiba        Sony
    Measurement
 Account receivable   4.935 times   5.70 times    6.30 times
      turnover
Return on Assets Ratio
The return on assets ratio shows how profitable a
 company's assets are in generating revenue. Sharp
 and Sony has a similar percentage. This means
 that the two companies are profitable and they are
 currently competing against each other. In the past
 2 years Sharp’s return on assets ratio have been
 increasing which is a sign that shows that they
 need to focus on better investments.
  Ratio or Other     Sharp    Toshiba       Sony
   Measurement
  Return on assets   3.3%       2%           3%
Price Earning Ratio
The higher the P/E ratio means that the more money the
 investor is expecting for return. Sharp has a high P/E
 ratio which means that the expected earnings per share is
 $18.24 while Toshiba only has a P/E ratio of $6.29. A
 P/E ratio of 0-10 indicates that either the stock is
 undervalued or the company’s sales have declined. A P/E
 ratio of 10-17 is usually the fair value while a P/E ratio of
 17-25 means that the company earnings have increased.

    Ratio or Other        Sharp        Toshiba        Sony
     Measurement
  Price-earning ratio   18.24 times   6.29 times   10.90 times
Return on common shareholder’s
equity
Toshiba has the highest percentage of return on common
 shareholders equity. This means the company is more
 likely to be the one that is capable of generating cash
 internally. The company has the highest earning of profit in
 comparison to the total amount of shareholder equity.
 Sharp has a low return on common shareholders equity
 which means that to company is earning a smaller profit in
 comparison to the shareholders.
    Ratio or Other        Sharp     Toshiba          Sony
     Measurement
  Return on common        8.44%      12%            10.7%
   shareholder’s equity
Why Invest in Sharp?
a leading supplier of silicon
 photovoltaic (PV) solar cells for a
 number of years.
Worldwide Top 20 Semiconductor
 Sales Leaders: Rank 20
Offering Solar TV: uses about one-
 third the power, and about one-half the
 annual energy consumption.
Thinnest LCD TV and is energy
 efficient .
Why Invest in Toshiba?
Revolutionizing gaming Laptop. Release of the Qosmio
 X305 may interest many gaming consumers and will
 generate a lot of profit from this product.
Product of the Year. Toshiba’s Strata CTX100-S digital
 business communication system has been named 2004
 Product of the Year Award.
Why Invest in Sony?
Due to the many products that Sony has invented, many
 consumers believe that Sony is one of the best electronic
 producers in the world
Consumers believe that Sony will create better products
 that will allow them to maximize their profits
Sony is a fast-growing company and they have a long-
 standing joint venture with Samsung
Sony has also released their newest product the Blu-Ray
 disc and has been very popular among the consumers
Most Reliable Company to Invest
              in?
Sharp is the most reliable company to
 invest in because they are becoming a
 global leader in solar, providing the
 systems to power more homes and
 businesses than any other solar
 manufacturer in the world.
Environmental benefits and highly
 reliable.