UNIVERSITY OF LA VERNE
La Verne, CA
Case Study 1
BUS 635: Financial Management: Theory & Practice
January 19, 2014
College of Business and Public Management
Department of Business Administration
Financial Analysis of Hewlett Packard and the Comparison with Lenovo
In this case, we will calculate and analyze Hewlett-Packard’s financial statements and give our perspective. Because we can’t get much information from the data which are derived from the calculation, they are just numbers; we will compare these data with Hewlett-Packard’s major competitor Lenovo. After the comparison, we can better understand the financial statements and interpret some key numbers.
The financial statements including Balance Sheet, Income Statements and Cash Flow are downloaded from http://www.zacks.com.
Analysis of Financial Statements
Description of Calculation and Analysis
We will calculate and analyze Hewlett Packard’s financial statements by following key ratios:
(The two companies’ Balance Sheet and Income Statements are in the excel spreadsheets, we download it from http://www.zacks.com )
Hewlett Packard: (NYSE: HPQ)
Lenovo Grp Ltd: (OTC: LNVGY)
* Current Ratio
* Debt Ratio
* Profit Margin on Sales
* Return on Total Assets
* Return on Common Equity
* Earnings Per Share
* Price/earnings ratio
* Stock Price on January 10, 2014
* Stock Price on the date of the financial statements
In order to better understand these financial ratios, we choose one of Hewlett Packard’s major competitors Lenovo as a comparison object.
We can get the data from HP and Lenovo’s financial statements, and then we use them for calculation by the following formula: (we do it by excel)
Current Ratio =
HP’s Current Ratio is:
Lenovo’s Current Ratio is:
The current ratio measures whether or not a firm has enough resources to pay its...