SanDisk Corporation Form 10-k Analysis
Link: https://www.sec.gov/Archives/edgar/data/1000180/000100018016000068/sndk201510-k.htm
Financial statements are detailed information which presents figures describing different incomes, expenses, investment, and equity growth trends of the organization. The financial details are analyzed and structured by relevant authorities and used in making major business decisions. The list of financial statements includes a statement of financial position, income statement, owner’s equity statement, and cash flow statement (Finnerty, 2013).
Statement of the financial position or balance sheet shows structured information on the business assets, liability, and equity of shareholder. It is prepared at the end of financial year, and it is in the interest of creditors. The creditor will use the balance sheet to analyze security and the ability of the firm to pay debts using liquidity ratios (Healy and Palepu, 2012). On the other hand, income statement analyzes the amount of revenue generated by the firm within a financial year. It outlines the relationship between costs and revenues through presenting various types of expenses.
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In a nut cell, income statement shows the profitability of the firm’s operations at the end of the financial period. Further, it demonstrates how generated revenues are changed into net income. Cash flow statement analyzes the changes financial position and income influence cash of the organization. Further, it categorizes the activities of the firm as either operating, investing or financing activities. In most cases, potential lenders or creditors focus on the cash flow statement of the business to assess the ability to recover debts. Shareholder’s equity demonstrates changes in equity within the balance sheet for a financial period. Also, it presents stock resale and repurchases for the companies that are publicly held.
The form 10-k of SanDisk Corporation analyzes the financial performance between 2014 to 2016 financial statement. According to the income statement, the company had a net income $1,007,446 and $388,478 for the year 2014 and 2016 respectively. Balance sheet for the year 2014 and 2016 provides total assets as $ 10, 273, 825 and $ 9, 230, 761 respectively. Based on the analyses equity statement, the total equity for the year 2014 and 2016 is equal to $6, 526, 681 and $5, 738, 924. In the statement of cash flows, the cash and cash equivalent for the year 2014 and 2016 averaged to $809, 003 and $1, 478, 948 respectively. Based on the above analysis, all financial statements except cash flow statement indicates a better performance in the financial year 2014 compared to 2016.
The investors or creditors of SanDisk Corporation will be interested in the statement of financial position or balance sheet for the financial year 2014. It helps creditors as well investors to assess the potential of the firm's assets to cover its liabilities. Thus, if the value of total assets is high, the creditors will be willing to lend and invest in the company. However, creditors will also consider evaluating income statement to assess the extent to which company complies with the debt agreements. On the other hand, the management will be interested in cash flow statement and income statement (Bradshaw, et al. 2014). Both financial statements will help the management to analyze profitability potential of the company. In this case, cash flow statement presents activities which are using money as well as activities which are generating money.
Thus, the management gets a better understanding of the activities where cost can be cut or activities which can increase firm’s revenue. In a nut cell, management should consider all four types of financial statements as they are equally important in analyzing the overall financial health of the company.
References
Finnerty, J. D. (2013). Project financing: Asset-based financial engineering . John Wiley & Sons.
Healy, P. M., & Palepu, K. G. (2012). Business analysis valuation: Using financial statements . Cengage Learning.
Wahlen, J., Baginski, S., & Bradshaw, M. (2014). Financial reporting, financial statement analysis and valuation . Nelson Education.
