Joanna Andrews Elizabeth Griffiths Brittany Boone February 5, 2013

Agenda  Overview/History

Agenda  Overview/History  Financials

Agenda  Overview/History  Financials  Presentation & Interpretation of Ratios

Agenda  Overview/History  Financials  Presentation & Interpretation of Ratios  Summary

Overview/History

Financials

Financials – Income Statement

Financials – Balance Sheet

Financials – Balance Sheet (Cont’d) 03/012 03/011 03/010

Presentation & Interpretation of Ratios

Ratios – Return on Common Equity  2012: (7,028,000)/7,667,000 = (91.67%)  2011: (2,962,000)/7,612,000 = (38.91%)  2010: (760,000)/6,751,000 = (11.26%)  Return on Common Equity = Net Income/Common Equity

Interpretation of ROE  All 3 years = stockholders are earning negative returns off their investments  Reason: net income has been on the negative side due to high operating expenses  Negative ROE has continued to drastically plummet

Ratios – Return on Assets  2012: (7,028,000)/161,561,000 = (4.35%)  2011: (2,962,000)/155,781,000 = (1.90%)  2010: (760,000)/137,694,000 = (0.55%)  Return on Assets = Net Income/Total Assets

Interpretation of ROA  All 3 years have a negative ROA  Due to net loss from high interest expenses (too much debt) & operating expenses  ROA was closest to 1% in ‘010 from a lower bundle of assets

Ratios – Current Ratio  2012: 45,628,000/55,046,000 = x  2011: 46,381,000/49,895,000 = x  2010: 44,230,000/43,450,000 = x  Current Ratio = Current Assets/Current Liabilities

Interpretation of Current Ratio  All 3 years have a positive number which has slowly been decreasing since ‘010  Not enough assets to cover debt  Financials show more debt borrowing due to financial difficulty and slowing of A/P payments

Ratios – Debt Ratio  2012: 136,664,000/161,561,000 = 84.59%  2011: 124,805,000/155,781,000 = 80.12%  2010: 105,953,000/137,694,000 = 76.95%  Debt Ratio = Total Debt/Total Assets

Interpretation of Debt Ratio  All 3 years have extremely high debt ratio percentages; increasing with each year  Sony’s creditors have supplied it with an average of 80% of its funds This percentage will make it hard for Sony to borrow more funds Risk of bankruptcy if continued?

Ratios – Profit Margin  2012: (7,028,000)/ 78,902,000 = (8.91%)  2011: (2,962,000)/86,647,000 = (3.42%)  2010: (760,000)/77,205,000 = (0.98%)  Profit Margin = Net Income/Sales

Interpretation of Profit Margin  All 3 years have a negative PM  Due to high interest expenses (debt) and operating expenses  Sales have also decreased by $1,882,000

Summary

 Overall, Sony Corporation has been operating poorly over the past 3 years High interest payments (high debt) ○ Debt ratio High operating expenses Not a lot of assets

Work Cited  Brigham, E. F., & Houston, J. F. (2012). In Fundamentals of financial management. Mason, Ohio: South-Western Cengage Learning.  History of Sony Corporation. (n.d.). FundingUniverse. Retrieved January 30, 2013, from corporation-history/  SNE Balance Sheet | Sony Corporation. (n.d.). Yahoo! Finance. Retrieved January 30, 2013, from  SNE Income Statement | Sony Corporation. (n.d.). Yahoo! Finance. Retrieved January 30, 2013, from  SONY Timeline. (n.d.). Timetoast. Retrieved January 30, 2013, from