Any topic (Writer’s choice)

Economic analysis of Intel Corporation

Intel Corporation refers to an American multinational technology corporation that is headquartered in Santa Clara, California. It is the largest and highest value maker of semiconductor chip in the world based on the revenue. Investors should invest in Intel Corporation because their earnings per share have risen steadily in the past 5 years, including a moderate increase in stock price and amount returned in dividends.

Analysis of income statement (values in $ million)

  2012 2013 2014 2015
Revenue 53,341 52,708 55870 55,355
Cost of revenue 20190 21187 20261 20676
Gross profit 33151 31521 35609 34679
Total operating expenses 18,513 19230 20,262 20,677
Operating income 14,638 12,291 15,347 14,002
Interest expense 90 244 337
Net income 11,005 9620 11704 11420

Source: http://financials.morningstar.com

Despite they fluctuation, revenue, gross profit and net income indicated an upward trend. According to Yahoo Finance, revenue improved from $52,708 million in 2013 to $55355 million in 2015, indicating an increase in the efficiency and effectiveness of its operations (Kieso et al. 210). On the other hand, net income is relatively high increasing from $9620 million in 2013 to $11420 million in 2015 (Financials.morningstar.com, 2016). This implies an improvement in the profitability of Intel Corporation. Therefore, the earning per share has increased steadily in the past five years as well as the amount returned in dividends to investors.

Analysis of balance sheet (values in $ million)

Balance sheet indicates financial position of Intel Corporation as at a specific period.

  2012 2013 2014 2015
Total cash 18162 11646 14054 25,313
Total current assets 31358 32084 27730 40356
Net PPE 27983 31521 35609 34679
Total non-current assets 52993 60274 64226 62709
Total assets 84351 92358 91956 103065
         
Total current liabilities 12898 13568 16019 15667
Total non-current liabilities 20250 20534 20072 26313
Total liabilities 33148 34102 36091 41980
Total stockholders’ equity 51203 58256 55865 61085
Total liabilities and equity 84351 92358 91956 103065

Source: http://financials.morningstar.com

Balance sheet also experienced an inconsistent trend, but had an upward trend in general. The current assets increased implying Intel’s ability to meet its short term obligations. Total assets reveal an upward trend implying an increase in the ability of the company to generate more revenues across the period (Kieso et al. 210). Finally, it is evident that the portion of total liabilities is less than the portion of shareholders’ equity; therefore, Intel uses fewer debts and as a result has small business risk. It is able to provide higher earnings and due to low interest expense, the amount returned in dividends to investors has increased.

Analysis ratios for the past 4 years

  2012 2013 2014 2015
Net margin 20.63% 18.25% 20.95% 20.63%
 Debt-to equity ratio 0.26 0.23 0.22 0.33
Current ratio 2.43 2.36 1.73 2.58
  1.71 1.12 1.15 1.92
Receivable turnover 14.26 14.22 13.95 12.02
Earnings per share $2.13 $1.89 $2.31 $2.33
Dividends $0.87 $0.90 $0.90 $0.96
Payout ratio 40.8% 48.6% 42.8% 40.7%
Stock price $20.62 $25.97 $36.13 $34.30

Source: financials.morningstar.com/ratios/

From the table above, it is evident that net margin increased to 20.63% in 2015 implying an increase in profitability (Financials.morningstar.com, 2016). Debt-to-equity ratio is less than 0.5, Intel is using fewer debts. Current and quick ratios are higher than one and have somehow increased hence Intel is extremely liquid. It has a higher receivables turnover, implying a higher efficiency and effectiveness in using receivables to generate revenue. The increase in other ratios has resulted in the increase in EPS, stock price and dividends paid to the investors are shown in the table. Therefore, investors should invest in Intel Corporation because their earnings per share have risen steadily in the past 5 years, including a moderate increase in stock price and amount returned in dividends.

Get a 10 % discount on an order above $ 100
Use the following coupon code :
SKYSAVE