Harley Davidson Analysis Report: Solvency and Profitability
| Harley-Davidson, Inc. | Analysis Report: Solvency and Profitability | | | |
Introduction:
The purpose of this analysis report is to discuss the solvency and profitability of Harley-Davidson, Inc. (HOG) and formulate a measurement for is financial standing and profitability by comparison to the Industry in which it resides. Solvency is determined from data collected in the 2012 SEC Harley-Davidson, Inc. 10K report, and calculated based upon the solvency ratio; Solvency equals After Tax Net Profit plus Depreciation divided by Long Term Liabilities plus Short Term Liabilities. According to Investopedia.com the general rule of thumb is that a company with a solvency ratio greater than 20% is considered a financially healthy entity and this will be the baseline for this report since the average solvency ratio for the Heavy Weight Motorcycle market is unknown. Profitability can be determined by several different methods to include ratios such as management effectiveness measurement like, Return on Investments, Return on Equity, and Return on Assets. However, profitability at its simplest, and most complete form, can be measured by revenue less expenses or by Gross Profit Margin which is calculated by Sales minus Cost of Goods Sold divided by Sales. All additional data for industry comparisons for profitability are derived from the Factiva Company Report: Ratio Comparison Report and the 2012 SEC Harley-Davidson, Inc. 10K report.
H-D is divided into two major segments which are Motorcycles & Related Products, and the Financial Services segments. The motorcycle segment builds and sells motorcycles wholesale in addition to accessories, parts, merchandise, and deals in licensing of the companies trademarks. H-D exclusively builds street legal heavy weight motorcycles intended for freeway use with engines ranging from 883 cc’s to 1803 cc’s (Heavy weight motorcycles make up a specific market type and are define as street legal motorcycles with an
Introduction:
The purpose of this analysis report is to discuss the solvency and profitability of Harley-Davidson, Inc. (HOG) and formulate a measurement for is financial standing and profitability by comparison to the Industry in which it resides. Solvency is determined from data collected in the 2012 SEC Harley-Davidson, Inc. 10K report, and calculated based upon the solvency ratio; Solvency equals After Tax Net Profit plus Depreciation divided by Long Term Liabilities plus Short Term Liabilities. According to Investopedia.com the general rule of thumb is that a company with a solvency ratio greater than 20% is considered a financially healthy entity and this will be the baseline for this report since the average solvency ratio for the Heavy Weight Motorcycle market is unknown. Profitability can be determined by several different methods to include ratios such as management effectiveness measurement like, Return on Investments, Return on Equity, and Return on Assets. However, profitability at its simplest, and most complete form, can be measured by revenue less expenses or by Gross Profit Margin which is calculated by Sales minus Cost of Goods Sold divided by Sales. All additional data for industry comparisons for profitability are derived from the Factiva Company Report: Ratio Comparison Report and the 2012 SEC Harley-Davidson, Inc. 10K report.
H-D is divided into two major segments which are Motorcycles & Related Products, and the Financial Services segments. The motorcycle segment builds and sells motorcycles wholesale in addition to accessories, parts, merchandise, and deals in licensing of the companies trademarks. H-D exclusively builds street legal heavy weight motorcycles intended for freeway use with engines ranging from 883 cc’s to 1803 cc’s (Heavy weight motorcycles make up a specific market type and are define as street legal motorcycles with an
References: Factiva. (2013). Ratio Comparison Report. http://global.factiva.com.ezproxy.bellevue.edu/ar/arpdf.aspx?pp=PDF. SEC. (2012). Harley Davidson, Inc. 10K Report. http://www.sec.gov/Archives/edgar/data/793952/000144530513000288/hog12-31x201210xk.htm. ValueClick, Inc. (2013, June 28). Definitions. Retrieved June 28, 2013, from Investopedia.com: http://www.investopedia.com/dictionary/