Case
CORPORATE ANALYSIS OF HP INC
- Course
- Institution
This a corporate analysis on HP. The reports covers the profitiability, liquidity, efficiency and gearing ratios of HP
[Show more]
Seller
Follow
joshuaarcher
Content preview
CORPORATE ANALYSIS OFEC221 Individual Report
Student number: 19824671
HP INC
Tutor: Rafael Pool
Date 14/03/2021
Words: 1765
1
,Contents
Introduction....................................................................................................................................3
Profitability............................................................................................................................................4
Liquidity.................................................................................................................................................6
Efficiency...............................................................................................................................................8
Gearing ratios.......................................................................................................................................11
References....................................................................................................................................15
Appendices...................................................................................................................................16
Appendix 1: Industry averages......................................................................................................16
Appendix 2:2016-2020 Financial data and Relevant notes....................................................................17
2019-2020 Financial data (Hp inc, 2020)...............................................................................................17
2019-2020 Relevant Notes (Hp inc, 2020).............................................................................................26
2016-2018 Financial data (Hp inc, 2018)...............................................................................................36
Appendix 3: Financial Ratios.........................................................................................................47
Profitability ratios.................................................................................................................................47
Liquidity Ratios.....................................................................................................................................49
.............................................................................................................................................................49
Efficiency Ratios....................................................................................................................................50
Gearing/Risk Ratios..............................................................................................................................52
,Introduction
The following report will provide a basic understanding of how Hewlett Packard (HP) is
financially operating in the consumer electronics industry compared to the industry and its
competitors. It is the 9th best company in consumer electronics in terms of company sales
(Passport, 2020). It will include financial ratio calculations for the last four years to give
investors a more transparent view of the industry. The industry averages are conducted from
other competitors such as Apple, Samsung, and Microsoft.
, Profitability
Profitability ratios give an evaluation of the overall performance of a company and how
efficiently it can generate or manage its profits (Goel, 2016).
Gross Profit margin is used to assess a company’s wealth by subtracting the cost of sales from
revenue (McKenzie, Webdy, p 354)
Gross profit margin in % over the last 4 years
50
45
40
35
30
25
20
15
10
5
0
2016 2017 2018 2019 2020
HP industry
Figure 1: Gross profit margin in % over the last 4 years
HP’s gross profit margin has been significantly lower than the industry average. There are
numerous reasons to explain this. Hp focus on printers and notebook sales which have lower
margins than other products in the sector e.g. smartphones. Higher margins in a fast-changing
sector like smartphones because the product life cycle is shorter and R&D costs must be
recovered more quickly; conversely printer sector is less innovative and a longer life cycle.
Portable consumer electronics are the biggest segment within the consumer electronics
industry and have a bigger profit margin. Computer and Peripherals are valued at 95,150.80 US
dollars whilst portable consumer electronics are valued at 271,325.20 US dollars. (Passport
2020).
Secondly, while many other companies focus on branching out to other areas such as
smartphones and home entertainment. Hp focus on dominating their segment and
consequently their gross profit margins are lower than the consumer electronics industry
average (Passport 2020). Their personal systems are their most profitable segment. Between
2018-2020, the net revenue increased by 0.8% because of the growth of Notebooks which was
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller joshuaarcher. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.90. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
58426 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now