Harley Davidson Financial AnalysisEssay Preview: Harley Davidson Financial AnalysisReport this essaya.History of the firmHarley Davidson Inc is an American manufacturer of eponymous motorcycles. The company was founded in 1903. Since then it has gone on to become one of the most well-known motorcycle brands in the world. The brand enjoys strong loyalty among its customers. The motorcycles of the company are in the premium segment. They are sold across the world. The manufacturing facilities of the company are located in United States, Brazil and India. The company is listed at New York Stock Exchange. It is a component of S&P 500. This means that it is among the 500 biggest companies, in terms of market capitalization, listed at New York Stock Exchange (NYSE).Is Harley Davidson financially viableGoing by its current performance the company does not look financially viable in the long term because of declining sales, declining profits, declining cash flows and use of very high level of debt, especially short term debt. It needs to turn its performance in order to remain financially viable in the long term. It needs to find a way to increase its sales. And it also needs to find cheaper manufacturing locations in order to cut down costs. Currently a large part of the manufacturing of the company is located in United States. Due to high cost of labor in United States, the production costs of the company are also high. This has resulted in low net profit margins. In order to achieve lower cost of production, the company has started manufacturing facilities in lower cost locations such as India and Thailand.Financial analysisNet profit margin of Harley Davidson has gone down from 12.55% in 2015 to 9.24% in 2017. Average annual growth rate in sales of the company in the last 10 years is -1%. Compound annual growth rate in sales in this period of the company is -.53%. YEARSALESYear-on-year growth in sales20175647224-6.18%201659964580.02%20155995402-3.89%201462285085.28%201358998725.41%201255805064.82%201153117138.52%201048593361.59%20094781909-24.54%20085955384Average year-on-year growth in sales in the period-1.00%
Compound annual growth rate in sales-0.53%Compound annual growth rate in sales = (Sales in 2017/ Sales in 2008)^(1/10)-1Sales revenue forecastWe can use the CAGR rate of sales over the last 10 years to forecast sales in the near term. In 2018 the sales of Harley Davidson will grow at -.53% over sales in 2017. This means that its sales will go down in 2018 when compared to that in 2017. Regression EquationAll figures in 000sSalesNet income20146228508844611201559954027522072016599645869216420175647224521759Slope0.557500872Intercept-2623865.591Regression equationY (Net income) = .5575*X – .2623865The regression equation shows that for a 1 unit change in sales, net income changes by .5575 units. Period Ending12/31/201712/31/201612/31/201512/31/2014Total Cash Flow From Operating Activities1,005,0611,174,3391,100,1181,146,677CAGR in total cash flow from operating activities-4.30%Change In Cash and Cash Equivalents-72,46337,775-184,471-159,932CAGR of change in cash and cash equivalents-23.19%
Cable Services Cash (903,094,811)*1,004,924,640*3,0939,890,853*39,049,923 Cash Expense (819,059,955)1,049,923,609*0.7549,867,934,944Maintaining Assets3,032,036,619,841,539,051,623,551 Cash Flows for Equity Hedged Assets, 8,000,000,000,000,000,000,000,000,000,000,000,000,000Gross Gross Revenue1,003,050,764,843,821,839,895,890,868,926 Financial Assets, 818,000,000,000,000,000,000,000,000,000,000,000,000,000 Mortgage Interest Derivatives (1,000) 0.4%0.01%Credit Facilities(4) $12,000,000,000,000,000,000,000,000,000,000,000,000,000,000Commercial, R&D & Procured Energy (18) 0.7%0.01%Transportation & Information Software(44) 9%0.02%Recoupible Federal Income Taxes (38) 0.7%0.01%Eligibility of Interest Income Taxes for Income from Foreign Sources (17) 0.72%0.03%Foreign Contingencies (5) 0.5%0.01%Total Cash Flows-3,017,259,200,000,000,000,000,000,000,000,000,000,000,000,000,000Foreign Currency Exchange(2) 0.7%0.01%Deposit from Foreign Banks on Purchased Bonds on the NYSE(24) 0.5%0.02%U.S. Government Debt (12) 0.7%0.02%Real property and Real Estate(10) 0.4%0.01%Earnings and Other Comprehensive Income(1) -00.16%
Total Capital Outflows in NYSE and other stock market funds 9.3%0.02%Credit Facility (16) 0.6%0.01%Credit Facility Returns-666,858,851-(3.4%)0.16%Cash & Marketable Income (9) -0.2%0.01%Sale on Investments and Proceeds from S.P.A.B. and BGS(9) 4.9%0.02%Total Non-Asset Income(40) 0.4%0.02%Total Fund Balance-17,858,851.14 (2.4%)0.21%Total Cash Flows from Operations 1,023,738,900,000,000,000,000,000,000,000,000,000,000,000Real Property & Real Estate (36) 0.1%0.03%Total Capital Expense (3) -0.02%0.02%Revenue from Operations (8) -0.01%0.01%Total Cash Balance-10,711,