Assignment 1 F&A - Research Paper Example

Running Head: ABBREVIATED OF YOUR CHOICE (all caps) and Section # of Assignment11. RadioShack Corporation is global retail store with headquarters based in Downtown Fort Worth, United States. It specifically deals in electronic goods and services. Overall, the retail industry in the United States is the undisputed leader in the global world with retail sales accounting for $4.7 trillion in 2011 and employing around 14.4 million people as of 2010. According to the retail executives, the industry will continue on a modest growth- both on revenue and hiring; with a substantial growth predicted after 2015.

With the economy back on the recovery track, the US retailers are expanding globally to India, China and Dubai. Nonetheless, the executive are predicting low consumer confidence and high unemployment rate as two most important factors that will hinder the recovery of the retail industry. (KPMG, 2012) (Farfan, 2011) 2. Note 1 to the financial statements provides a complete description of the RadioShack Corporation’s business. The company deals in electronic items and services through 4,395 retail stores under its brand name in the US.

The company also operates in Puerto Rico, Virgin Islands and Mexico. In 2009, the company launched ‘Target Mobile Centers’ to increase their sales and revenue. However, due to its failure, the company has decided to wind up these centers by the first quarter of 2013. It is very important to understand this note because its helps to identify and comprehend the business operations of the company and its future plans of discontinuation of any product line. (RadioShack Corp. Annual Report, 2012)3.

Best Buy and Wal-Mart are two of the important competitors of RadioShack Corporation because they tend to have the same business as well as operate in the same environment. This will allow us to compare their financial and non financial metrics against each other such as profitability, efficiency, leverage and earning potential. Similarly, through a survey, the position of the RadioShack can be compared against its competitors in the consumers’ minds. 4. (Amounts in millions)Assets = Liabilities + Shareholders’ equity$2,175 = $1,333 + $842Debt to Total Assets = 0.

61Debt to Equity = 1.58Compared to the industry average debt to total assets ratio of 0.72, RadioShack Corporation has a better financial position. The company’s 61% of the assets are financed by debt. However, RadioShack Corporation is highly leveraged company as compared to industry benchmarks. The company has raise $1.58 of debt for every $1 of equity in the company as compared to $1.2 raised by the industry. This signifies an increased riskiness in the company and a poor rating amongst the external stakeholders.

(Bloomberg Businessweek, 2013) 5. RadioShack Corporation recognized a net income of $206.1 million from its operations in 2010. The company has been seeing a positive growth since 2008. Nonetheless, the growth rate for YOY revenue has decreased. The company registered a growth of 8.8% in sales revenues in 2009 whereas a growth of 0.5% in sales revenue in 2010. Therefore, it shows the falling the sales growth.Revenue% Increase189.4- 2058.2%206.10.5%6. RadioShack Corporation’s consolidated balance sheet shows that the retained earnings decreased to $1,502.

5 from $2,323.9 million as of Dec 31 2010. The fall in the retained is due to buy-back of treasury stock worth $949 million and payment of $26.5 million worth dividends while registering a modest net income. (RadioShack Corp. Annual Report, 2010)7. The consolidated balance sheet shows cash as the fist line item as a part of financial position. The consolidated statements of cash flows shows the outflows and inflows of the cash during a financial year and reports the net change in cash position at the end of the financial year.

The repurchase of the common stock worth $398.8 million and payment of cash dividends worth $26.5 million were the two most important items that caused the cash to change the most during 2010. (RadioShack Corp. Annual Report, 2010)ReferencesBooksBrigham, E. F. et al (1985). Introduction to Financial Management. Dryden Press.Emery, D. R., & Finnerty, J. D. (1997). Corporate financial management. Upper Saddle River, NJ, Prentice Hall.WebsitesBusinessweek.com (2013). RADIOSHACK CORP (RSH:New York): Financial Statements - Businessweek.

[online] Retrieved from: http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=RSH&dataset=cashFlow&period=A¤cy=native [Accessed: 30 Apr 2013].Farfan, B. (2000). Retail Industry Information: Overview of Facts, Research, Data & Trivia 2011. [online] Retrieved from: http://retailindustry.about.com/od/statisticsresearch/p/retailindustry.htm [Accessed: 30 Apr 2013].KPMG (2012). Retail Industry Outlook Survey. [online] Retrieved from: http://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/2012-kpmg-retail-outlook-cautious-optimism-in-style.

pdf [Accessed: 30 Apr 2013].Radioshack Corporation (2012). RadioShack Corporation - Investor Relations - Financial Reports: Annual Reports. [online] Retrieved from: http://ir.radioshackcorporation.com/phoenix.zhtml?c=84525&p=irol-reportsannual [Accessed: 30 Apr 2013].Radioshack Corporation (2010). RadioShack Corporation - Investor Relations - Financial Reports: Annual Reports. [online] Retrieved from: http://ir.radioshackcorporation.com/phoenix.zhtml?c=84525&p=irol-reportsannual [Accessed: 30 Apr 2013].