Financial Analysis

Introduction

Financial ratios are use for evaluating the performance of the business along some potential problems with it. Through each ratio, it enables the business to look into its factors such as the solvency, earning power, load of debt of the business, efficiency. For measuring the performance of the business, financial ratios are used and examine the relationship between two or more financial statements' components. It provides a greater result for companies when these ratios are compared to the standards of industry for businesses which are having similar activity and size.

NOKIA

Business Overview

(www.datamonitor.com)In the telecommunication sector, the corporation of Nokia is a leading provider of telecom equipments, mobile devices and mobile content services. The offerings of the Nokia Company includes basic to high end telecom network equipment, mobile devices and other related mobile services and its software. The primary operations of Nokia are done in Asia and Europe. The headquarters of the Nokia Corporation is in the country of Finland and around 129,355 are its employees. During the financial year which is ended on December 2010, the company has recorded its revenues of $56,363.6 million in which there is an increment of 3.6% over 2009. In the fiscal year of 2010, the operating profit of Nokia was $2,748.7 million which is also increased up to 72.9% over the year of 2009. Compared to the net profit of $1,183.4 million in 2009, there was $2,456.6 an amount of net profit generated in the year of 2010 (www.datamonitor.com).

Nokia outlook and Industry

(www.datamonitor.com)Nokia Corporation expected an attractive year of 2011 due to its future tremendous growth for the long-term basis and the frequent adoption of smartphones by their consumers especially in the emerging markets. Due to the competitive factors, Nokia expected that the gross margins of the mobile device industry will come under pressure. (www.datamonitor.com)2011 and 2012 were expected as transitions years for the Nokia Corporation as it already planned to win the ecosystem with Microsoft. Nokia targets Devices and Services on the longer term basis and net sales is targeted to grow faster than the market while the operating margin of Devices and Services is to be 10% or more (www.datamonitor.com).

Ratio Analysis for Nokia Corporation

2007

2008

2009

2010

2011

 

 

 

 

 

Liquidity Ratios

 

 

 

 

 

Current Ratio

1.54

1.2

1.55

1.55

1.46

Quick Ratio

1.22

0.8

1.13

1.16

1.04

 

 

 

 

 

Debt Management Ratio

 

 

 

 

 

Debt/Equity

0.01

0.06

0.34

0.29

0.33

Financial Leverage

2.55

2.79

2.73

2.72

3.05

 

 

 

 

 

Market Value Ratios

 

 

 

 

 

P/E ratio

2.86

4.95

20.88

10.22

-13.39

EPS

1.84

1.05

0.24

0.5

-0.31

Dividend Payout Ratio

22.5

47.8

171.7

62

-

Dividend Yield

0.078

0.096

0.082

0.061

0.080

 

 

 

 

 

Profitability Ratios

 

 

 

 

 

Asset Turnover (Avg.)

1.7

1.31

1.09

1.13

1.03

Return on Assets %

23.94

10.34

2.36

4.94

-3.09

Return on Equity

53.92

27.53

6.52

13.47

-8.87

Return on Invested Capital %

50.65

22.16

40.37

8.47

-6.66

Net Margin %

14.11

7.86

2.17

4.36

-3.01

Trend Analysis for NOKIA Corporation

Liquidity Ratios

Interpretation

The current ratio and quick ratio highlights and indicates the ability of a company to meet its short term debt obligations. If the current ratio and quick ratio are higher, the company is more liquid. In 2008, the current ratio fell to 1.2 from 1.54 and quick ratio to 1.22 to 0.8 that was quite a better situation for meeting short term debt. Afterwards, Nokia Co. has been maintaining its financial performance so far and having enough resources to pay off its short term debt. There is a good sign for investors and partners for the better performance of Nokia Co.

Debt Management Ratios

Interpretation

The debt management ratios are ...