Financial Statement Reporting and Analysis of Texas Instruments Inc. Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Financial Statement Reporting and Analysis of Texas Instruments Inc. Case Solution

Introduction

The report talks about the detailed financial analysis of Texas Instrument Inc., which is quoted on NASDAQ stock exchange with the ticket Id TXN and is trading currently at the price of 71.27. The company, with the help of its strong mission, captured the position of global leader in the semiconductor manufacturing industry. It can be seen that the semiconductor industry is very huge because of intense demand from the customers with which variety of technology products are manufactured. From the analysis of 10-K, the greatest customer of the company is Apple Inc. with which the company tried to gain much of revenues and also from the global world. Its major customers are from Asia then United States, Europe, Africa, Middle East, Japan as well as from other parts of the world. The company however faces certain types of risk, which first and foremost include foreign exchange risk due to its global business nature, for which the company tries to make effective use of hedging alternatives that mainly include forward currency exchange contracts. Moreover, the other risks of the business are the interest rate risk on the fair value of investment as well as on the fair value of debt. Last but not the least important risk is the equity risk.

Management discussion and analysis

Under the management discussion, it is identified that there were many factors involved in order to execute the performance of the company properly. The first factor was the revenue recognition, which shows that the volume of sales was directly proportional to the level of customers, either as a direct sale or through distributers. While the main focus to increase the sales was towards the direct sales activity in order to save cost of transportation. The other important part to consider was the valuation of fixed and intangible assets, which was evaluated through considering the impairment activity and using the un discounted as well as discounted cash flows to analyze the fair value of an asset.

While with the certain results, some risks related to the operations became apparent. The first that a management discussed was the risk of foreign exchange currency that would hurt the operational activity overtime. The second risk was somehow related to interest rates that would tend to increase if the certain economic conditions were not in favor; the last was the equity risk, which involved the decrease in the stock prices due to under performance. So with all these risks, the company would bear a huge loss if it does not mitigate properly.

Thus, it is concluded that the company showed a proper evaluation of the financial conditions to the shareholders and therefore, illustrates the ability to cover the risk by implementing the process, which would be helpful for the shareholder’s information.

Choice of Competitor

In order to perform the detailed financial analysis of the company, a number of financial ratios are computed together with the horizontal and vertical analysis of the company’s income statement as well as the balance sheet. In order to compare this company in the overall industry, a competitor analysis is also performed; all the ratios of the competitor are also computed with which the current company could be analyzed for its future perspective.

The competitor chosen for this report is Applied Material Inc. with the ticket Id AMAT, which is also traded on NASDAQ exchange with the current stock price of 26.90. There are so many reason of choosing Applied Material Inc. as a competitor, which mainly includes that both the companies are dealing in the same industries, which is the semiconductor industry whose demand is significantly increasing as per the historical records.......................

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