The company Nippon Telegraph and Telephone Corporation is a Japan's holding organization which through its numerous subsidiaries provides system integration, telecommunications equipment sales, communication services based on IP/packet, voice related services on fixed and mobile devices, and numerous services related to telecommunications. The major operations of the group are in Japan. The company has headquarters in Japan and provides fulltime employments to approximately 224,239 individuals. In the recent quarter ending Jun 30, 2012, the company's revenue rose up to $134.01 b from $129 b, with earnings before income and tax with dividend added, to be $40.22 b (finance.yahoo.com, 2012a). We will be exploring the financial statements of the company and will assess the financial health of the company. We will advise if any issue might require special consideration. We will evaluate the industries attractiveness using the Michael Porter's five forces and will develop a SWOT analysis of the company.
Discussion
The company's financial statements, income statement, balance sheets and cashflow all show improvements from the previous year on a number of areas.
Income Statement
The income statement reports the in the period ending, the NTT received an increase of 2.7% in revenue over the previous fiscal year to the amount of 127 b (finance.yahoo.com, 2012b) (see table 1).
Table 1: Income Statement of NTT, (retrieved from finance.yahoo.com, 2012)
Income Statement
Period Ending
30Mar12
30Mar11
30Mar10
Total Revenue
127,679,000
124,336,000
108,962,000
Cost of Revenue
53,186,000
49,878,000
43,266,000
Gross Profit
74,493,000
74,459,000
65,696,000
Operating Expenses
Selling General and Administrative
36,232,000
36,074,000
32,110,000
Non Recurring
183,000
47,000
91,000
Others
23,218,000
23,679,000
21,533,000
Operating Income or Loss
14,861,000
14,659,000
11,962,000
Income from Continuing Operations
Total Other Income/Expenses Net
883,000
195,000
616,000
Earnings Before Interest And Taxes
15,744,000
14,854,000
12,577,000
Interest Expense
684,000
667,000
590,000
Income Before Tax
15,060,000
14,187,000
11,987,000
Income Tax Expense
7,143,000
5,738,000
4,784,000
Minority Interest
2,198,000
2,320,000
2,029,000
Net Income From Continuing Ops
5,683,000
6,149,000
5,268,000
Net Income
5,683,000
6,149,000
5,268,000
Net Income Applicable To Common Shares
5,683,000
6,149,000
5,268,000
From table 1 above, the area of concern is the despite the increase in revenue, we still are earning less net income. We can see that the cost of revenue has risen by 7 % over the previous year. The second area of concern is the staggering rise in the Nonrecurring expenses which has increased to 289% over the previous year. As income of the company has risen, it has also increased it interest expenses by 24%. It can be observed that the major contributor to the reduction in the net income can be attributed to the rise in cost of revenue and income tax expenses.
Balance Sheet
Table 2 illustrates the balance sheet of the company.
Table 2: Balance Sheet of NTT, (retrieved from finance.yahoo.com, 2012)
Period Ending
30Mar12
30Mar11
30Mar10
Assets
Current Assets
Cash And Cash Equivalents
12,396,000
17,316,000
9,750,000
Short Term Investments
3,730,000
2,017,000
4,091,000
Net Receivables
33,294,000
30,607,000
25,422,000
Inventory
4,002,000
3,800,000
2,984,000
Other Current Assets
3,835,000
3,817,000
3,190,000
Total Current Assets
57,257,000
57,557,000
45,438,000
Long Term Investments
10,189,000
10,343,000
10,019,000
Property Plant and Equipment
119,161,000
119,458,000
107,636,000
Goodwill
9,374,000
9,019,000
5,349,000
Intangible Assets
19,543,000
19,516,000
15,560,000
Accumulated Amortization
Other Assets
10,497,000
10,683,000
9,813,000
Deferred Long Term Asset Charges
9,591,000
10,702,000
8,871,000
Total Assets
235,612,000
237,278,000
202,687,000
Liabilities
Current Liabilities
Accounts Payable
29,193,000
27,986,000
23,542,000
Short/Current Long Term Debt
9,225,000
12,806,000
11,686,000
Other Current Liabilities
4,042,000
3,719,000
3,175,000
Total Current Liabilities
42,460,000
44,511,000
38,402,000
Long Term Debt
43,098,000
42,580,000
36,576,000
Other Liabilities
25,900,000
26,337,000
23,139,000
Deferred Long Term Liability Charges
2,061,000
2,218,000
Minority Interest
26,310,000
24,858,000
21,219,000
Total Liabilities
113,518,000
115,645,000
98,118,000
Stockholders' Equity
Misc Stocks Options Warrants
Common Stock
11,397,000
11,317,000
10,038,000
Retained Earnings
59,405,000
62,206,000
57,863,000
Treasury Stock
5,085,000
7,277,000
12,905,000
Capital Surplus
34,415,000
34,194,000
30,382,000
Other Stockholder Equity
4,348,000
3,664,000
2,029,000
Total Stockholder Equity
95,785,000
96,775,000
83,349,000
Net Tangible Assets
66,868,000
68,240,000
62,440,000
We can observe that the short term investments have increased by 84.93%. The inventory levels have also increased by 5.32%. The total current assets have marginally decreased by 0.52%. The short / current long term debt has decreased by 28% while other liabilities have increased by ...