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Seem 6050 - Engineering Economic Analysis Management

Essay by   •  March 1, 2016  •  Research Paper  •  2,785 Words (12 Pages)  •  1,293 Views

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SEEM 6050 Engineering Economic Analysis Management                                  

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Table of Contents

Introduction:        

Objectives:        

Financial Statement Detail:        

1.        Balance Sheet        

2.        Income Statement        

3.        Cash Flow Statement        

Financial Report Analysis:        

1.        Calculation of Financial Indexes        

2.        Final Financial Index List        

3.        Financial Condition Analysis        

4.        Financial Condition Key Notes        

5.        Financial Summary:        

Risk Management Evaluation        

1.        Funding Risk Management        

2.        Supply Chain Risk Management        

3.        Other Risk Management.        

Proposed Suggestions        

Conclusion        

Reference        

Introduction:

        

Lenovo is a global computer manufacturer and business IT solution provider. It was founded in 1984. It started the business on personal computer designing and assembling. Lenovo was benefited a lot by successful market strategy and national established company background, and it became largest personal and commercial computer company manufacturer in China since 1997. In 1994, Lenovo was successfully listed in Hong Kong, Stock Code: 00992.  In 2004, Lenovo took over IBM PC department with cost of 1.25 billion US dollars and 0.5 billion share exchange, and became the third largest computer manufacturer of the year. This movement helped Lenovo to enter global market to compete with ACER and HP. In 2014, Lenovo bought IBM X86 server department for 2.5 billion US dollars. Since 2013, Lenovo has become one of the largest computer manufacturer in the world. It dominates over 20 percent of market share (IDC, 2015).

        PC market is a low profit business. Many traditional PC companies had tried to expand their business to multiple areas. Lenovo also explored new market in Smartphone, Tablets, portable storage, and other computer related accessories. However, because of the high competition and lack of experience, it didn’t repeat the success in these new markets. The company is now mainly focusing on five strategies.

  • Optimizing Supply Chain, increase material manufacturing factory
  • Improving diverse management to prevent culture conflict and market disorder due to Mergers and Acquisitions
  • Continuing Competition in traditional market and focus on diverse sale style
  • Seizing partnership to cooperating the company
  • Speeding Cloud Computing development and market commitment

Objectives:

        This report used basic financial analysis approach to evaluate the financial condition of the company Lenovo. The reason of analyzing company’s financial condition is to give investor’s basic impression about company’s performance and future potential. Additionally, with the understanding of the company’s history performance and financial details, the group will have sufficient information to provide suggestions for the company to improve its’ financial situation as well as propose risk management strategy.

        The group has determined several objectives of this report. As a case study report, this report will focus on:

  1. The analysis of balance Sheet, income statement, and cash flow statement for the past two financial years (2013 & 2014)
  2. Calculating financial indexes or organizational statistics
  3. Interpreting or explaining company’s financial condition due to index calculation or data analysis
  4. Proposing methods to improve the financial statement and risk management of this company.

Financial Statement Detail:

  1. Balance Sheet

The table below is the balance sheet of Lenovo in financial year 2013 & 2014 (Lenovo 2014).

Balance Sheet

Note

2015

US$’000

2014

US$’000

Non-current assets

  Property, plant and equipment

14

1,496,474

667,413

  Prepaid lease payments

15

225,111

40,884

  Construction-in-progress

16

311,888

351,934

  Intangible assets

17

8,929,713

3,339,516

  Interests in associates and joint ventures

18

45,719

20,753

  Deferred income assets

20

530,047

389,330

  Available-for-sale financial assets

21

73,400

35,157

  Other no-current assets

41,191

111,558

11,653,543

4,956,545

Current assets

  Inventories

22

2,995,389

2,701,015

  Trade receivables

23(a)

5,177,840

3,171,354

  Notes receivable

23(b)

334,738

447,352

  Derivative financial assets

184,534

61,184

  Deposits, prepayments and other receivables

23(c)

3,572,015

3,000,826

  Income tax recoverable

136,857

65,715

  Bank deposits

24

171,139

94,985

  Cash and cash equivalents

24

2,855,223

3,858,144

15,427,735

13,400,548

Total assets

27,081,278

18,357,093

...

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