Financial Statement Analysis: Nintendo ltd

Résumé du document

Nintendo manages its financial features efficiently. This is not surprising from a big international company which has big experience. The video game industry is in a growth phase and Nintendo, in its war against Microsoft and Sony, has to be very vigilant to keep in its hands its recent place as the leader. The company doesn't seem to be debt oriented which is a risk free strategy but, some analysts think that a company has to borrow to grow. This is not a Japanese way of doing business. In any case, if it is necessary, Nintendo could borrow because of its Return on Assets and its Debt ratio. Besides, the Return on Equity distribution management is so well that Nintendo has lots of resources. These are the goods points to continue with the needed growth. The experience in creation and commercialization of products and concepts that Nintendo got last year, permits a better effectiveness to produce revenues from assets, and many products saw daylight and are in much demand. But the launch of products that require expensive components are the reason for the increase in the cost of goods sold. However, the increase of inventories shows a good management of costs. These results permit to note down the good health of the company and also that the company has a certain value.

Extraits

[...] Nintendo : des objectifs annuels plus ambitieux FranceBourse.com http://www.francebourse.com/fiche_news_16843.fb 26 October 2007 Nintendo. Financial Statements and Annual Reports Nintendo Co LTD http://www.nintendo.com/corp/annual_report.jsp Nintendo. “Corporate Management Policy Briefing”. Nintendo Co LTD http://www.nintendo.co.jp/kessan/060607qa_e/index.html Reuters. Nintendo veut lancer la Wii en Chine et en Corée du Sud en 2008 LeMonde.fr http://www.lemonde.fr/web/depeches/0,14-0,39-32984221@7- 37,0.html 26 October 2007 Reuters. Nintendo relève ses objectifs annuels LeMonde.fr http://www.lemonde.fr/web/depeches/0,14-0,39-32959165@7- 37,0.html 25 October 2007 Unknown Journalist. Microsoft lance une nouvelle version de sa Xbox360 pour défier Nintendo RTL info http://www.rtlinfo.be/news/article/48968/-- Microsoft+lance+une+nouvelle+version+de+sa+Xbox+360+pour+d%C3%A9f ier+Nintendo 24 October 2007 Unknown Journalist. [...]

[...] Here, Nintendo has very low results and tend to be equals. The amount of expenses seems to be proportional to the sales. But we could consider that this is difficult for Nintendo to reduce its expenses by now: the video game industry is one of the best field at a state of the art technology level just near space exploration. So the research and developments, the raw materials, the components are very expensive. We could add also the fact that this market is very competitive which requires high expenses in marketing, license contracts, studies, creations 2007 GROSS PROFIT MARGIN = (Sales Cost of Goods Sold) / Sales = ( - 578 722) / = GROSS PROFIT MARGIN = (Sales Cost of Goods Sold) / Sales = ( 294 133) / = 0.42 A high gross profit margin means that the company has capacities to be profitable controlling its costs. [...]

[...] Notes Any annual report is different. The presentation, the colours, the pages, the layout anything changes from a year to another. In any case, the beginning of the annual report is colourful and filled with little Japanese clip-arts which create a video game atmosphere. So it is entertaining, but the quality of the items is not very professional: they look like if an amateur tried to cut and paste them. This is a little bit strange from such a big company. [...]

[...] For the video game department of Sony, at the end of the financial year, the objectives were reached only by half knowing that PS3 are sold less than their costs. Something unexpected: PS2 and PSP are sold better because of their lower prices and their wide range of available titles. The recorded figures could be the proof of the failure on the next generation machines passage for Sony. For Nintendo, this is another story: the recorded results are better than the expectations and so they change the 2008 expected incomes to higher ones. [...]

[...] Besides the Return on Equity distribution management is so well that Nintendo has lots of resources. These are the goods points to continue the needed growth. The experience in creation and commercialization of products and concepts that Nintendo got last years permits a better effectiveness to produce revenues from assets: many products saw the daylight Wii, new games, accessories ) and are much demanded. But those launches of products that require expensive components are the source of increases of the cost of goods sold. [...]