Introduction
This paper performs a complete financial analysis of NVIDIA Corporation. The main objective of this paper is to evaluate deep analysis of NVIDIA Corporation by using the horizontal and vertical financial statements with their various ratios analysis.
NVIDIA Corporation Business
NVIDIA Corporation is a worldwide technology company that is based in Santa Clara, California. For two decades, NVIDIA has established visual computing and the art and science of computer graphics with its invention of the GPU (graphics processing units) product line. The corporate sales are enhanced by 13.3% in 2015 comparison of 2014 total sales that indicates the high growth rate of business (NVIDIA Corporation, 2015). The profit of NVIDIA has increased 43.3% in the last year that is higher than other competitors in the industry indicates the strong position of the corporation.
Financial Analysis of NVIDIA Corporation
The percentage of sales and common-size indicates NVIDIA operating cost in percentage is much lower than the industry average that enhanced the gross profit and net profit that indicates the strong position of the corporation. In addition, NVIDIA current assets by percentage (79.3%) are much higher than industry averages (37.2%) that means it able to pay its short-term obligation that indicate the strong financial position of the corporation in the industry (Yahoo Finance, 2015). In addition, improvement in the NVIDIA earning per share, dividend per share and cash flow per share ratio in comparison to past year represented the corporation performance is improved and it will able to face any challenges in the market. Balance Sheet percentage analysis indicates NVIDIA account payable decreased and account receivable increased that means the corporation credits collection and debt payment efficiency improved means it reduce the cash amount in daily activities (Chacko & Evans, 2014). Income Statement percent change analysis represents the company sales, operating profit and net profit improved that means its financial performance improved.
Analyze NVIDIA's Ratios Against The Industry Averages
Liquidity ratio of NVIDIA's is more than double of industry average that indicates the company short-term and long-term salvages position is strong means its able to pay their obligation in any situation of the market. Liquidity strong position represents the corporation able to face any challenging satiation in the market. In addition, asset management ratios of NVIDIA is also much higher than industry average that indicates the corporation's is the leader in the industry (Hitchner, 2006). It represents the corporation is effective manage or utilize its assets to generate revenue and profit that is a financial beneficial point of any company.
Moreover, the high debt management ratios comparison to industry average indicates the corporation's management is effective manage funds and investment that means management is playing a major role in the success of the business and management able to solve any issue or problem. Furthermore, profitability ratio of NVIDIA is similar to industry average that indicates the corporation's is performance and growth similarly with the industry trends that is financial strong situation of the business (Gibson, 2008). The market value ratios of NVIDIA's is lower than industry average indicates the corporation's market value is lower than their major competitors that is financial not beneficial for the business.
Overall Financial Health of NVIDIA's
On the basis of financial analysis of NVIDIA's through the use of percentage of sales, common-size and ratio analysis, it can be concluded that the corporation's financial position is strong and it's able to face any risk or situation in the market. Strong financial performance indicates the investment in NVIDIA's is less risky and providing high retun of investors.
References
Chacko, G, & Evans, C., L. (2014). Valuation: Methods and Models in Applied Corporate Finance. USA: FT Press.
Gibson, C.H. (2008). Financial Reporting and Analysis (11th ed.). USA: Cengage Learning.
Hitchner, J.R. (2006). Financial valuation: applications and models (2nd ed.). USA: John Wiley and Sons.
NVIDIA Corporation. (2015). Annual Reports and Proxies. Retrieved From: https://investor.nvidia.com/annuals-proxies.cfm
Yahoo Finance. (2015). NVIDIA Corporation (NVDA). Retrieved From: https://finance.yahoo.com/q/cf?s=NVDA+Cash+Flow&annual