财务管理案例分析

The case study ofSony corporation Members of our group:童士卫财务管理0201 012002019106唐虎财务管理0201 012002019105王小夏财务管理0201 012002019126季春蕾财务管理0202 012002019214张亚茹财务管理0201 012002019131任课老师: 夏新平完成时间: 2005年1月28日一.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”.①Evidenced by recent improvements in network infrastructure,the broadband environment has begun to expand at a rapid pace.②In preparation for the arrival of the full-scale broadband era,Sony is pursuing its vision of creating a Ubiquitous “V alue”Network (UVN).3. Its development aspect expanded from the first magnetic tape recorder in1950, to the first "QUALIA" products in 2003, during these years with representative products in each decade:60th—first tape recorder and transistor70th--video cassette player and headphone stereo Walkman80th--CD player and camcorder90th--high-density disc and DVD playerIn the 21th century-- EL Display and optical disc二. The main operations of the corporation are:①②③④⑤⑥三. 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 decreasing2. 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 Entertainment (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. Fifth 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 an 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 Sony①AudioHome audio, portable audio, car audio, and car navigation systems②VideoVideo cameras, digital still cameras, video decks, and DVD-Video players/recorders, and Digital-broadcasting receiving systems③TelevisionsCRT-based televisions, projection televisions, PDP televisions, LCD televisions, projector for computers and display for computers④Information and communicationsPC, printer system, portable information PC, broadcast and professional use audio/video/monitors and other professional-use equipment⑤SemiconductorsLCD, CCD and other semiconductors⑥Electronic componentsOptical pickups, batteries, audio/video/data recording media, and data recording systems四.Sales and Operating Revenue by Geographic Information1. The main market of course is the USA2. It is expand the Europe and other country market ,while decrease theUSA and Japan market ,While seems flat in total market .3. We can conclude Sony 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 bringnew product with technology.This is the Segment Information of its sales income6. Developing trend AnalysisFactors which may affect Sony‟s fi nancial performance include the following:①market conditions, including general economic conditions, levels ofconsumer spending, foreign exchange fluctuations②Sony‟s ability to continue to implement personnel reduction and otherbusiness reorganization activities③Sony‟s ability to implement i ts network strategy, and implementsuccessful sales and distribution strategies in the light of the Internet and other technological developments④Sony‟s ability to devote sufficient resources to research anddevelopment⑤Sony‟s ability to prioritize capi tal expenditure s, and the success Sony‟sjoint ventures and alliances.⑥Risks and uncertainties also include the impact of any future events withmaterial unforeseen impacts.7.The basic financial ratios of Sony from year 2002 to 2004From the above analysis and the table, we can see that:①The liquidity ratio and Acid-test ratio are in a year by year up-trend ,butcombining receivable turnover and inventory turnover, the increase is mainly because of the increase of accounts receivable and the decrease of current liability.②The company accounts receivable turnover and inventory turnover are inup-trend ,this shows that Sony do well in accounts receivable and inventory, so its debt-repay ability and profit abilities will be in advantages.③Its debt ratio is decreasing year by year, so we can see that Sony will have a low financial leverage, its financial environment will be good for its operating④Also, from analysis of the table, Sony‟s 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 fiscal year ending March 31, 2005 will strengthen against the U.S. dollar andwill weaken against the euro⑤Sony‟s inve stments 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 other-than-temporary decline in its value, the investment is written down to its fair value by a charge to earnings.五.Analysis of Sony’s abilitiesThe ability to meet the obligation1.①. 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.②. But if we look at the quick r atio, we will find it‟s 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 obligations①. The debt ratios are lager than 50%, which indicates that Sony borrows alarge amount of money. Its evidenced by the increasing amount of interest payment.②. Its interest coverage ratios are obviously less than the median of that forthe industry which is 4.0.Then we can see that Sony’s ability to meet the long-term obligations is not good.2. Assets management analysisFirst, the receivable turnovers are obviously less than the median of 8.1for the industry, which tells us that Sony‟s receivables 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 assetsThird, the total asset turnovers 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 Sony’s assets management is not good enough3. Profitability analysis①Sony‟s gross profit margin is above the median of 23.8 percent for theindustry, indicating that it is relatively more effective at producing and selling products above cost.②But comparing to the median ROI value of 7.8% and the median ROEvalue 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 programIn the United States of America, Sony set up an accounts receivable securitization 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 operated 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 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 endedMarch 31, 2003. 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 determined 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 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 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 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 Sony‟s common stock during the fiscal year, were 2,665 thousandshares, 4,141 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 allocated 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 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 issued 2,502 thousand shares. The shares were included in the computation of basic and diluted EPS.6. P/E ratioLet‟s see the three year‟s data of P/E RatioWe can see that the P/E ratios are large, and if we invest on it, we will need many years to get back our money. So it‟s not good to invest on it. 六. Do Pont analysis1. Here I‟d like to analysis the effects of all kinds of items, such as …Return oftotal assets‟ and …Equity multiplier‟, to ROE.Then, based on thecontributions 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 other two year. ---So I decide to analysis that one for example the decrease of the ROE in year 2002 is primarily because of the decrease of other income, increase of costs and expenses and other expenses.Let us go to the “income statement” to see the details------From the …income statement‟ behind,(1)we can see that the decrease of …other income‟ is primarily because of the decreaseof …foreign exchange gain‟ and decrease of …marketable security and security sales‟.The news behind has shown that the foreign exchange rate has changed so much that the foreign exchange risk is so high ,and the economics in Japanese has fallen down.It is may be one of the reasons of the decrease of …foreign exchange gain‟中新网香港1月23日消息：尽管亚洲国家对日元继续贬值表示关注，但美国财政部长奥尼尔与日本财务大臣盐川正十郎进行会谈后表态，外汇汇率应由市场决定。