Jwi 530: Assignment 2 – Garmin Analysis
Business and Management
Submitted By damightybee
This paper will evaluate Garmin’s financial statements including the balance sheet, the income statement, and the cash flow statement. Each of these documents reveals a crucial part of Garmin’s overall business picture, but never a fully complete one (JWMI 530, Week 3, Lesson 1). In addition, it includes a review of Garmin’s capital management, expenditures, and trends as a result of today’s competitive landscape.
Balance Sheet Financial Ratio Analysis Garmin Ltd (GRMN)
Garmin’s balance sheet represents the snapshot of its financial position on the last day of the calendar year and its strength as a result of its assets and no long-term debt. Garmin (GRMN) generates plenty of free cash flow and has a strong, cash-loaded balance sheet (Harry, 2012). It is important to highlight that since 2008 and year over year, Garmin Ltd. has seen Return on Assets declined 13.70% to 11.30% from 25% in 2009 and Return on Equity (REO) declined 17.5% to 15.40% from 32.90% (See Appendix A and B). Return on Equity encompasses Garmin’s ability to leverage the three pillars of corporate management—profitability, asset management and financial leverage (Montley Fool Staff, 2008). In 2008, Garmin was an asset creator as it had a REO of ~33% in comparison to 2012’s REO of 15.40%. This occurred during the worst recession in 70 years. In my opinion, this number demonstrates that management is running the company very well. Clearly, high expectations, disruptive innovations such Google Maps and the slowing economy have had an impact on Garmin’s capability to maintain its historical performance levels.
Return on Invested Capital
When sizing up management's, it’s recommended to start with two simple measures: ownership and returns on invested capital (Meier, 2010). An investor wants to know whether management has skin in the game, aligning...