Financial Analysis Of Huawei Smartphone

Financial Analysis is the Most Important Aspect

This is the top most global communication and information technology which was founded in the year 1987 to provide solution. Huawei provides enterprises, telecom carries, and also customers with ICT solutions, products and services, (Sun, Y. and Grimes, S., 2016, 217). Huawei is operating in more than 170 regions and countries, providing services to over one-third of the population in the world. Huawei Company in china has employed over 180,000 workers from 168 different countries with their localization rate of almost 70%.

Financial analysis of Huawei smartphone.

Financial analysis is the most important aspect in the evaluation of the company one has interest in. for any investor who is wishing to invest in any company, the key aspect is the analysis of the company financial statements, ( Lin, F., 2017,16). Financial analysis can be done in different perspectives, for instance, analysis of the company financial health, analysis of the company financial profits, analysis of the company financial growth and also analysis of the management relevant information for a specific period of time at least five years. My analysis is based on the Huawei smartphone in China on the above-mentioned areas at least for the last five years.

Five years financial highlights.

This figures shows the financial analysis of Huawei phone for the last five year. The ratios are calculated based on these figures.

1. The financial health of Huawei smartphone in China.

Financial health deals with the analysis of the company asset and reliability ratio, and maybe to emphasis, financial health is the most important consideration any investor must analyse before investing in any company, (Chen, Y., Park, Y. and Nakaoka, I., 2017, 56). It is important to understand the financial trends of this phone for the last five years in order to be able to be equipped with all the relevant information in analysing Huawei financial position.

1. The asset and the reliability ratio of Huawei phone for the last five years is asfollows ( financial risk ratio).

This is the ratio that show how much the huawei company is responsible to its shareholders and the investors in terms of assets and finances. It identifys weather the company is liable or not.

It is clear from the chart that the asset and reliability ratio of this phone is constant between 64.70% and 68.40% for those five years. The ratios of this phone is a little bit higher bus since the phones revenue is growing faster, this becomes understandable.

1. Cash, short-term investment and borrowing compensation/ liquidity ratio.

This ratio shows or measures the company ability to pay its debts per year. It’s all about how much over what they borrow. This ratio is also called liquidity ratio.

Five Years Financial Highlights

This is all about the company’s cash flows and the borrowing ratio.

It is clearly shown that the Chinese Huawei phone is growing in terms of cash and short-term investment and the volumes are doubled for the past five years. In terms of the companies’ borrowing, it is seen being almost the same in all the years and the figures not exceeding 35, 000 million in terms of what they borrow. From this, we can conclude that the Chinese Huawei company is growing in terms of cash flows in each and every year and also they are in the better position of paying their debts. As the investor, it is a great I dear to invest in the company that is in an excellent position of paying his debts and generates a lot of cash across all the years. This gives hope for the future that the company will survive for a long time, (Xiao, Q., Lu, S., Wang, Y., Sun, L. and Wu, Y., 2017, 225).

1. The financial growth analysis of the Huawei phone in China.

The financial growth of this company can be analysed in different ways, for instance, analysis of the revenue, analysis of the net profit, analysis of the operating profit, analysis of the operating cash flow and finally the analysis of the owners’ equity, (Pan, D. 2013, 450)

1. Analysis of Huawei revenue for the last 5 years.

Revenue give the analysis of the income returned from what the company invested. This ratio helps to show how much the income the Huawei Company is making.

From this figure, we can see that the revenue has been increasing every year and this is a great indicator that shows the company is growing stronger every year. In the year 2013, we see the revenue stand at 239025 as compared to the year 2017 where by the revenue grew up to 609021. This is a great achievement for the management of this company.

1. In terms of the operating profit, net profit, and cash flow:

The operating profit gives the analysis of how much profit is the company earning from what is spends, net profit gives the total amount that the gates after deducting all the expenses and the cash flows how the company is using its money.

This figure shows clearly that the management team of the Huawei in China is doing excellent jobs in ensuring that there are efficiency and growth in the company gross profits levels. The operating cost went up to 47,455 million CNY in the year 2017 from 22,554 million CYN in the year 2013.

The Analysis of Financial Health

Inters of the net profit, we can see also an increase from 22,554 to 96,336 million CNY for the past five years. There is an increase in the compound annual growth rate to 23% indicating there is faster wealth growth, (Xia, W. and Gan, D., 2017,16)

In terms of cash flows that arise from the operating activities since 2013, there is a shoot up from 29128 to 56384 million CYN where the compound annual growth rate is at 51.66 % which shows that the company out of business services, generates good cash flow.

1. Owners’ equity/ investor’s ratio.

This is also called investors ratio. This is the ratio showing the total dividend paid per share over a period of one year.

The owner’s equity shows an increase for all those five years and in fact doubling while the compound annual growth ratio is at 23,41%. As the shareholder of this company, you enjoy the dividends and also your wealth will keep on growing.

1. Analysis of the profitability ratio.

Profitability ratio shows that the manager of the company have been making a lot of profit in the business. We will be looking at the net profit margin of Huawei phone in chine and it is normally interpreted in ratio form to show the company overall profit. For any company to continue being into the existence, profit is the driving factor. A company that doesn’t make the profit should not continue being into the existence. Every good company will be striving to make a maximum profit but not only profit and the stability of the profit ratio should be evident, (Wen, Y., Kuang, D., Huang, J. and Zhang, Y., 2017, 67)

1. Operating margin.

This ratio shows how much of each CYN of revenue is remaining after all costs of goods sold and the operating expenses are taken in to consideration.

The profitability ratio of Chinese Huawei since 2013 has been growing and this is maybe the reason why the Chinese Huawei phone is taking a great market share in the global world as compared to other companies, (Dedrick, J. and Kraemer, K., 2017, 41 ) They are more cleaver on their bidding price, especially in the strategic markets.

1. Return on equity.

It is a measure of profitability that shows how much profit is the company generating from what the investors have invested. This is a great indicator that can help the company to know their position. Return on the equity is used to determine the returns you get from the investment, (Xiao, Q., Lu, S., Wang, Y., Sun, L. and Wu, Y., 2017, 220). A company that is focused forward should yield maximum return on the equity as compared to the other investment that they might be having.

The Analysis of Cash Flows

The return on equity of the Chinese Huawei company since 2013 is from 27.93% and by 2017, it was at 34.45% that means that the return on equity of this phone is growing at a greater speed. This indicates that this company still have a greater future ahead because of the clear evidence we are seeing, (Wang, C., Liang, H., 2014, 105).

4 management of the related information.

Huawei is still a private company and the management of their information’s is still limited to a few individuals, (Regan, M. and Chang, H., 2015, 238). However, considering this analysis of Huawei profit margin, operating profit margin and the net profit margin, we can see that it is growing at a greater rate and the management is probably taking the best actions to ensure that they optimize this profit margin.

Conclusion

To sum up my analysis, just by looking at the Huawei Chinese company annual report and their financial statement since 2013, I can say that the profitability, financial growth, financial risks and the investment ratios, it is evident that the company is doing well and has a greater future if they continue putting more efforts on what they are doing, (ZHU, S. LIU, G., LUO, J. and TAO, C, 2014, 67).

Looking at the given data and having analysed it critically, I can recommend that any investor that wants to invest should invest in Huawei mobile company in China because of the healthy financial position of the company and the health of all the financial records I have analysed. The company is in the better position for any investor to invest in and become wealthy all through.

References.

Sun, Y. and Grimes, S., 2016. China’s increasing participation in ICT’s global value chain: A firm level analysis. Telecommunications Policy, 40(2-3), pp.210-224.

ZHU, S.J., LIU, G.S., LUO, J. and TAO, C.H., 2011. Virus of Smartphone and Information Security [J]. Information Security and Communications Privacy, 5, p.055.

Xiao, Q., Lu, S., Wang, Y., Sun, L. and Wu, Y., 2017. Current status of cardiovascular disease-related smartphone apps downloadable in China. Telemedicine and e-Health, 23(3), pp.219-225.

O’Regan, M. and Chang, H., 2015. Smartphone adoption amongst Chinese youth during leisure-based tourism: Challenges and opportunities. Journal of China Tourism Research, 11(3), pp.238-254.

Dedrick, J. and Kraemer, K., 2017. Intangible assets and value capture in global value chains: The smartphone industry– (No. 41). World Intellectual Property Organization-Economics and Statistics Division.

Wen, Y., Kuang, D., Huang, J. and Zhang, Y., 2017. Microaxicave colour analysis system for fluoride concentration using a smartphone. RSC Advances, 7(67), pp.42339-42344.

Xia, W. and Gan, D.Z., 2017. The Marketing strategy of HUAWEI Smartphone in China.

Lin, F., 2017. Price Erosion and Sales Volume Analysis of China Smart-Phone Market. In Business Analytics: Progress on Applications in Asia Pacific (pp. 16-57).

Chen, Y., Park, Y. and Nakaoka, I., 2017. A Comparison Study on the Vertical Integration and Horizontal Specialization of Chinese ICT Companies.

Xiao, Q., Lu, S., Wang, Y., Sun, L. and Wu, Y., 2017. Current status of cardiovascular disease-related smartphone apps downloadable in China. Telemedicine and e-Health, 23(3), pp.219-225.

Pan, D., Chen, N. and Rau, P.L.P., 2013, July. The acceptance and adoption of smartphone use among Chinese college students. In International Conference on Cross-Cultural Design (pp. 450-458). Springer, Berlin, Heidelberg.

Wang, C., Liang, H., Geng, X. and Zhu, M., 2014, December. Multi-sensor fusion method using kalman filter to improve localization accuracy based on android smart phone. In Vehicular Electronics and Safety (ICVES), 2014 IEEE International Conference on (pp. 180-184). IEEE.

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