Analysis2 - Research Paper Example

Company Analysis: Eastman Kodak Eastman Kodak Q1:A.access newspaper and periodical articles about Eastman Kodak tolearn of any information that would be helpful in understanding the companys financial condition as well as future plans. Summarize what you learn in a short paper. A report written by Mattioli and published in The Wall Street Journal on November 4, 2011 indicated that Eastman Kodak has apparently been experiencing a downturn in financial performance as exhibited from reported declines in various financial indicators such as level of cash, sales, stock value and continuing operations (Mattioli, 2011).

As disclosed, “Eastman Kodak Co. said Thursday that it will have trouble staying in business over the next year if it cant squeeze more money out of its patent portfolio or raise new funds by selling debt” (Mattioli, 2011, p. 1). The information was confirmed and validated in another report written by Wilkison (2011) that appeared in Seeking Alpha where it was averred that “over the last decade, the stock has lost 98% of its value, sinking from its 10 year high of $41.08 to where it closed yesterday at 95 cents” (Wilkison, 2011, p. 1). The same report indicated financial losses as reflected in quarterly revenue loss of 16.

70% and a net loss available to common stockholders of $1.23 billion to date (Wilkison, 2011). The company’s total debt figure was significantly reflected at $1.57 billion. When interviewed regarding plans and prospects in the future, Kodak Chief Executive Antonio Perez indicated that “the company would be able to sell the portfolio of patents it has put on the block, though he declined to give a timetable for a sale or discuss potential values of the patents” (Mattioli, 2011, p. 1). Q1:B.

Review items 1, 2, and 4 of the form 10-k as well as the report of independent registered public accounting firm found in item 8. Write a concise summary of important items learned from reading these items. From the Form 10-K of Kodak, it was revealed in Item 1 that the cause of its financial decline was primarily “competitive pricing and rising commodity costs negatively impacted results in Kodak’s more mature product lines” (Securities and Exchange Commission, 2010, p. 4).The risk factors that were reported included: competitive pressures, potential failure of commercialization and manufacturing processes to retain product reliability and quality issues, the successful implementation of strategic investment decisions, effective anticipation of technology trends, economic conditions, motivating employees, currency fluctuations, to name a few.

Further, their investment decisions and restructuring of payments were reported to require substantial amounts of cash and their ability to generate cash would thereby affect future financial performance. Item 2 summarized Kodak’s properties, headquarter in New York and distribution centers. No Item 4 was stipulated in the Form 10-K report. Q2: Analyze the balance sheet. Write a summary that includes important points that analyst would use in assessing the financial condition of Eastman Kodak.

The balance sheet figures reflected in the Excel file for the comparative periods 2009 and 2010 revealed declines in all major balance sheet items: current assets, total assets, and current liabilities that significantly affected total stockholders’ equity from $(35,000) in 2009 to $(1,077,000) in 2010. Total assets likewise declined from $7,691,000 in 2009 to $6,239,000 in 2010 or a 23% decline. Q3: Analyze the income statement of Eastman Kodak. Write a summary that includes important points that an analyst would use in assessing the profitability of Eastman Kodak.

The income statement highlights indicated that gross profit has been reflecting considerable decline since 2008 at $2,169,000 to $1,768,000 in 2009, with a little increase to $1,951,000 in 2010.However, despite the efforts, the net income for Kodak consistently declined since 2008 from $(442,000) to $(210,000) in 2009 and a significant loss of $(687,000) in 2010. The figures indicated the worsening financial condition of Kodak as all income statement items posted declining rates and trends that would negatively impact on shareholders and investors.

References Mattioli, D. (2011, November 4). Squeeze Tightens on Kodak. The Wall Street Journal, p. 1. Securities and Exchange Commission. (2010). Form 10-K: Eastman Kodak Company. Washington. Wilkison, B. (2011, December 9). Eastman Kodak: Watching The Slow Demise Of A Once Iconic Company. Retrieved January 1, 2012, from Seeking Alpha: http://seekingalpha.com/article/312912-eastman-kodak-watching-the-slow-demise-of-a-once-iconic-company