Eastman Kodak Income Statement Analysis Essay
The objective is to learn how to do a comprehensive financial statement analysis.
Open the financial statement analysis template that you saved from the Eastman Kodak 1 assignment and input the data from the Eastman Kodak income statement. Use the basic earnings per share from continuing operations when inputting the earnings per share amount. When you have finished inputting the data, review the income statement to make sure there are no red blocks indicating that your numbers do not match the cover sheet information you input from the Eastman Kodak 1 assignment. Make any necessary corrections before saving a “print out” of both your input and the common-size income statement that the template automatically creates for you. You will submit this “print out” to your instructor.
Analyze the income statement of Eastman Kodak. Write a 2-page summary that includes important points that an analyst would use in assessing the profitability of Eastman Kodak
The income statement contains very important points that the financial analysts would use when evaluating the profitability of a business. One of the major points an analyst would use is the making a comparison of Eastman Kodak’s income statement figures with the close competitors. This will greatly help in determining how well the Kodak Company is doing when compared to the other companies in this business. Analysts also use the financial reports in a business to predict the future prospects of the business. It is also an important document when it comes to making recommendations on investments. After analyzing Eastman Kodak’s income statement some clear points come to surface and this would be of great important to analysts. The first things analysts would use to gauge Eastman Kodak are their sales and operating costs (Gibson, 2012).
From the income statements it can be derived that there has been a sudden fluctuation during the three year period beginning 2005 by showing a loss of $1,261 net profit in 2005 (in millions), an extra loss of $601 in 2006 in the net profit which amounted to $676 in 2007. Although the company still gained profit during this period the shareholders had started losing faith in the management owing to the company’s performance. The cash flow figures also portray a decrease which further aggravated the company’s woes. The company’s troubles did not stop at that as the stock activity also fluctuated reasonably during this period. For instance, at the end of 2005, Kodak’s stock price was valued at $72.24 a share. In 2006, the stock went up to $81.33, this can be attributed to their attempts to look for loans to try and boost the shareholder confidence. Nonetheless, by the end of 2007, Kodak’s shares dropped much lower than they were in 2005 to a mere $70.23 per share. This clearly shows that the efforts to bring the company back to its feet were futile (Gibson, 2012)
Kodak’s financial| statements provide useful information about the company’s financial state at this particular period. Some of the information includes: accounts payable liabilities decreased from $12,932 to $10,630, assets that dropped to a value of $13,659 from $14,320 and the shareholder equities also went down from $14,320 to $13,659. All this information reveals that the shareholder equity and incoming revenue showed a sturdy decline during this period. From the findings in this analysis, the above figures disclose that during this particular period, the Eastman Kodak company showed unhealthy enterprise performance levels.
Gibson, C. H. ( 2012). Financial Reporting and Analysis . South-Western Pub.