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Financial Analysis Paper





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Financial Analysis

Balance Sheet

1. Capital accounts

Sony and Panasonic’s capital accounts of the year 2010 have some similarities. For example, both accounts have additional paid in capital. Sony’s additional capital is about $1,520,132,000 while Panasonic’s $735,811,700. This identifies the activity of investment taking place. The total assets of Panasonic are $ 3.68 billion dollars at the period ended 2011. In addition, as for Sony, the representations in the report are realistically represented although they have been scaled down in order to make recording easier. For Panasonic’s, the 2010 ratio of the stock prices to book value was 8.54 while Sony’s was 9.89.

2. Non-Current Assets

Sony’s property and equipment account had a book value of $25,560,600.246 million while Panasonic’s property plant and equipment account had a net book value of $3,545,693 million. Unfortunately, the information does not separate the accounts. For example, the net book values of the plant and equipment. The amortization and depreciation rates are also not quite clear.

3. Materiality of the Assets

The non-current assets are material to the financial statements. Their significance has been shown as they have been recorded as part of the financial report. A misrepresentation of these assets would mislead the investors or those interested in the report. The material intangible assets have been recorded at a value of $1.31 billion for Panasonic Company and $5.546.1 billion for Sony Company. For these large companies, goodwill and the investments done in other major companies are material assets (Graham and Meredith 107).

4. Deferred Tax Accounts

The Sony’s company has deferred taxes worth $1,332.4 billion while Panasonic has deferred taxes worth $808 million. Although both companies have tried keeping up with paying the taxes, they should improve on their payments. The deferred taxes and the accrued income taxes may affect the company’s financial performance.

5. Current Assets

Liquidity ratios: Quick Ratio = (Current assets – Inventory)/Current liabilities

Panasonic Company – (9,730 – 6,222)/2,728 = 1.286

Sony’s – ((9,730 – 6,222)/2,728 = 1.286

Current Ratio = Current Assets/Current liabilities

Panasonic– 3,730/3,728 = 0.948

Sony’s = 4368.5/2924.7 = 1.49

Cash ratio = Cash and cash equivalents/ Current liabilities

Panasonic– 90/8728 = 0.0453

Sony’s – 2387/2924.7 = 0.282

6/7 Liabilities and Hidden Assets

All the assets have been reported on although they have been portrayed as miscellaneous assets or other assets.

Income Statement

1. Efficiency Ratio

Collection period Ratio = Accounts Receivable/Sales*365 days

Sony – 1610/15564*365 = 37.76

Panasonic’s – 1179.1/24074.6*365 = 17.88

Panasonic – 15564/1222 = 12.74

Sony’s – 24074.6/109.9 = 219.05

Assets to sales = Total assets/Sales

Panasonic – 11172/15564 = 0.72

Panasonic’s – 31,975.2/24074.6 = 1.33

Accounts Payable to Sales Ratio = Accounts payable/Net Sales

Panasonic – 1165/15564 = 0.08

Sony’s – 943.9/24074.6 = 0.04

Sales to Net working Capital Ratio = Sales/ Net working Capital

Panasonic – 18564/-848 = -20.35

Sony’s – 54074.6/ -2635.7 = -24.82

2. Ratio Profitability

The companies need to increase the sales revenue and reduce the debt ratio. The assets to sales should also be improved so that the assets can work to the absolute advantage of increasing the sales. Sony’s collection of debt should also be improved. This will increase the total income acquaintance and minimize the debts to be written off (Graham and Meredith 137).

Works Cited

Graham, Benjamin, and Spencer Barrett Meredith. The Interpretation of Financial Statements. HarperBusiness, 1998. Print.

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