Disclosure Analysis PaperEssay Preview: Disclosure Analysis PaperReport this essayCircuit City Stores, Inc. specializes in consumer electronics, home office products, entertainment software, and related services. Previously, this company was only engaged in domestic business of selling brand-name consumer electronics, personal computers, entertainment software, and related services. In 2004, they acquired another chain of stores InterTAN, Inc. in Canada. The international segment has 954 retail stores and dealer outlets, which consisted of 540 company-owned stores, 300 dealer outlets, 93 Rogers Plus stores, and 21 Battery Plus stores. In 2005, Circuit City sold their private-label finance operation.
The companys cash and cash equivalents consist of cash on hand and highly liquid debt securities with original maturities of three months or less. (p. 41)
The company has changed their strategy from 2005 where their cash was generated from net earnings and improved working capital management as domestic segment merchandise inventory levels were reduced and merchandise payable increased. In 2006, cash was generated through net earnings plus adjustments for non-cash items. They also increased the inventory to improve in-stock levels. In order to buy the business chain in Canada, they sold the credit card bank and stock. The forecast for earnings estimate according to MSN money is steadily increasing for the next two years.
The receivable turnover is at 51.4% in comparison to “S&P 500” companies with 25.5%. Their inventory turnover is at 5.6 vs. 9.2 for “S&P”. (MSN money). The current ratio for liquidity is 1.746 reflecting a solid foundation. A little disturbing is the notation about the ongoing litigation with RadioShack Corporation for its international business. The international segment had to re-brand most of its company-owned stores and dealer outlets. To the positive, an allowance for estimated sales returns has been established. Even though the company is not concerned about the outcome of the litigation, I believe as an investor I should watch the updates. In addition, the company maintains a portfolio of marketable investment securities. To keep control of inventory losses, regular inventory counts are taken.
I hope to see some news about an upcoming press event. I would also like to know about what the company has done financially to support its operations. My next scheduled post, The company has not invested any in its global financial operations yet. The company has given it a total of $3.8 billion, making it around $3.3 billion more than it will ever make in revenue. We estimate the combined profit of the company is around $1.5 billion, or about $2 million less than a year ago. However, this is only in line with how much this new company will profit from. In a recent interview, Michael H. Lassen explained the company’s success, including its ability to raise about $11 million for its global operations this year. I believe that the company has a great chance of having $11 million or more by end of this year, and that their future funding will consist of some very important new services. A few years ago, the stock price was $1 a share. The new stock price is now up to $1 per share, up from under $1 in 2009. In other words, the company should be able to close a $11 million margin within one or two years. But investors, in a recent Bloomberg earnings update, reported that for the first time in over 30 years, the stock price is still up almost $100,000 at 7.5%. Since the previous earnings statement put the stock price at an historic $1 share, that means the company now owes some $1 million for its stock price since 2009.
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Posted by Bucky at 10:23 AM