Assignment 2: Garmin Analysis - Following the Business Decisions

[Name of the Professor]

[Date of Submission]

Assignment 2: Garmin Analysis - Following the Business Decisions

Introduction of Garmin

Garmin Limited (GRMN) is a manufacturer of navigation, information and communication applications and devices that are enabled by GPS technology. Garmin designs, creates, produces, and markets a diversified family of portable, hand held, and fixed amount GPS enabled products and other communication, navigation and information product. Its target markets comprise of various sectors including automotive, fitness, outdoors, marine and general aviation markets (www.stock2own.com).

Financial Analysis

Throughout last 5 years, Garmin has taken several decisions that have impacted its financial performance. It has been showing solid track record of revenue and earnings per share growth. Analysis of Garmin's balance sheet statement represents that it has a larger inventory before the holiday season, which would make the balance sheet analysis of Garmin in spring very different. Overall the balance sheet figures suggest that company poses little financial risk for an investor because its capital structure doesn't rely on leverage (Forbes, 2012, n.d).

The financial figures of Garmin since last 5 years have been showing strong position. Analyzing combined intrinsic value of important financial figures from balance sheet, income and cash flow statements shows an increasing trend of company's income. These figures include earning per share, Equity (BVPS), sales, free cash flow, gross profit, debt, and other major financials. All the numbers, except debt, has been showing growth year after year, which shows the position of a company is getting stronger and stronger. Debt and Capital Expenditure are the only reverse categories that have shown declining trend since last few years. Where, it is also clear that the lower capital expenditure results in higher profit margin, which leads toward stronger business cash flow (www.stock2own.com). Garmin doesn't have long term debt as per the latest financial statement, which means that it has zero debt Ratio.

When analyzing the Income statement individually, it is represented that Garmin has seen net income shrink from $584.6M to $520.9M regardless of flat revenues. It can be seen that a contributing factor here has been the increase in percentage of sales devoted to cost of goods sold, plus the income tax expenses and SGA expenses (2008-2011) (Businessweek, 2012, n.d).

As already mentioned, the balance sheet of Garmin (2007-2011) indicates little financial risk because the capital structure doesn't rely on leverage. However, the cash collection is a well-built ...