财务管理案例详解英文版.docx

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1、一 .Background information of Sony1. Sony is founded on May 7, 1946 with the Headquarters Tokyo and Japan.2. Its corporate strategies are becoming a “knowledge-emergent enterprise in the broadband network era”.Evidenced by recent improvements in network infrastructure, the broadband environment has b

2、egun to expand at a rapid pace. In preparation for the arrival of the full-scale broadband era, Sony is pursuing its vision of creating a Ubiquitous “Value” Network (UVN).3. Its development aspect expanded from the first magnetic tape recorder in1950, to the first QUALIA products in 2003, during the

3、se years with representative products in each decade: 60thfirst tape recorder and transistor 70th-video cassette player and headphone stereo Walkman 80th-CD player and camcorder 90th-high-density disc and DVD player In the 21th century- EL Display and optical disc二. The main operations of the corpor

4、ation are: 三. The main structure of its sales income1. First is the Electronics:The Electronics segment consists of the following categories: Audio, Video, Televisions, Information and Communications, Semiconductors, Components and Other.The graph shows the information about this: The income is decr

5、easing 2. Second is the Game:Game console and software business is conducted by Sony Computer Entertainment Inc.We can see the information from the graph: the income is also decreasing3. Third is the Music:Music business is conducted by Sony Music Entertainment Inc. (SMEI) and Sony Music Entertainme

6、nt (Japan) Inc. (SMEJ).The graph is showing the basic information: The income is decreasing4. Fourth is the Picture:Motion pictures, television and other businesses are conducted by Sony Pictures Entertainment Inc. (SPE).And also the basic information is from the Graph: The income is increasing5. Fi

7、fth is the financial service:The Financial Services segment includes Sony Life Insurance Co. Ltd. Sony Assurance Inc., Sony Bank Inc. and Sony Finance International. Inc.As graph of right show the operating information: The income is increasing6. Sixth is other operating:The Other segment includes a

8、n Internet-related business, So-net, which is conducted by Sony Communication Network Corporation, an in-House information system services business, an IC card business and other businesses.With the information in the right graph: The income is increasingThe major Products of SonyAudio Home audio, p

9、ortable audio, car audio, and car navigation systems Video Video cameras, digital still cameras, video decks, and DVD-Video players/recorders, and Digital-broadcasting receiving systemsTelevisions CRT-based televisions, projection televisions, PDP televisions, LCD televisions, projector for computer

10、s and display for computers Information and communications PC, printer system, portable information PC, broadcast and professional use audio/video/monitors and other professional-use equipment Semiconductors LCD, CCD and other semiconductors Electronic components Optical pickups, batteries, audio/vi

11、deo/data recording media, and data recording systems 四.Sales and Operating Revenue by Geographic Information1. The main market of course is the USA 2. It is expand the Europe and other country market ,while decrease the USA and Japan market ,While seems flat in total market .3. We can conclude Sony

12、is facing a worldwide competition.4. It is changing its business from traditional area to the new area, especially the entertainment market.5. It also need find new market, for example the Asian market, and bring new product with technology.This is the Segment Information of its sales income20022003

13、2004ElectronicsCustomers477255045433134758400Intersegment513631397137138995Total528618149404504897395GameCustomers986529936274753732Intersegment171851875726488Total1003714955031780220MusicCustomers541418512908487457Intersegment586338459872431Total600051597506559888PicturesCustomers635841802770756370

14、Intersegment000Total635841802770756370Financial ServicesCustomers480190509398565752Intersegment289322787827792Total509122537276593544OtherCustomers161730168970174680Intersegment99733137323155712Total261463306293330392Elimination-718114-665693-421418Consolidated total757825874736337496391 6. Developi

15、ng trend AnalysisFactors which may affect Sonys financial performance include the following: market conditions, including general economic conditions, levels of consumer spending, foreign exchange fluctuations Sonys ability to continue to implement personnel reduction and other business reorganizati

16、on activities Sonys ability to implement its network strategy, and implement successful sales and distribution strategies in the light of the Internet and other technological developmentsSonys ability to devote sufficient resources to research and developmentSonys ability to prioritize capital expen

17、ditures, and the success Sonys joint ventures and alliances. Risks and uncertainties also include the impact of any future events with material unforeseen impacts.7.The basic financial ratios of Sony from year 2002 to 2004Financial ratios of each items of Sony corporation200420032002current ratio1.1

18、278 1.2953 1.3044 Acid-test ratio0.9043 1.0384 1.0411 Debt to total Assets ratio0.7359 0.7249 0.7076 Long term Debt to total Assets ratio0.4078 0.4340 0.3950 Interest guarantee leverage1.2850 1.5090 1.2024 Cash guarantee leverage1.3056 1.3828 1.4109 Receivable turnover6.1248 6.1867 5.1764 Inventory

19、turnover7.5891 7.9578 7.7804 Current Assets Turnover2.0466 2.1926 2.1152 Fixed Assets Turnover5.0427 5.4101 5.0003 Total Assets Turnover0.7572 0.8262 0.8623 Gross Sales profit margin0.2652 0.2800 0.2577 Sales profit margin0.0209 0.0358 0.0131 Return on total Assets0.0158 0.0296 0.0113 Return on Equi

20、ty0.0606 0.1086 0.0391 Assets Increment rate1.0426 0.9622 1.0237 Return on Fixed Assets0.1055 0.1937 0.0657 Return on long term Assets0.0327 0.0648 0.0253 Net Sales profit margin0.0129 0.0167 0.0022 Net profit margin on total Assets0.0097 0.0138 0.0019 Net profit margin on Equity0.0372 0.0506 0.0065

21、 From the above analysis and the table, we can see that: The liquidity ratio and Acid-test ratio are in a year by year up-trend ,but combining receivable turnover and inventory turnover, the increase is mainly because of the increase of accounts receivable and the decrease of current liability. The

22、company accounts receivable turnover and inventory turnover are in up-trend ,this shows that Sony do well in accounts receivable and inventory, so its debt-repay ability and profit abilities will be in advantages.Its debt ratio is decreasing year by year, so we can see that Sony will have a low fina

23、ncial leverage, its financial environment will be good for its operating Also, from analysis of the table, Sonys consolidated sales, operating income, income before taxes, and net income are expected to decrease compared with the fiscal year ended March 31, 2004. While we assume that the yen for the

24、 fiscal year ending March 31, 2005 will strengthen against the U.S. dollar and will weaken against the euroSonys investments are comprised of debt and equity securities accounted for under both the cost and equity method of accounting. If it has been determined that an investment has sustained an ot

25、her-than-temporary decline in its value, the investment is written down to its fair value by a charge to earnings.五. Analysis of Sonys abilities1. The ability to meet the obligation200220032004Current ratio 1.30441.29531.1278 Quick ratio 1.04111.03840.9043Interest coverage ratio 1.20241.50901.2850De

26、bt to total Assets ratio 0.70760.72490.7359For short-term obligations:. From the current ratio, we see that the situation is not good for Sony corporation. Because the median current ratio for the industry is 2.1, but those of Sony is less than this obviously. But if we look at the quick ratio, we w

27、ill find its very good: the industry median quick ratio is 1.1, and those of Sony are very near to it. This is because Sony has not as much inventories as other corporations.Then we can see that the ability of Sony to meet short-term obligations is good.For long-term obligations. The debt ratios are

28、 lager than 50%, which indicates that Sony borrows a large amount of money. Its evidenced by the increasing amount of interest payment. . Its interest coverage ratios are obviously less than the median of that for the industry which is 4.0. Then we can see that Sonys ability to meet the long-term ob

29、ligations is not good.2. Assets management analysis200220032004Receivable turnover 5.17646.18676.1248Inventory turnover7.78047.95787.5891Total assets turnover 0.86230.82620.7572First, the receivable turnovers are obviously less than the median of 8.1for the industry, which tells us that Sonys receiv

30、ables are considerably slower in turning over than is typical for the industry.Second, the inventory turnovers are higher than the median of 3.3 for the industry, which shows Sony has a good inventory management. This is because that inventory is a small portion of assets Third, the total asset turn

31、overs are obviously less than the median of 1.66 for the industry. So it is clear that Sony generates less sales revenue per dollar of asset investment than does the industry.So Sonys assets management is not good enough3. Profitability analysisGross profit margin 26.52% 28.00%25.77% Return on asset

32、s(ROI) 0.97% 1.38% 0.19% Return on net profit(ROE) 3.72% 5.06% 0.65% Sonys gross profit margin is above the median of 23.8 percent for the industry, indicating that it is relatively more effective at producing and selling products above cost.But comparing to the median ROI value of 7.8% and the medi

33、an ROE value of 14.04%, those of Sony are very poor. And this means that it employs more assets and equity to generate a dollar of profit than does the typical firm in the industry. 4. Accounts receivable securitization program In the United States of America, Sony set up an accounts receivable secu

34、ritization program whereby Sony can sell interests in up to $900 million of eligible trade accounts receivable, as defined. Through this program, Sony can securitize and sell a percentage of undivided interest in that pool of receivables to several multi-seller commercial paper conduits owned and op

35、erated by banks. Sony can sell receivables in which the agreed upon original due dates are no more than 90 days. after the invoice dates. The value assigned to undivided interests retained in securitized trade receivables is based on the relative fair values of the interest retained and sold in the

36、securitization. Sony has assumed that the fair value of the retained interest is equivalent to its carrying value as the receivables are short-term in nature, high quality and have appropriate reserves for bad debt incidence. There was no sale of receivables for the fiscal year ended March 31, 2003.

37、 Losses from these transactions were insignificant.5. EPS attributable to common stock:Reconciliation of the differences between basic and diluted EPS for the years ended March 31, 2002, 2003 and 2004 is as follows:As discussed in Note 2, the earnings allocated to the subsidiary tracking stock are d

38、etermined based on the subsidiary tracking stockholders economic interest.The statutory retained earnings of SCN (the subsidiary tracking stock entity as discussed in Note 15) available for dividends to the shareholders were 209 million as of March 31, 2002, which decreased by 374 million during the

39、 year ended March 31, 2002 after the date of issuance.The accumulated losses of SCN were 779 million and 1,764 million ($17 million) as of March 31, 2003and 2004, respectively.For the year ended March 31, 2002, 75,201 thousand shares of potential common stock upon the conversion of convertible bonds

40、 were excluded from the computation of diluted EPS due to their anti-dilutive effect.44,603 thousand shares of potential common stock upon the conversion of 250,000 million convertible bond issued dated December 18, 2003 were excluded from the computation of the number of weighted-average shares for

41、 diluted EPSPotential common stock upon the exercise of warrants and stock acquisition rights, which were excluded from the computation of diluted EPS since they have an exercise price in excess of the average market value of Sonys common stock during the fiscal year, were 2,665 thousand shares, 4,1

42、41 thousand shares, and 6,796 thousand shares for the years ended March 31, 2002, 2003 and 2004, respectively.Warrants and stock acquisition rights of subsidiary tracking stock for the years ended March 31, 2002, 2003 and 2004, which have a potentially dilutive effect by decreasing net income alloca

43、ted to common stock, were excluded from the computation of diluted EPS since they did not have a dilutive effectStock options issued by affiliated companies accounted for under the equity method for the years endedMarch 31, 2002, 2003 and 2004, which have a potentially dilutive effect by decreasing

44、net income allocated to common stock, were excluded from the computation of diluted EPS since such stock options did not have a dilutive effect.On October 1, 2002, Sony implemented a share exchange as a result of which Aiwa became a wholly-owned subsidiary. As a result of this share exchange, Sony i

45、ssued 2,502 thousand shares. The shares were included in the computation of basic and diluted EPS.6. P/E ratioLets see the three years data of P/E Ratio200220032004P/E Ratio401.919635.5299947.97535We can see that the P/E ratios are large, and if we invest on it, we will need many years to get back o

46、ur money. So its not good to invest on it. 六. Do Pont analysis1. Here Id like to analysis the effects of all kinds of items, such as Return of total assets and Equity multiplier, to ROE. Then, based on the contributions of the items, we try to find ways to improve the ROE.At the first glance of the table, you will obverse there is so great difference between the ROE of 2002 and the