Mythical High Technology Corporation

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Management of asset-liability and implementation of the organization’s overall financial plans are the main duties of the financial analyst of the company. The organization mythical High Technology (“HTC”) is a well-known manufacturer of electronic constituents, and also the organizations services a worldwide marketplace. At the same time this particular company is functioning on a most recent complete – integrated service of the wireless communication for universal use. A competitive scientific and fiscal evaluation of the product has confirmed that AMD of Sunnyvale, CA is the most tremendous potential trader of microprocessors of the tackles for the electronic service. AMD is put forwarding a competitively encouraging deal. This particular report will be appropriate to the fiscal assessment of an actual, publicly-traded, business. AMD is the second highest worldwide dealer of microprocessors based on the x86 architecture and also one of the highest dealers of graphics processing parts. It also possesses 8.6% of Spansion, a provider of non- impulsive flash memory. AMD declared net earnings of 1.18 billion dollar for the quarter period of Dec. 26, 2009. They had an amazing development; compared to the net loss of 128 million dollar or 18 cents per share in 2008, this will help to identify the viability of the AMD in the market. And also in order to understand the viability of the AMD in the next three years a financial analyst of the company in this report incorporated analysis and preparation of a report for the Chief Finance Officer on the actual fiscal performance of AMD for the years 2008, 2009, and 2010.

Advanced Micro Devices, Inc. is a U.S based industry operating outside Sunnyvale, California. The business establishment, which has at present spanned particularly three decades, established its function first in the year of 1969. AMD has mainly give attention in mounting goods, for instance such goods includes microprocessors of the computer, various types of computer processors and finally the motherboard chipsets of the computer. They also have entrenched various types of graphics processors and processors that are essential for every type of computer systems, for example private and computers for the use of business, game consoles and various types of handheld mechanisms. “The company began its impressive rise as the producer of logic chips. The year 1975 proved to be quite productive. So the company began to produce RAM chips, introduced a clone of the Intel 8080 microprocessor, designed bit slice processors elements and attempted the diversification into audio devices and graphics” (The History of AMD, 2009, para. 3).

Financial Analysis

In the analysis part, financial analysis is included. This part mainly discusses the financial performance of AMD for the year 2008, 2009, and 2010, by way of the help of financial statement analysis, financial ratio, trends and industry comparatives etc. Ratio analyses are simply used in accounting, to state the connection in numerical terms among two related figures in the financial statement. The financial statement provides data on both of an industries position at a point of time and on its process over some past stages. In the financial statement generally gives information about the future earnings capacity of AMD assets as well as a signal of cash flows that can come from stock and receivables. AMD’s sales improved from 2008 to 2009 and at the beginning of 2010. Operating profit enhanced from 2009 to 2010. Profit before taxation improved from 2009 to 2010 and from 2010. Profit turned down throughout 2009 and 2010. Yet the improvement in 2010 was better than limited of 2009 level. Profit from continuing operations declined from 2009 to 2010. Where Gross profit improved from 2008, 2009 to 2010. The financial analysis includes 4 ratios namely Return on equity, Gross profit ratio, Net profit ratio and Quick ratio.

Name of Ratio Formula Company/Year Compass 2010 Company/Year Compass 2009 Company/Year Compass 2008
Return on Equity Profit after-tax/
1842.7% 381.9% 607.7%
Gross profit ratio Gross profit/ Net sales *100 4854 324.5 1693.43
Net profit ratio Current assets/ Current liabilities 1.25 0.11 0.98
Quick ratio Total quick assets/ current liabilities. 100.00% 100.00% 97.89%

Following are the interpretations of these ratios:

Return on Equity: AMD’s Return on Equity improved from the year 2009 to 2010 and from the year 2008. In 2010 AMD showed higher performance of ROE.

Gross Profit Ratio: AMD’s gross profit margin declined from the year 2008 to 2009 but then improved from the year 2010. In 2010 the company showed better performance.

Net Profit Ratio: AMD’s net profit margin grew weaker from the year 2008 to 2009. And, 2010 showed better performance.

Quick Ratio: AMD’s quick ratio showed the same performance in 2009 and 2010 other than slight deterioration from the year 2008.

AMD announced net income of 1.18 billion dollar for the quarter period of Dec. 26, 2009. They had an amazing growth, compared to the net loss of 128 million dollar or 18 cents per share in 2008. The increase in revenue is 1.7 billion dollar. The expectation of the experts was an increase of 1.5 billion dollar and the achievements the largest limit and it would be better to remember that 1.2 billion dollar was expected for the fourth quarter of 2008. This is a wonderful achievement for the company and they are in face with their major competitor Intel. AMD had settled up its issue with Intel during the nearly ended quarter of Dec 2009, and got 1.24 billion dollar as a result of the settlement of dispute with its bigger rival. The company’s annual report shows a gross profit margin of 45 % percent in the quarter of Dec 2009 improving from 42 % in the previous quarter. 23 % was their gross profit in the fourth quarter of 2008. For the last one year the gross profit margin of has AMD increased to 42%, from 40% in 2008, and at the same time the revenue has declined to 5.4 billion dollar from 5.8 billion dollar.

Recommendations made regarding this are:

  • From the financial analysis, it is clear that AMD is gradually improving their performance in the stock market and there is nothing to worry to make a deal with AMD.
  • The long-term deal will be beneficial for the HTC as the AMD is going through a tough competition with its large rival Intel.
  • HTC should clearly and consistently close watch the financial performance of AMD because any fluctuation in the performance can affect the HTC also.

Reference List

The History of AMD, (2009). Web.

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