Financial Analysis of HP Inc. Practical Work

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HP Inc.: History
Hewlett Packard (HP) began its existence in January 1939, and was formally founded as a company (INC.) on August 18, 1947. (Cardenas, 2012)

Its history is based years ago, where first they specialized in electronic measuring instruments for many decades, and it was not until the Sixties when they were launched by computer science.
His first computer was destined for internal tasks and by the year 1972 they launched a mini-computer, this one already more generic and destined to the use of other companies.
For the years 1980, they were launched by the printers for PC and the camp of servers (computers that serve several terminals).

By the year 2014, the company announced its division in two firms that would trade separately in the stock market: Hp, Inc. With its business of computers and printers and Hewlett-Packard Enterprise dedicated to servers, storage equipment and networks, computer programs and services for third-party companies.

Concept: Financial Reasons

Based On the Eco-Finance Website, the coefficients or financial ratios are units of measure that serve us to evaluate the performance of a company, relating items of the financial statements; And it serves us to compare: current indices with past or probable indexes for the future and to compare the indices of a company with that of other similar or with the average of the industry in which the company operates.

In Short, they are reasons that allow us to analyse the favorable and unfavorable aspects of the economic and financial situation of a company.

In other words, can a company quickly convert its cash assets without a loss of value if necessary to meet its short-term obligations?

They are Also a key predictor of a company’s ability to make timely payments to creditors and continue to fulfill its obligations against lenders when faced with an unforeseen event.

Financial Analysis

Taking into account the Balance Sheet in its most recent year (September 2017), based on 100% of the Total Asset, in the first place we have 22% to the Customer account or accounts receivable; They follow with 17.6% and 17.1% inventories and Surplus Value respectively, giving a total of 56% of the three highest accounts (which are the main in which the Asset falls).

On the other hand, in the Liabilities and Capital, with 40% is the account of Suppliers or accounts payable, they follow with 20.5% and 20% Total Debt in the Long Term and accumulated Expenses; Finally with a total of 17.5% of other liabilities. This accumulates a 98% based on the Total of the Asset. In the Statement of Results, we are told that the percentage of change based on the previous year (September 2016) in Revenue is 7.91% and that for every dollar, 4.9% is for shareholders; However, a loss of 5.25% in net post-tax Revenues is present. In the Cash Flow, it presents a positive balance in the Net Cash Change, with 709 MD (2017) and this presents a positive change, since on the basis of the previous year (2016) a negative balance was presented with 11.145 Md.

Ratios

In This section, it was decided to compare the company based on the division of its two signatures mentioned above.

For P/E Ratio, the price-gain ratio is more feasible in HPQ; Because its value indicates how many times the net annual profit of a given company is being paid when buying an action from it.

In the case of Beta, HPQ is the indicated because for HPE does not apply, however this indicator shows how fast the market moves.

HPE is higher in Price to Sales that indicates the value allocated to each dollar of the sales or revenue of a company; Likewise, it is higher in the case of Price to Book, which compares the market value of an action with its book value.

The Price to Tangible Book is higher in HPQ and this indicates the price of a value compared to its book value. Finally, the Price to Cash Flow is higher in HPE, which indicates the ratio of non-monetary earnings to net income.

Dividends

Dividend Yield is higher in HPE, while the Payout Ratio is in HPQ. That is, in the first to pay more dividends in relation to the price of their shares; And in the second, the profits paid as dividends to the shareholders.

Financial Strength and Profitability

In This section Facebook was added to compare not only the two HP companies but also a new industry, showing their great financial capacity, as the latter has more and better liquidity, lower risk, percentage of debt and ease of payment as well as the best profitability and higher earnings and income taxes; Showing significant losses in HPQ and HPE.

Efficiency

Facebook Is still maintained with better sales rates per employee, net earnings per employee, effectiveness and recovery of accounts receivable in a shorter period of days; However, since it does not have inventories this company, the profit margins are transferred to HPE, since it registers more sales (based on inventory); On the other hand, HPQ is higher in income based on assets.

Effectiveness

Facebook shows greater profit margin per utility for each peso invested as well as higher profitability; However, HPQ shows greater performance on property plant and equipment; Showing that HPE gets losses and the lowest percentages.

Conclusions

In the case of the statement of results, although the year 2016 began with less income than the year 2017, the net income after taxes were higher in the year 2016, this because in the Other Net line, was higher in the last year 69%. In the case of the Cash Flow State, the result in positive numbers is for the year 2017 since although in the two years payments were made to the long-term debt, the largest amount was reflected in the year 2016 making its result in negative numbers. Finally in the ratios, HPQ shows an advantage in price-gain and in the Beta indicator, showing that the performance of its action is flowing in a positive way in the market and that of course, its price compared to its value in books is greater. On the other hand, in the indicators where HPE is greater, the Price to Sales shows that its action has more value; The Price to Book indicates the value of the action in the book, that this case is greater because HPQ has a negative valuation and the Price to Cash Flow that more gains in the cash flow. In the other areas, Facebook gets the best scores and percentages, thus being the most profitable and effective company, this is I believe, based on the era that we are living or rather, based on the mega trends, because the Internet has evolved and created that SOC networks Iales are paramount; That people think it’s more important to have a Facebook profile than to have a digital camera or an HP printer at home.

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