Income Statement Analysis

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Income Statement Analysis

• Net Sales

• COGS

• Gross Profit

• Operating Expenses

• Income from Operations

• Net Income

3

Income Statement Analysis
100 117 139
141
4

Income Statement Analysis
100 117 137
163
5

Income Statement Analysis
100 118 143
169
6

Income Statement Analysis
100 113 133
150
7

Income Statement Analysis
100 124 154
191
8

Income Statement Analysis
100 123 154
189
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Balance Sheet Analysis
Assets
Retained Earnings
Liabilities
Annual Growth Rate
Long-term Liabilities
Property, Plant, and Equipment,net
Stockholders Equity
Cash
Contributed Capital
Quick Ratio
Debt Ratio
Current Ratio
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Balance Sheet Analysis

• Increased 52 since 1997
• Annual Growth Rate 17
• Moderate Growth (5-20)

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Balance Sheet Analysis

• More than 50 - current assets

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Balance Sheet Analysis

• Most significant part
• - cash and cash equivalent
• - current portion of finance receivables

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Balance Sheet Analysis
Depreciation - straight line basis income
purposes - accelerated method
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Balance Sheet Analysis

• Increase in current liabilities lt increase
• in current assets
• Working capital increase 134

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Balance Sheet Analysis

• Increase in long-term liabilities lt increase
  in total assets

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Balance Sheet Analysis

• able to attract investors
• able to issue share of stock

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Balance Sheet Analysis
Net income increased in all years More money to
invest to grow
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Balance Sheet Analysis
Strong short-term liquidity
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Balance Sheet Analysis
No difficulty to pay short-term debts
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Balance Sheet Analysis

• No difficulty to pay long-term debts
• Less of a financial risk

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Balance Sheet Analysis

• Growing Expanding
• Low Financial risk
• Strong Company

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Key Concepts Objectives

• Statement of cash flow
• Operating, investing and financing cash flows
• Ratio analysis
• S-T liquidity
• L-T solvency
• Potential investment by investor
• Income from operating
• Stock price and SPs 500
• Conclusion

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Statement of Cash Flow

• Operating inflows can cover investing activities
  cash outflows.

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Trend of cash flows
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Operating activity

• Profitability

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Trend of Operating activity

• Profitability
• Main cash inflows come from adjustments of net
  income provided by operating activities
• HDI is mainly financed by operating cash flow

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Investing activity

• Expanding business

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Trend of Investing activity

• Net cash outflow
• purchased common stock treasury since 1999
• borrowed and issued more debt than it repaid
• paying dividend.
• Expanding Corporation
• HDI has borrowed more money to finance
  activities.
• HDI is a corporation that investors can rely

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Ratio analysis

• S-T liquidity Strong
• L-T solvencyStrong
• Potential investment by investor Strong

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Short-Term liquidity

• Is higher than industry average

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Short-Term liquidity

• Inventory turnover
• how quickly inventory is sold on average
• Days' Sales in Receivables
• how many days/How quick it takes to collect A/R
  

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Long-Term Solvency

• Times-Interest-Earned Ratio
• Income from operations/Interest expense
• HDI dont has interest expense

INTEREST EXPENSE
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Potential investment

• HDI increased its market price (except 2000)

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Potential investment

• Dividend payment increases

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Potential investment

• Price/Earnings Ratio
• market price of one dollar of earnings.
• Price keeps going up until 1999.
• Dividends Yield
• HDI has high ability to pay dividend

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Income from operating
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HDI V.S S Ps 500
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Stock Price

• Stock price of motorcycle industry
• Yamaha
• Suzuki
• Honda
• HDI
• Stock price falls down in 2000.It effected the
  shareholders investing intention

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Conclusion

• Operating activity
• Operating cash flow is significant enough to
  cover cash outflow of investing and financing
  activity.
• Investing activity
• HDI has borrowed more money to expanding
  Corporation.

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Conclusion

• Stock performance
• Compared with main competitor and SPs 500,we
  can say the HDI is a company worth to invest.
• However,
• Financing activitys growth in 1999 2000 is
  negative. We should observe if HDI over invest in
  continuing year.

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Conclusion

• Income statement
• Balance sheet
• Statement of Cash flow
• Ratio analysis
• Invest! Invest! Invest! Even after 9/11/01.

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Reference

• Web site www.harley-davidson.com
• Lecture notes
• Shoenbeck text
• Financial Accounting (3rd alt edition)
• http//www.valuepro.net
• http//finance.yahoo.com
• http//chart.yahoo.com
• http//investor.harley-davidson.com

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Thank You!