Table of Contents
Executive Summary 1
Financial Structure 2
Corporate Governance 5
Value Creation for Investors 6
Market Analysis 7
Future Outlook 8
Challenges and Opportunities 8
Table A 12
Table B 12
Table C 13
Chart A 13
Financial Accounts 14
This report provides an overview of the financial position of Symantec Corporation (SYMC), a global provider of security, storage, and systems management solutions.
The followings areas are considered:
* The Debt and Equity position of the company are analysed. The various sources of financing used by the company are examined and ...view middle of the document...
Equity in Symantec’s case, comprises the following components: paid-in common stock; additional paid-in capital; accumulated other comprehensive income; accumulated earnings and non-controlling interest in subsidiary on an annual basis, of which additional paid-in capital is greatest.
*All figures taken from EDGAR Reports.
From the data, we can induce that Symantec’s gearing position has improved over the last four years. The debt-to-equity ratio has fallen by 34.93%, highlighting the long-term contribution brought about the investments of shareholders to the long-term capital structure has improved. This is not to say debt has decreased over the last four years, but the proportion of debt the company uses to finance its assets has reduced.
Theoretically, Symantec is relatively lowly geared, with a ratio lower than 1:1; however, Symantec’s long-term debt-to-equity ratio is exorbitantly greater than the industry average of 8.49%, portrayed in Table A of the Appendices. Nevertheless, we must not forget that this is a relatively capital-intensive industry in terms of R&D and marketing, in which Symantec’s market-capitalisation is one of the highest; see Table B.
The capitalisation ratio, a more comprehensive measure of leverage, has oscillated around 0.3 for the past four years as illustrated by Table C, indicating that the debt component of financing, taken as a factor of the overall measure, is less than that of equity, stabilising investor’s claims on assets in comparison to creditors.
The level of common stock decreased between 2009-2012, falling from $8.169m to $7m, with the largest decline as a result of a new $1bn repurchase program. Symantec does not issue dividends, instead they have had various stock repurchase programs and have repurchased shares on a quarterly basis since 2004. Additionally, as of March 2012, Symantec authorized $984m for future repurchases. Symantec does not issue preferred stocks.
Company risk is difficult to gauge precisely with a perpetual threat of non-diversifiable risk. Given the diversification of assets and multiple acquisitions in various programming arenas, one can deduce that the level of unsystematic risk is minimised. Symantec’s assets are evenly spread between current and fixed, and there is a healthy cash flow, which has augmented over the past fiscal year. Systematic risk, measured by the Beta coefficient, stands at approximately 0.84. This hypothesises that a beta of 0.84, also equal to the industry average, would have 4/5th of the average of systematic risk on the stock market. Hence, Symantec’s stocks have a volatility, which is less pronounced than the market, depicting less risk.
Given this level of risk, the mixture of debt and equity and stock structure appears justified. The retreating debt-to-equity ratio provides a positive outlook. It can also lower the risk, as investors will have larger claims on Symantec’s assets. The equity level is impacted heavily by substantial...