1. ANNUAL REPORT NOKIA Taru Juvonen ACG2021.002

2. Executive Summary I started this project knowing that Nokia had not had the year that they had hoped in 2004. Their sales had gone down but after making some improvements especially in multimedia, networks, enterprise solutions and phones I believe that they are going to improve their sales. http://www.nokia.com/A402795

3. Part A. Introduction Jorma Ollila (Chairman and CEO) Espoo, Finland Fiscal year ended December 31, 2005 4 business groups:Mobile phones, Multimedia, Enterprise Solutions, Networks Nokia operates all over the world. The geographic area is Europe, Middle-East and Africa, China, Asia-Pacific, North America and Latin America.

4. Part A. Audit Report PricewaterhouseCoopers Oy Nokia's auditors reviewed all the financial information, and found that they had been prepared according to the Finnish Accounting Act. The financial statements gave a correct view of all financials.

5. Part A. Stock Market Information Most recently Nokia's stock was $18.58 Dividend per share: $0.430 In 04/29/2005 Nokia is doing good and owning their shares would not be a bad idea. My opinnion is to hold on to the stock because it is going to go up this year. But if you do not own any my suggestion is to buy.

6. Part B. Industry Situation and Company Plans The mobile phone industry is still growing. Nokia has been succesfull in expanding it's mobility into new areas such as imaging, entertainment, games, media, and enterprises. According to Nokia there are still opportunities to sell mobility to completely new users.

7. Part C. Income Statement EuroM20042003 Gross Profit11,13412,218 Income from 4,3305,011 Operations Net Income3,2073,592 ● Nokia uses a multi-step income statement ● Even though Nokia did suffer some downfall but I believe that with their new ventures their numbers are going to climb back up.

8. Balance Sheet Assets = Liabilities + Stockholders Equity 2004 2003 22669 = 8431 + 14238 23920 = 8772 + 15148

9. Part C. Statement of Cash Flows Cash flow from operating income is more than net income Nokia's long lived assets have gone down in 2004 but some of their current assets such as liquid assets and inventories have grown. Nokia receives most of it's money from investments Even though sales have gone down cash has increased.

10. Accounting Policies Revenue recognition occurs when evidence of an arrangement exists, delivery has occured, the fee is fixed and determinable, and collectibility is probable Inventories: Nokia uses the FIFO method (first in, first sold) Short term investments: All highly liquid marketable securities purchased with maturity at acquisition of more than three months Property, plant and equipment: stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis. Cash and cash equivalents: Bank and cash consist of at bank and hand. Cash equivalents cosist of highly liquid available-for-sale investments.

11. Part E. Financial Analysis Liquidity Ratios EuroM 20042003 Working Capital11,53911,803 Current Ratio2.442.42 Receivable turnover6.15.5 Average days' sales59.866.4 uncollected Inventory turnover14.614.1 Average days’ inventory 2525.9 on hand Overall there was only a small change in Nokia's liquidity.

12. Part E. Financial Analysis Profitability Ratios 20042003 Profit margin0.110.12 Asset turnover1.31.2 Return on assets0.140.15 Return on equity0.220.24 Overall the profitability of Nokia went down in 2004. Only the asset turnover ratio was larger than the year before. This shows that Nokia was a little better in 2004 to use assets to produce sales.

13. Part E. Financial Analysis Solvency Ratio 20042003 Debt to equity0.60.5 Having a debt to equity ratio of under 1 means that the stockholders control the company

14. Part E. Financial Analysis Market Strength Ratios 20042003 Price/earnings per share27.324.8 Dividend yield2%1.6% Overall these results did not change much. These numbers are an indication to the investors about what kind of return they get and how succesful the company is.