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ID#:100063777
Class:BUS220f
INDIVIDUAL PAPER
Nevertheless, this does not mean that Toshiba is a safe harbor for the investors money.
As IndustryWeeks article titled Toshiba returns to black points out, the outlook still
remains uncertain. The Great Japanese Earthquake had an enormous impact on the
performance of the company for the fiscal 2010 year and will have effect on the company in
the future as well. As the article suggests, the nearly doubled revenue for FY 2010 is mainly
due to the strong demand for television sets and memory chips, which are just a small portion
of the companys product range. At the same time, Toshiba had to close a chip-making factory
in Iwate Prefecture, which has resumed its operations only partially. In the long-term the
computer giant has to deal with the paralyzed Japanese economy, which will definitely lead to
a change in the domestic demands.
So the question is: should we invest in Toshiba Corporation? On one hand, the
company is relatively debt leveraged and that means its equity is pretty sensitive to losses.
Currently the economic picture of the world is not very promising: we have a sovereign debt
crisis and Europe and in addition the earthquake stricken economy of Japan. These
uncertainties make Toshiba a relatively risky company to invest in, because the case of big net
losses would wipe out the equity of the company. On the other hand, we should also note that
the company is trying to restructure itself and create a more flexible business model. It has
managed to decrease its long-term debt and cut many operational expenses. Furthermore,
except for the strongly established business in the digital products and electronic devices
segments, Toshiba has been consistent in its annual investments in new technologies and
alternative sources of energy. In the future this may turn out to be a gold mine for the
company and for the stockholders. To conclude, in the short run Toshiba is not the perfect
company to invest in, but for a venturesome investor, the Japanese giant may turn out to be an
easy way to for multiplying money.
Sources:
1. Toshiba to Buy Meter Maker Landis+Gyr for $2.3 Billion in Smart Grid
Boost. www.bloomberg.com.
http://www.bloomberg.com/news/2011-05-19/toshiba-reaches-agreement-
to-purchase-landis-gyr-for-2-3-billion-in-cash.html
Other assets:
Non-current assets of discontinued operations 142,085 114,817
Deferred tax assets 281,035 160,479 27,921
Other assets 1,096,100 1,236,091 788,985
Total other assets 1,519,220 1,511,387 816,906
Long-term liabilities:
Long-term debt 1,182,668 1,043,021 831,300
Accrued pension and severance costs 538,183 515,446 629,402
Other liabilities 182,049 208,120 228,372
Non-current liabilities of discontinued operations 90,115 91,966
Total long-term liabilities 1,993,015 1,858,553 1,689,074
Horizontal Analysis:
Other assets:
Non-current assets of discontinued 142,085 114,817
operations -27,268 -19.1913
Deferred tax assets 281,035 160,479 -120,556 -42.8971
Other assets 1,096,100 1,236,091 139,991 12.77174
Total other assets 1,519,220 1,511,387 -7,833 -0.51559
Long-term liabilities:
Long-term debt 1,182,668 1,043,021 -139,647 -11.8078
Accrued pension and severance costs 538,183 515,446 -22,737 -4.22477
Other liabilities 182,049 208,120 26,071 14.32087
Non-current liabilities of discontinued 90,115 91,966
operations 1,851 2.054042
Total long-term liabilities 1,993,015 1,858,553 -134,462 -6.74666
Vertical Analysis:
Other assets:
Non-current assets of discontinued 114,817
operations 1,8% -
Deferred tax assets 160,479 27,921 2,5% 0,5%
Other assets 1,236,091 788,985 19,5% 14,5%
Total other assets 1,511,387 816,906 23,9% 15,0%
Long-term liabilities:
Long-term debt 1,043,021 831,300 16,4% 15,3%
Accrued pension and severance costs 515,446 629,402 8,1% 11,6%
Other liabilities 300,086 228,372 4,7% 4,2%
Total long-term liabilities 1,858,553 1,689,074 29,3% 31,1%
2011 2010