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Finance and Portfolio Management 4 - Assignment Example

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Oracle Corporation Investment Risks According to the company’s latest Quarterly Report and on their Annual Report on Form 10-K the following factors could adversely affect their overall performance and stock price: 1. Risks from economic, political and market condition, including the recent recession and global economic crisis and the current situation in Japan caused by the recent earthquake and resulting tsunami may adversely affect sales and stock price…
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Finance and Portfolio Management Assignment 4
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Download file to see previous pages 4. Acquisitions including Sun Microsystems, Siebel, I-Flex, PeopleSoft and others, may involve unanticipated costs, and integration issues that may disrupt existing operations. 5. Risks relating to foreign currency gains and losses and risks relating to compliance with international and US laws that may adversely affect international sales and operations. 6. Risks of reducing prices or losing customers due to intense competition and rapid technological evolution. Source: http://www.wikinvest.com/stock/Oracle_%28ORCL%29/Filing/10-Q/2011/F94876420 Company Performance and Financial Ratios Compared vs. Industry Average/ S&P 500 Growth Rate % Oracle Corp. Industry Average S&P 500 Sales (Qtr vs. year ago qtr) 36.90 23.80 12.10 Net Income (YTD vs. YTD) 13.50 5.60 `5.90 Net Income (Qtr vs. year ago qtr) 78.00 51.50 60.60 Sales (5-Year Annual Avg.) 17.85 14.05 7.98 Net Income (5-Year Annual Avg.) 16.28 11.74 8.03 Dividends (5-Year Annual Avg.) N/A 4.76 5.30 Price Ratios % Current P/E Ratio 21.3 32.9 19.3 P/E Ratio 5-Year High NA 23.6 18.4 P/E Ratio 5-Year Low NA 8.4 2.6 Price/Sales Ratio 4.73 10.33 2.20 Price/Book Value 4.43 4.69 3.60 Price/Cash Flow Ratio 15.40 20.60 15.30 Financial Condition % Debt/Equity Ratio 0.40 0.30 1.18 Current Ratio 2.9 2.4 1.4 Quick Ratio 2.9 1.8 1.0 Interest Coverage 14.4 21.3 83.8 Leverage Ratio 1.8 1.9 3.8 Book Value/Share 7.24 8.16 25.45 Profit Margins % Gross Margin 75.3 74.9 39.0 Pre-Tax Margin 30.0 3.4 17.4 Net Profit Margin 22.4 22.3 12.8 5 Yr Gross Margins (5-Year Avg.) 78.1 76.1 38.8 5Yr Pre-tax Margin (5-Year Avg.) 33.1 26.2 15.6 5 Yr Net Profit Margins (5-Year Avg.) 23.7 17.9 11.1 Investment Returns % Return On Equity 23.7 27.0 23.4 Return On Assets 12.1 13.6 8.3 Return On Capital 15.3 19.5 10.9 Return On Equity (5-Year Avg.) 24.7 26.1 19.6 Return On Assets (5-Year Avg.) 12.5 14.0 7.7 Return On Capital (5-Year Avg.) 16.4 20.3 10.2 Management Efficiency Income/Employee 73,655 122,961 112,643 Revenue/Employee 328,520 495,504 990,090 Receivable Turnover 8.2 7.3 14.4 Inventory Turnover 28.7 58.6 11.8 Asset Turnover 0.5 0.6 0.8 Source: http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=TenYearSummary&symbol=ORCL Based on the table presented above Oracle Corporation’s Performance and Financial ratios is comparatively better or at par with industry average and with S&P 500. Gowth rate is higher than industry average. The price ratios and interest coverage is lower than industry average. There is a clear disparity in Oracle’s Investment Return Ratios and Management Efficiency Ratios particularly in income and revenue per employee. This low income/employee and revenue/employee ratios show that Oracle employees generally earn less than the industry average. In the long run this is crucial to Oracle’s operation as this relates to employee satisfaction and performance. It is also seen that no data is available on dividends paid as Oracle Corp have not consistently declared or paid dividends in the past years. The company is geared towards reinvesting funds in acquisitions and tends to delay payment of dividends to stockholders. Reinvesting on its internal customers, the stockholders and the employees, is evidently low. Bonds Maturity Date Interest Price Yield % Oracle 5.75% 04/15/2018 5.75% 155.50 3.21 Oracle 144A 5.375% 07/15/2040 5.375% 101.90 5.25 ...Download file to see next pagesRead More
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