Cash Flow Statement Eastman Kodak’s cash flow statement shows that cash has decreased every year except for in 2012 (Nasdaq, 2015). The reason for this is that the company sold $90,000 of their capital assets and also issued a large amount of debt (Nasdaq, 2015). In 2013 Kodak repaid $811,000 of their debt, this was different from any of the other years (Nasdaq, 2015). They may have done this since 2013 was the only year with a positive net income. Each year from 2011 to 2014 Kodak purchased capital assets (Nasdaq, 2015). Exchange rates had little effect on their cash flow until 2014 where it composed 42% of their total uses of cash. Ratio Analysis Liquidity In terms of liquidity, Kodak is in a good position. This is due to the fact that Kodak’s debt ratio has been improving since 2012 when it was considerably above 1. Their 2014 debt ratio is 0.89, which is very close to Hewlett-Packard and Sony. The debt-to-equity ratio of Kodak is the first signal within the ratios that the company is not performing well. Generally, this ratio should be below 1 and for Kodak in 2014 it was 8.83. Their equity is almost non-existent and this is signaling very weak balance sheet strength. Compared to Kodak, Hewlett-Packard and Sony are doing okay, but their ratios are both well above 1. In terms of ability to pay interest, Kodak’s only strong year was 2013. Their ratio has dipped in 2014, showing that they aren’t able to pay their interest or are struggling to pay it. Hewlett-Packard had no interest expense in their latest fiscal year and Sony’s ratio is very strong. In 2012, Kodak’s free cash flow was in the negatives (-$1,176,000). Surprisingly, it reached over two million in 2013, but then dropped to only $33,000 in 2014. Without sufficient cash flow, Kodak is going to have a difficult time increasing their shareholder value. Hewlett-Packard has free cash flow over five million dollars which is huge compared to Kodak. Kodak does not seem to have sufficient cash to handle their business obligations. The cash flow adequacy ratio should be above 1, but Kodak’s are negative. The competitors are around 0.5 for their cash flow adequacy ratio, which In 2014 it was 3.95; this was a lot lower than Hewlett-Packard and Sony. Their ratios were 8.06 and 6.53 respectively. The low ratio signifies that Kodak might have a poor collecting process and should consider changing it. Their effectiveness in collecting debt is poor; therefore, they are losing money from their credit sales. The inventory turnover ratio for Kodak is also low. It has decreased from 2012 to 2014, sitting at 4.66. When this number is compared to HP and Sony (13.23 and 8.10 respectively), it shows that Kodak has poor sales and excess inventory. Kodak is also not getting much revenue per dollar of assets. This is shown by their low asset turnover
Sales growth after 2000 were only 9%, which the average annual sale growth rates range from 10% to 30% in their industry. The lack of cash is explained by the current liquidity ratio
.... In addition, inventory turnover shows a consistent increase from 2.16 in 2011 to 2.38 and 2.49 for 2012 and 2013 respectively.
Looking at the individual ratios seen in exhibit 1 and comparing it to the industry average shown in exhibit 2 gives a sense of where this company stands. Current ratio and quick ratio are really low and have been decreasing. For 1995, the current ratio is 1.15:1, which is less than the industry average of 1.60:1, however to give a better sense of where this stands in the industry, as seen in exhibit 3, it is actually less than the average of the bottom 25% of the industry. The quick ratio is 0.61 is less than the industry is 0.90. Both these ratios serve to point out the lack of cash in this company. The cash flow has been decreasing because, it takes longer to get the money from customers, but the company still needs to pay for its purchases. Also, the company couldn’t go over the $400,000 loan limit, so they were forced to stretch their cash.
Eastman Kodak Company is an American company focused on manufacturing photographic, print and film related products such as digital cameras, printers and scanners. It was founded in 1888 and is headquartered in New York, United States. In order to understand Kodak´s situation back in 1993 one has to know what the market was like at this time. Eastman Kodak Company was the strongest player in the early 1990s and Kodak Gold Plus was seen as the industry standard. In 1993, the US photo and film market consisted of 670 million 24-roll exposures whose prices ranged from $2.50 to $3.50, resulting in a total of approximately $2 billion. The industry was mature, leading to a 2% annual growth, and the market was relatively concentrated with four major players, namely, Kodak, Fuji, Agfa and 3M. Eastman Kodak Company and Fuji sold branded products, whereas Agfa and 3M sold the products b2b and b2c under private labels. Polaroid sourced its products from 3M.
When looking back at what caused Kodak to fail instead of moving forward as technology advanced, it comes down to people and assets. When Kodak first started out, the employees were full of ideas. As Kotter (2012) explains, “Kodak was built on a culture of innovation and change. It’s the type of culture that’s full of passionate innovators, already naturally in tune to the urgency surrounding changes in the market and technology” (Para 5). As the company became more and more successful, leaders became complacent and listened less to their innovative
...rs, setting a good trend for the corporation. They also have a very low debt-to-equity ratio, indicating that they have enough equity to easily pay off any funds acquired from creditors. As a creditor I would feel safe in lending them funds for any future projects or endeavors.
The case is set out in a period where leading film product producing company, Kodak is faced with competitive pressures and market share losses. According to the case, between January 17 and January 24 1994, Kodak has lost 8% of its value, due to rumors of a price cut. Kodak’s market share over a 5-year period has also fallen from 76% to 70%. Although it was still the leading firm in the film production industry, it had rising competitive pressures from players such as Fuji co, Konica and other brands, which had products that were priced much lower than Kodak’s flagship brand Gold plus. This led them to develop a new brand called Funtime, which was priced at the same level of that of Konica and Fuji, 20% lower then Gold plus brand.
It seems that Apple Inc. keeps investing effectively and does not keep too much cash, which is good. In contrast, cash and cash equivalents for Hewlett-Packard Co. had increase rates in the year 2012 to 2014. In the fiscal year 2013, its cash was increased by 7.63% as compared to 2012. Additionally, a big increase of 24.42% was in the fiscal year 2014 as compared to 2013. The increase was due to cash generated from sales of available-for-sale securities (Hewlett-Packard, 73). According to vertical analysis, it shows that cash and cash equivalents were 10.39%, 11.51%, and 14.66% in year 2012, 2013, and 2014, respectively. Cash for fiscal year 2012 and year 2013 was similar at around 11%; however, it has increased in year
Sony’s significant change in their management team has resulted in them optimizing their resources, realigning their business and portfolio, and ultimately strengthening their financial position. Sony’s sales and operating revenue in fiscal year 2012 amounted to 6.5 trillion yen, and rose 4.7% to yield a total of 6.8 trillion yen in fiscal year 2013. Another tremendous improvement was that operating income in 2012 amounted to a loss of nearly 63.7 billion yen, but in fiscal year 2013, the operating income amounted to 230.1 billion yen. With significant improvements, it is not surprising that the consolidated results showed the net income attributed to the shareholders at 43.0 billion yen, in comparison to last year’s loss of 456.7 billion yen, resulting in optimal profitability for once in nearly half a decade. With impressive results in the current fiscal year, Sony is starting to break away from stagnancy, and move towards growth.
They’ve created a sustainable, profitable top-line growth for Kodak, expanding the use of pictures, expanding the market for pictures, and enabling convenience, easy access to pictures all around the globe. Kodak’s expectations for the year 2004, is the product to be the largest single product to be used by use the consumer. Also by the end of 2004 they expect to see and increases of $1 ½ to $4 billion of revenue . The recent growth strategies at Kodak have focused on digital imaging and strategic partnerships with AOL, eBay, and Hewlett Packard, giving the company a strong grip in the market.
Although the balance is useful, it has its limitations. The primary limitation of the balance sheet is that it does not reflect the current value or worth of a company. In essence the importance of the balance is that it provides the financial position of a company on a particular date. It helps external users assess the financial relationship between assets, liabilities, and the owner’s equity. Assets and liabilities are usually classified as either current or long term and presented in descending order of liquidity. (W. Steve Albrecht, 2002)
products such as film. Early success helped Kodak to have all necessary recourses to invest in
O'Reily, L. (2012). Kodak has lost its moment in the frame. Marketing Week, p. 3.
Kodak’s competitive advantage began in black and white film products, even though the company did produce cameras and camera equipment as well. As the years progressed, Kodak “paid progressively less attention to equipment” and concentrated more on the development of colored film and photo-finishing processes (Gavetti et al, 2005). In the 1960’s, Kodak focused on growth in incremental modifications to photo equipment products, which lead to Kodak’s dominance over 90% of the film market and 85% of the camera market in 1976. Although competitors began to emerge, Kodak was satisfied with its achievement of $10 billion in sales. For much of its history, Kodak had been very successful. Kodak began to expand into other business lines in the 1980s and 1990s, acquiring Clinical Diagnostics, Mass Memory, and Sterling Drug. While Kodak dabbled in other business ventures, the scope of technology had dramatically increased, offering new players a chance at a changing market that no longer needed photographic film. Sony and Fuji were two such competitors that took advantage of this situation, steadily gaining market share in the digital film industry. While Kodak did develop innovative products in the early 1990s...
While reviewing the current assets as a percentage of total assets other than cash & shorter investments all of the other are almost same in the year 2013 as compared to 2014.Cash & investments are higher due to the reason they have increased significantly in the current year as mentioned above .Long term debt have increased to 21% of total assets from 17% in the year 2012 the reason for this change is the 30% increase in long-term debt as compared to the previous year. Equity components have slightly changed in the current year as a percentage of total assets as compared from 2012 due to the reasons that their figures have not changed significantly in the current