Premium Essay

Callaway Golf Financial Analysis

In: Business and Management

Submitted By dan89210
Words 3093
Pages 13
Questions: 1. Describe the company business. Is management pursuing strategies that you think will add value to shareholder wealth?
Answer:
Callaway Golf Company (ELY) is a company that produces high-end equipment for amateurs and professionals to play Golf. The company was created by Ely Callaway Jr. in 1982. With the increasing demands of hiring new specialists as well as increased capital demand, Callaway Golf Company decided to take their company public in 1992 on the New York Stock Exchange (NYSE) under the ticker ELY. Since then, ELY has focused primarily on the business-to-consumer market selling woods, irons, wedges, putters (Odyssey brand), golf balls, as well as accessories.
Many golfers including myself hate to admit that it is nearly impossible to play golf all year round. Much of this is due to unplayable conditions during the late fall to early spring seasons. During this time period, the demand for Callaway’s products start to diminish. Several companies whose primary operations are dependent on Golf have suffered financially over the past few years because of a decrease of interest in the game as well as less than perfect economic conditions. From 2010 to mid 2013, Callaway has posted consistent net losses. These financial hits have caused Callaway to sell off some of its low-performing subsidiaries including Ben Hogan and Top Flite.
From an investor’s standpoint, it has been difficult to find any successful cyclical business on an earnings per share standpoint. Since the 2008 sub-prime mortgage crisis, retail stores have cut back on inventory and consumers have been less open to purchasing expensive golf clubs. To thwart this economic degradation, Callaway’s board of directors initiated a restructuring plan in 2011 to turn-around their financial woes. This included selling Ben Hogan to Perry Ellis in 2009 for $700,000 and Top-Flite brand to…...

Similar Documents

Premium Essay

Callaway Golf Clubs

...Callaway Golf Clubs Term Paper Assignment Webster University Marketing 5000-02 Fall I 2010 Rashad A. Myers Executive Summary Callaway is a premium golf equipment company which focuses on increasing the overall experience of playing the game for those that use its products. The company will increase market share and profits by focusing on specific target markets over the next 12 months. Environmental Analysis Socio-Culturally, Callaway is affected by the fact that the majority of its customers are Caucasian and male. Further, this demographic is largely made up of male baby boomers, and this segment is aging rapidly, with many giving up the game due to health reasons. Also, children are not taking up the game with the numbers that they used to. Instead, they opt for video games and other sports. Politically, Callaway is not affected by legislation. Callaway is certainly impacted by what is going on economically. Golf is a relatively expensive sport to play with any regularity, when you take into consideration the equipment costs and green fees. One of the first activities that are limited is recreational spending in a down economy. The company will suffer if people’s discretionary spending is limited for extended periods of time. Callaway is affected by Legal and Regulatory forces because its governing body, the United States Golf Association (USGA) can make changes to equipment any time it wants to. Callaway incorporates technology heavily in......

Words: 2287 - Pages: 10

Free Essay

Callaway Analysis

...have joined the industry since Callaway first began and they have been narrowing the gap in terms of a competitive product at a cost that is equal to, if not less than Callaway’s for a like product. Therefore, should Callaway continue to maintain their leading-edge technology, focus on average golfers target market and build strong relationship with retailers? Objectives: _Maintain customer value _Obtain a growth in sales _Maintain Premium pricing model _Increase brand awareness Alternatives: 1. Expand its operation in international markets 2. Focus on the baby boomer segment 3. Develop the variety of products in terms of golf accessories 4. Strengthen relationships with retailers 5. Sponsor golf camp and university or school tournaments. 6. Invest in R&D to maintain their leading-edge technology Consequences of alternatives: (Table 1) Callaway should focus their marketing programs on the baby boomer generation segment. One of this target segment’s characteristics is that people at the age of 50-60 have more time to play golf as they are retired and tend to remain brand loyal. Moreover, baby boomers have more disposable income, which makes them more likely willing to pay a premium for higher quality clubs. Another alternative for Callaway Golf Company is to develop its products in terms of accessories and create a star golfer model. By doing that, they would have lower cost than producing golf clubs and golf balls. Furthermore,......

Words: 883 - Pages: 4

Premium Essay

Callaway Golf Marketing Plan

...Running head: GROWING THE GAME Growing the Game Callaway Golf (Marketing Plan) Abstract This proposal discusses the promotion of and the expanding of the Custom Club Fitting service to more markets. This proposal will also discuss and give a brief overview of the company’s history, overall philosophy, the current market condition, the competition, performance, customers, a SWOT analysis, marketing strategies, and marketing mix strategies. The objective of this proposal is to develop and implement an effective marketing plan to expand Custom Club Fitting to more markets to increase performance in the market. Growing the Game Contents Executive Summary……………………………………………………………………… 4 I Introduction 5 a. Background 5 b. Purpose and Objectives 6 II Analysis of the Environment 6 a. External Analysis 6 a.a. Market 7 a.b. Competition 7-8 b. Internal Analysis 8 b.a. Performance 8 b.b Customers 9 III SWOT Analysis 9 a. Opportunities 10-11 b. Threats 11-13 c. Strengths 13-14 d. Weaknesses 14-15 IV Fundamental Marketing Strategies 15 a. Positioning Strategies 16 b. Competition Strategies 16 V Marketing Mix Strategies 17 a. Product 17 b. Price 17 c. Place 17 d. Promotion 17 VI Implementation and Control 18 a. Implementation 18-19 b. Control 19 VII Conclusion 19 Executive Summary Every......

Words: 4054 - Pages: 17

Premium Essay

Financial Analysis

...Corporate Finance a) WACC A company’s weighted average cost of capital (WACC) is usually regarded as the minimum required rate of return. It is defined as the weighted average rate of return a company must pay to its long-term creditors and shareholders for the use of their funds. When WACC is used as the discount rate, it serves as a screening device in net present value analysis. To calculate WACC we must first find the expected return on share i E(Ri), using the securities market line equation, as follows: E(Ri) = RF + βi (E(RM) - RF) = 3% + 1.2 (13% - 3%) = 15% E(Ri) = expected return on share i E(RM) = expected return on the market = (Market risk premium + the risk free rate of return) = 13% RF = risk-free rate of return = 3% βi = beta of share i =1.2 As such, WACC can be calculated using the following equation: WACC = [D/(D+E)*RD](1-T) + [E/(D+E)*RE] = [40%*6%(1-28%)] + [60%*15%] = 10.728% D = value of total debt E = value of shareholders’ equity RD = cost of debt RE = cost of equity T = corporate tax rate b) NPV, IRR, & Payback Period Assumptions: - Generally speaking, because of difficulties related to identifying costs with particular activities and determining the future benefits, all R&D costs are expensed when incurred. They do not become part of the capitalised investment asset. As such, the €20m OMG has spent on R&D will be excluded from the NPV......

Words: 4150 - Pages: 17

Free Essay

Giới Thiệu Callaway Golf

...36k16.2 Lê Thị Hằng Sương 36k16.2 Nguyễn Thị Thùy Giang 36k16.2 10/09/2013 QUẢN TRỊ CHIẾN LƯỢC QUẢN TRỊ CHIẾN LƯỢC MỤC LỤC 1.Tổng quan về Callaway Golf 2 1.1. Giới thiệu công ty 2 1.2. Vài nét về người sáng lập 2 1.3. Các sản phẩm chính của công ty 3 1.4. Các thành tựu về các giải thưởng đã đạt được 4 2.Lịch sử hình thành và quá trình phát triển 4 2.1. Lịch sử hình thành 4 2.2. Quá trình phát triển 4 3.PHÂN TÍCH SỨ MỆNH VIỄN CẢNH 5 3.1. Sứ mệnh 8 3.2. Viễn cảnh 10 1. Tổng quan về Callaway Golf Callaway Golf là công ty sản xuất gậy golf hàng đầu thế giới 1.1. Giới thiệu công ty * Thông tin chính * Tên đăng ký kinh doanh: CALLAWAY GOLF * Hình thức pháp lý: Công ty cổ phần * Thành lập: 1982 * Trụ sở chính: Carlsbad,California, Mỹ * Mã chứng khoán: ELY tại sàn New York * Lĩnh vực kinh doanh: Công ty chuyên thiết kế, sản xuất, và bán thiết bị , phụ kiện golf và các sản phẩm liên quan đến golf. Công ty thiết kế sản phẩm của mình dựa trên công nghệ tiên tiến. Sản phẩm của công ty được thiết kế cho người chơi golf ở tất cả các cấp độ kỹ năng cả nghiệp dư và chuyên nghiệp, và thường được thiết kế để phù hợp với các nguyên tắc của Hiệp hôi Golf Mỹ. * Dưới thương hiệu Callaway và Odyssey, Callaway sản xuất và bán gậy golf, bóng golf, và bán quần áo golf, giày dép và phụ kiện tại hơn 110 quốc gia trên toàn thế giới, với khoảng 2.300 nhân viên. * Các số liệu tài chính cơ bản năm 2012 * Doanh......

Words: 5805 - Pages: 24

Free Essay

Review of Callaway Golf Company

...IMPLEMENTATION of NEW TECHNOLOGY In 1986 Callaway hired Richard Helmstetter as the chief club designer. He initiated major developments in the research of clubs designed and marketed by the company. This culminated into Callaway establish a strong product portfolio. In 1987, Callaway became the first golf company to use computer controlled milling machines to produce innovative club designs. These clubs helped eliminate/reduce the impact of variables such as directional control, distance, etc. during the game thus making it easy to play. Callaway consistently produced innovative products at an impressive rate thus appealing to its present customers at the same time attracting new customers. Examples include: 1988 Introduced S2H2 technology 1991 Big Bertha club design is launched ruled the market in the 90s 1993 Big bertha Heavenwood club introduced 1994 Big Bertha stainless steel woods and Irons are introduced ACQUISITIONS: In 1997, Callaway acquired Odyssey which was one of the leading manufacturer of golf clubs at that time. This move of Callaway had several advantages: 1 This acquisition added more variety of clubs to the product portfolio. 2 Increased market share which is directly proportional to the increase in customer base 3 Reduced competition 4 More manufacturing capacity with Callaway can use Odyssey’s establishments GREAT CUSTOMER RELATIONS/ENDORSEMENTS: Callaway established great rapport with many leading golf players of the time by working......

Words: 848 - Pages: 4

Premium Essay

Financial Analysis

...Financial Analysis of Coca-Cola and PepsiCo, Inc. Kyla D. Smith XACC/280 Financial Accounting Axia College Financial Analysis Two of the major competing companies that manufacture drinks are Coca-Cola, and Pepsi. They both produce regular water, flavored water, and soft drinks of many kinds. While this essay will explain what vertical and horizontal analysis is, it will also explain each company’s vertical and horizontal analyses. Also the ratios for each company will be given, and several examples as to how each company can improve in their financial status. The financial analysis of both companies is very important so both businesses can understand how they are being managed. It is very important for a company to keep up to date financial documents, audits, taxes, and other financial statements. This is the information needed to show what a company is doing with their finances and what they have done in the past. This information is also very useful for management to use and know what to do differently in future months or years. Information like this allows a company to grow, and have healthy production going forward. Having this data also helps management, investors, and creditors know if there are any issues that have come up in the past that need to be worked on. While in competition, these two companies have continued to grow in size, market value, and profit sales. Since the beginning of their competition, both companies have ventured into new areas of......

Words: 2009 - Pages: 9

Premium Essay

Financial Analysis

...Financial Analysis – Week Five Final Assignment ACC 205 Principles of Accounting I July 4, 2000 Financial Analysis As an introduction, financial analysis provides an opportunity to make informed decisions about the health and viability of the company under review. The analysis can be done in several ways, but most commonly the business activities of a particular entity are compared internally from one year to the next. Similarly, the company is compared to an external but similar company in the same industry. Alternatively, one could also compare the activity of the company under review with that of an industry average of similar companies. The various financial analysis techniques used by accountants and analysts are all designed to provide the best possible estimate of financial viability of a company on a go forward basis. The company selected for this project is a publicly held healthcare corporation based in Boca Raton, Florida and named Cross Country Healthcare. As an overview, the company is comprised of three segments: contingent nurse and allied healthcare provider staffing, physician staffing, and other human capital management services, the latter of which provides education and training programs to the healthcare industry, as well as retained search services for physicians and healthcare executives in the United States. Competitors of Cross Country Healthcare would be companies similar to Staff Care, Maxim, Delta Staffing, Onyx MD, and others...

Words: 1702 - Pages: 7

Premium Essay

Financial Analysis

...Financial analysis Accountancy Financial analysis (also referred to as financial statement analysis or accounting analysis) refers to an assessment of the viability, stability and profitability of a business, sub-business or project. It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions. Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of its goods; Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital; Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business. Financial analysts often assess the firm's: 1. Profitability -its ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations; 2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term; 3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations; Both 2 and 3 are based on the......

Words: 826 - Pages: 4

Premium Essay

Callaway Golf

...1) One of the primary benefits of FX-1 product is to help respond to market demand which requires Callaway to come up with a revolutionary product. With FX-1, Callaway will have the chance to pair it with FT-i driver (existing product) and attract the attention of the golfers who seek ultimate course experience .It will also increase the company's revenues and enable it to gain further market share in a market where consumers report decreasing golfing. On the other hand, the introduction of FX-1 will cannibalize comparable top-end irons in its product portfolio. Additionally, FX-1 will require one-off investments for product development, manufacturing, and pre-marketing. 2) Gross profit margin comparison: FX-1: Callaway Golf: 3) Earnings and FCF analysis for FX-1 product are as follows: 4) At discount rate of 10.5% NPV of project FX-1 is USD 910,000 taking into consideration of potential cannibalization. Given that NPV is positive, the firm should take on the project. 5) Below is the NPV for 3 different scenarios. The implication here is that assuming that the 3 scenarios are reasonable, the actual project NPV is likely to end between a range of USD -0.6 million and USD 2.66 million. 6) Assuming all other assumptions are fixed at base scenario, project will break-even at the following number of units sold, per-unit wholesale price, and per-unit manufacturing cost value. 7) Because NPV of price reduction of 10% and sales increase...

Words: 309 - Pages: 2

Premium Essay

Financial Analysis

...Student Number: 10314497 Course Title: MBA (Finance Stream) Lecturer Name: Enda Murphy Module/Subject Code: B9AC106 Module/Subject Title: Financial Analysis Assignment Title: Analysis of Financial Statements No of Words: 3418 (Excluding Citation, Bibliography, Table of Content and Charts) Date of Submission: 12 November, 2015 Table of Content Introduction..............................................................................................................................3 Ratio Analysis of Tata Motors..................................................................................................5 Profitability Ratio.....................................................................................................................5 Gross Profit Margin..................................................................................................................6 Net Profit Margin/Profit for the year (after tax).......................................................................7 Profit before Tax (PBT) Margin................................................................................................8 Return on Equity.......................................................................................................................9 Efficiency Ratio.........................................................................................................................9 Average Receivable Collection Days....................

Words: 4725 - Pages: 19

Premium Essay

Callaway Golf

...Company Profile 3/5/12 2:00 AM Close Callaway Golf Co D-U-N-S® Number: Company Name: Mail Address: 05-557-1012 Callaway Golf Co 2180 Rutherford Rd Carlsbad, CA, USA 92008-7328 View Map San Diego San Diego-Carlsbad-San Marcos 1 760-931-1771 www.callawaygolf.com Location Type: Subsidiary Status: Manufacturing Indicator: Plant/Facility Size: Owns/Rents: Foreign Trade: Year Established: Ownership: Stock Ticker: Headquarters Non Subsidiary Manufacturer 135,000 Sq Ft Owns Import 1982 Public ELY County: MSA: Country Phone Code: Phone: Web Address: Employment: (Individual Site) Current Year: 2,126 1 Yr Prior: 2,126 | Trend: 0.00 2 Yr Prior: 2,126 | Trend: 0.00 3 Yr Prior: 2,126 | Trend: 0.00 Sales: (All Sites) Sales: (Individual Sites) $967,656,000 US (Actual) $967,656,000 US (Actual) Executives: Ms Bonnie Thacker - Management Ms Katy Tomak - Administrative Assistant Mari Wright - Services Mr Bruce Parker - President Mr George Fellows - President; Chief Executive Officer Mr Neil Howie - Managing Director Mr Brian P Lynch - Corporate Secretary; Vice President Mr Bob Penicka - Chief Operating Officer Mr David A Lverty - Chief Operating Officer Mr James Hill - Executive Officer Mr Steven C McCracken - Chief Administrator; Executive Ms Christine Rousseau - Executive Vice President; Chief Information Officer Mr Brad Holloway - Executive Vice President Mr William F Knees - Senior Vice President; Marketing Staff Mr Mike Rider - Senior Vice President Mr John F......

Words: 865 - Pages: 4

Free Essay

Financial Analysis

...three years and also shows the forecast of the company for financial year 2012. This would help investors and researchers to decide on investing to SWM or not. SWM has been analyzed step by step in order to find out its true value in the industry. The analysts have first looked into SWM business and strategy where it has been noted that SWM was a result of merger of seven group holdings and Australian West Newspaper in order to expand and use their resources efficiently. Secondly, SWM accounting policies and procedures have been analyzed where they showed that the company is following the accounting standards and using their flexibility that was given by the standard in order to measure some accounts in the financial statement. This flexibility was compared to the industry where it has noted that the company is valuing these accounts in a proper way. Thirdly, a financial analysis was also undertaken. It has been understood that the company, though there was a merger, is managing their resources well that resulted to positive book and cash returns. Lastly, the forecasts of the said company, where the analyst has determined the company’s value and the full set of financial statement for 2012, were estimated and calculated intelligently. With the help of the four steps of business analysis, the group has recommended that it is safe to invest to seven west media even if merger has occurred twice in the last three financial year. I. INTRODUCTION In order for a......

Words: 1963 - Pages: 8

Premium Essay

Financial Analysis

...Financial Data Analysis Jesse Patacsil HCS 577 June 29, 2012 Financial Data Analysis Financial data analysis is the procedure for assessing budgets and other finance-related things to determine the sustainability of a business venture. A financial analysis is used to analyze whether a unit is constant, solvent, liquid, or profitable enough to be invested in by shareholders. When looking at a specific company, the financial analyst will often focus on the income statement, balance sheet, and statement of revenue and expenses statements. In addition, one key area of financial analysis involves comparing the company's past year performance into an estimate of the company's future performance.(Stock Analysis, 2912) On the Balance sheet the patient accounts receivable had a larger allowance for bad debts on the audited version. There was $1,000,000 more in the allowance for bad debts (or doubtful accounts) in the audited version of the financial statements (Patton-Fuller Community Hospital, 2009). This means that the hospital most likely will not collect on this patient accounts receivable and has classified it as a bad debt so it is estimated to result in a loss. The management uses historical data to estimate bad debt but new agreements with managed care payers required an adjustment to the expense and allowance during the audit (Patton-Fuller Community Hospital, 2009). This also decreases the total assets by $1,000,000 in the audited version of the balance......

Words: 778 - Pages: 4

Premium Essay

Callaway Golf

...Strategic Report for The Callaway Golf Company Innovation through Collaboration Scott Damassa Amy MacKinnon Alisher Saydalikhodjayev April 14, 2007 Harkness Consulting Table of Contents Executive Summary ................................................... 3 Company Background ................................................ 5 Competitive Analysis.................................................. 7 Internal Rivalry ................................................................ 8 Entry .............................................................................. 12 Substitutes & Complements ........................................... 13 Buyer & Supplier Power ................................................. 14 SWOT Analysis ..........................................................15 Strengths ....................................................................... 15 Weaknesses ................................................................... 15 Opportunities ................................................................. 16 Threats........................................................................... 16 Financial Analysis .....................................................16 Strategic Issues & Recommendations .......................21 References…………………………………………………………25 Harkness Consulting 2 Executive Summary Harkness Consulting has been asked by Callaway Golf to assess its strategic market position and to make recommendations for......

Words: 7472 - Pages: 30