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Garmin Financial Analysis

6003 words - 25 pages

FIN 6406

A Financial Ratio Quarterly Trend Analysis of:
Garmin Ltd.

Stock Symbol: GRMN
Listed on NASDAQ

Prepared for:
Dr. Edward Lawrence
Department of Finance
Florida International University

In partial fulfillment of the requirements of course:
FIN 6406

By:
Byrd-Rosario, Brenda | PID: 2073306 |
Cimand, Nili | PID: 1487172 |
Louis, Stanley | PID: 1293017 |
Uribe, Carolina | PID: 2114636 |

This report provides a financial trend analysis of Garmin (NASDAQ: GRMN). Garmin Ltd. was founded in 1989 in Kansas and later incorporated in Switzerland in 2010. The company provides navigation, communication, and information devices and applications that are enabled by ...view middle of the document...

The sources used to find the income statements, balance sheets, cash flow statements and trading information for Garmin were:
• Yahoo! Finance
• MSN Money
• Wall Street Journal
• Garmin.com/en-US/company/investors

We have chosen to use TomTom (TOM2) as the comparison for the industry standard. This is the most closely related company in terms of products offered and the technology used.

Section A: Computations

Please refer to the tables below that summarize the ratio computations for GRMN.
Liquidity Ratios | Q1 | Q2 | Q3 | Q4 | Annual |
Current Ratio | 2.64 | 2.51 | 2.87 | 3.42 | 3.42 |
Quick Ratio | 2.21 | 2.08 | 2.44 | 2.79 | 2.79 |
Net Working Capital Ratio | 0.32 | 0.30 | 0.35 | 0.36 | 0.36 |
Current Liabilities to Inventory Ratio | 2.32 | 2.34 | 2.37 | 1.58 | 1.58 |
Cash Ratio | 1.22 | 1.10 | 1.30 | 1.63 | 1.63 |
Operating Ratio | 0.44 | 0.45 | 0.41 | 0.56 | 0.46 |
Advertising Expense to Sales Ratio | 0.04 | 0.04 | 0.05 | 0.04 | 0.04 |
Marketing Expense to Sales Ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |

Asset Ratios | Q1 | Q2 | Q3 | Q4 | Annual |
Inventory Turnover Ratio | 1.79 | 1.58 | 1.95 | 1.39 | 6.40 |
Fixed Assets Turnover Ratio | 0.31 | 0.27 | 0.33 | 0.25 | 1.14 |
Total Assets Ratio | 0.15 | 0.13 | 0.16 | 0.12 | 0.57 |
Asset to Equity Ratio | 1.37 | 1.36 | 1.33 | 1.26 | 1.26 |

Profitability Ratios | Q1 | Q2 | Q3 | Q4 | Annual |
Return of Assets Ratio | 0.04 | 0.04 | 0.03 | 0.03 | 0.14 |
Return on Equity Ratio | 0.05 | 0.05 | 0.04 | 0.03 | 0.17 |
Profit Margin Ratio | 0.25 | 0.29 | 0.22 | 0.20 | 0.24 |
Basic Earnings Power Ratio | 0.04 | 0.03 | 0.04 | 0.03 | 0.15 |
Earnings per Share Ratio | 0.88 | 0.96 | 0.84 | 0.61 | 3.29 |

Debt Ratios | Q1 | Q2 | Q3 | Q4 | Annual |
Total Debt Ratio | 0.27 | 0.26 | 0.25 | 0.21 | 0.21 |
Interest Coverage Ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Debt/Equity Ratio | 0.37 | 0.36 | 0.33 | 0.26 | 0.26 |
Loan to Value Ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |

Market Ratios | Q1 | Q2 | Q3 | Q4 | Annual |
Earnings per Share (EPS) Ratio | 0.88 | 0.96 | 0.84 | 0.61 | 3.29 |
Price to Earnings Ratio | 39.55 | 45.87 | 54.84 | 90.64 | 16.76 |
Price to Cash Flow Ratio | 33.39 | 39.74 | 59.88 | 151.32 | 16.78 |
Payout Ratio | (0.51) | 0.00 | (0.54) | (0.74) | (0.41) |

Section B: Financial Trend Comparison
Utilizing the financial ratios previously calculated, allowed us to obtain the data necessary to plot and chart the trend analysis. Below please find the graphs along with the explanations of the trends for the various ratio categories.

Liquidity Ratios
Liquidity ratios are financial metrics that are used to determine a company's ability to pay off its short-term debt obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.

The current ratio measures a company's ability...

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