Financial Analysis of Brightpoint Inc - Assignment Example

Calculations show that Brightpoint, Inc.’s current ratios for 2008 and 2007 are 1.35:1 and 1.6:1, respectively, while its quick ratio is .92:1 and 1.06:1, respectively. These ratios show that the company has enough current assets that it can convert to cash to pay for its current liabilities. However, it should be noted that for 2008, the current and quick ratios went down, indicating that the company may be having problems in meeting its short-term obligations in 2008.

One bright spot on this is the fact that the cash conversion cycle for the company’s inventories decreased in 2008 (page 39 of the Annual Report), indicating that the company is able to sell off its inventories and convert its accounts receivable to cash in a much shorter period than in 2007, providing relief in its liquidity status.

The most significant is goodwill, which came from the excess of its acquisition cost over the fair value of the net assets of its acquired subsidiaries or business units.

Other intangible assets are intangibles with finite lives acquired in connection with the CellStar and Dangaard Telecom transactions (page 36 of Annual Report). These intangibles are amortized over a 15-year period and are subjected to impairment tests.

Yes, the company provides business segment data according to geographic locations. According to the 2008 notes to financial statements, the company’s segments are divided into 3 geographic locations – Americas, Asia-Pacific, and EMEA (Europe, the Middle East, and Africa).

Based on the 2008 segment reporting (page 59 of the Annual Report), EMEA has the highest revenues among the three with $2.6 billion. However, this segment has an operating loss of $308 million for the same year, due largely to a goodwill impairment charge of $326 million. Without this charge, EMEA’s operating income would have been $19 million. The Americas has the lowest revenue of $890 million but posted the highest operating income among the three with $39 million, making it the most profitable among the three.