Sirius vs. XM: Ratio Analysis and Statement of Cash Flows Paper
From the previous company selection paper, we are now familiar with the selected satellite radio broadcasting companies, Sirius and XM Satellite Radio. Our group will now take a further, in-depth look at the ratio analysis and statement of cash flows to get a better understanding of how the companies are doing financially and with in their market. First, we will be reviewing the cash flows for both companies and identifying how much cash was generated or used by each through everyday operations, and financing and investing activities. We will also address some of the significant events that have affected the overall cash flow for both organizations and describe the changes in revenue and net income over the last several years. Last, we will be calculating the current ratio, return on sales, earnings per share (EPS), debt ratio, and price earnings ratio to state the companies' solvency, liquidity, and profitability and will compare the results within the industry.
Review of Cash Flow Statements
Sirius' primary source of revenue comes from subscription fees, activation fees, sales of advertising on non-music channels and the direct sale of Sirius radios and accessories. Costs of services include satellite and transmission, programming and content, customer service and billing, and costs associated with the sale of equipment (Summary of Sirius Satellite Radio Inc). As of December 31, 2004, Sirius' total cash flow from operating activities was a negative $334,463. Total cash flow in investing activities was a negative $92,852, and total cash flow from financing activities was a positive $660,227. As the data shows, Sirius had losses in operating and investin...
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...th from the financial news website. Retrieved December 30, 2005, from website:
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U.S. Securities and Exchange Commission. Sirius Satellite Radio Inc. And Subsidary Consolidated Statements of Cash Flows. Retrieved December 14, 2005, from website: http://www.sec.gov/cgi-bin/browse-edgar?company=&CIK=siri&filenum=&State=&SIC=&owner=include&action=getcompany
XM: Cash Flow for XM Satellite Radio Holdings Inc.-Yahoo! Finance. Retrieved December 29, 2005 from website: http://finance.yahoo.com/q/cf?s=XMSR&annual
XM: Summary of XM Satellite Radio Holdings Inc.- Yahoo! Finance. Retrieved December 26, 2005 from website: http://biz.yahoo.com/prnews/051027/nyth111.html?.v=28
XM: Consolidated statement of operations. Retrieved January 2, 2006 from website: http://www.xmradio.com/pdf/xm_Q4_2004_earning_financials.pdf
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You would not buy a home, car or other large purchases without researching what product offered you the most for your money. The same is true when investing in a company. Investors do avid research on multiple companies to find what company matches the investors' criteria. In this paper Team C will research both AT&T and Verizon's financial documents. Team C will compare selected ratios, cash flow and make recommendations how both companies can manage cash flow for the future.
The first method we will review is the accounting method. Through this accounting approach we will analyze specific ratios and their possible impact on the company's performance. The specific ratios we will review include the return on total assets, return on equity, gross profit margin, earnings per share, price earnings ratio, debt to assets, debt to equity, accounts receivable turnover, total asset turnover, fixed asset turnover, and average collection period. I will explain each ratio in greater detail, and why I have included it in this analysis, when I give the results of each specific ratio calculation.
There are many valuation methods that could be used to evaluate this company. Finding a method that valuates the stand-alone value is difficult. The stand-alone value should be dependent upon the firm’s own assets and projected future income. We decided to evaluate this company based upon two methods: The Discounted Cash Flow Method and the Comparable Companies Method.
Total Cost of Ownership (TCO). (2005, January 31). Retrieved November 30, 2007, from the searchdatacenter.com website: http://searchdatacenter.techtarget.com/sDefinition/0,,sid80_gci342316,00.html
INTRODUCTION Would people be willing to pay $12.50/month for commercial free radio beamed right to their car or home. Well two companies and many big investors are betting about $3 billion dollars that people are willing to do just that. In 1997, the Federal Communication Commission (FCC) granted a portion of the S-band spectrum for satellite radio and two companies purchased use of these bands and started the only two companies competing in the satellite radio business today, namely Sirius and XM. Analysts like William Kidd of CE Unterberg Towpin, predict satellite radio will generate about $10 billion a year in revenues by 2007 (McClean, 2001).
Satellite radio is a technology that provides a radically new way to listen to radio. XM’s service makes use of advanced satellite capabilities and elaborates terrestrial receiver architecture to deliver a wide array of high quality radio programming nationwide. In early 1998, Robert Acker, director of strategic planning at XM, needs to develop a marketing strategy for this new radio service. There are several decisions that need to be made by the company in order to finalize the business plan. At fist XM needs to decide which of two business models to pursue, whether emphasis should be placed on charging customers a monthly subscription fee, or whether to rely more on earning revenue through advertising. In addressing this problem, management must consider the value that XM radio could propose for different consumer segments as compared with existing modes of radio (AM, FM) and in relation to its sole competitor in satellite radio – SIRIUS. Besides choosing a business model there is also a need to explore how best to approach and leverage manufacturer and channel partners, considering high unknown and high-risk technology. The purpose of this report is to analyze possibilities and outline possible recommendation on strategies for XM Radio. The following areas will be examined:
Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.
-The main advantage that Sirius Xm satellite radio has over its competitors are the commercial free programs that they offer. Most of us think that terrestrial radio is free of charge, not thinking of all the time we consume listening to the commercial. We pay these radios with our time. On the other hand most of the incomes of Sirius Xm comes from its listeners, not from advertisers, making it possible for them to avoid commercials. We believe that commercial-free programs are a very important key
Texas Guaranteed Student Loan Corporation (2014). Learn About the Cost of College. Retrieved February 18, 2014, from http://www.aie.org/paying-for-college/cost-of-attendance/learn-about-the-cost-of-college.cfm
The articles below will provide you with a closer look at the new XM satellite radio. We talk about the history, basics, and future of this amazing new service. We also give you a closer look at examining the positives and negatives of the XM satellite radio over your regular radio service. So, don't waste any time with static, distortion, and limited channels on your radio service. Take a deeper look at the XM satellite radio and find out for yourself, this is the radio wave of the future!
U.S. Securities and Exchange Commission. (2012, August 14). International Investing. SEC.gov. Retrieved February 25, 2014 from https://www.sec.gov/investor/pubs/ininvest.htm
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