Garmin was founded in 1989 by Gary Burell and Dr. Min Kao; and has overtime evolved into the leading worldwide provider of navigation, communication and information devices and applications that have engaged GPS technology. Garmin designs and manufactures over one hundred products for four main segments: automotive/mobile, outdoor/fitness, marine and aviation (Garmin, 2009). Garmin has a proven track record of solid revenue and earnings per share growth.
Garmin’s balance sheet represents the snapshot of its financial position on the last day of the year (Brigham & Ehrhardt, 2011). Naturally, as a retailer, Garmin has a larger inventory before the holiday season, which would make the analysis of Garmin’s balance sheet very different in the spring (Brigham & Ehrhardt, 2011). Overall the balance sheet shows that Garmin presents little financial risk for an investor, as the capital structure does not rely on leverage (Businessweek, 2012).
The current ratio is the current assets divided by the current liabilities, for Garmin this number is 4.0 (Forbes.com, 2012). This number indicates Garmin has a strong ability to pay their short-term bills as the higher the number of a company’s current ratio the better, placing Garmin in a strong category (JWI530, week 5). This number has decreased however from a 5 in 2010 (Istockanalyst.com, 2010). However, a high current ratio can also be indicative that a company is not investing enough in its own business, but rather are sitting on assets that could be utilized in other ways (JWI530, week 5). Because Garmin does not require a lot of cash to operate, the company is able to deploy cash for strategic acquisitions, share buybacks and dividends instead (Istockanalyst.com, 2010).
Garmin’s Quick Ratio, or their current assets minus their inventories and then divided by their current liabilities is currently a strong 3.0