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Annual Report. HP Maria Farinez ACG2021.080. Executive Summary.
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Annual Report HP Maria Farinez ACG2021.080
Executive Summary HP is the leading company in technology around the world. At the end of 2003 HP had a revenue of $73.7 billion, a cash flow from operations of more than $6 billion, ending the year with a gross cash and investments balance of $14.7 billion. They also paid a dividend of $977 million. In 2003 HP had a gross profit of $19,204 millions and a net income of$2,539. They invested in land $13,299 millions. HP’s Certificate of Incorporation authorizes 9.6 billion shares of stock. With a price of $23.13 per share. Dividends were $0.32 per share. http://www.hp.com/hpinfo/investor/financials/annual/2003/hp2003_10k.pdf
Introduction • Carleton S. Fiorina (Chairman and Chief Executive Officer) • The home office is located in Palo Alto, California. • Latest fiscal year ended on October 31, 2003
Introduction • 1.Imaging and Printing group: provides home and business imaging, printing and publishing devices and systems, digital imaging products, printer supplies and consulting services. 2. Personal System group: provides commercial personal computers, consumer PCs, workstations, a range of handheld computing devices, digital entertainment systems, calculator and other related accessories, software and services for commercial and consumer markets. 3. The Enterprise Systems group: provides server, storage and software solutions. 4. HP services: provides a portfolio of IT services including customer support, consulting and integration, and managed services. 5. HP Financial Services: provides a broad range of value-added financial life cycle management services. 6.Corporate Investments: sale of certain network infrastructure products to enhance computing and enterprise solutions as well as the licensing of specific HP technology to third parties. • Main geographic area of activity: America: Houston, Texas. Europe, Middle East, Africa: Geneva; Switzerland. Asia Pacific: Hong Kong.
Audit Report • Auditors: Ernst & Young LLP. • The auditors explained what is their function. They have to make sure all financial statements are free of mistakes. They have to examine all the statements and check the amounts and disclosures. They said that the financial statements from HP Company are correct at October 31, 2003.
Stock Market Information • Most recent price of the company’s stock: 20 Feb 2004: $23.13 • Twelve month trading range of the company’s stock • The 2003 rate is $0.08 dividends per share per quarter • From the graphic we can see that the stock from HP has fluctuated. But, I think this is a stock to hold because the company is growing more every year.
Industry Situation and Company Plans • Hp is the leader in technology around the world. The last year 2003, was a remarkable year because they achieved many of their goals. HP made significant investments on many of the different areas that are part of their business, such as software, innovation, etc. • HP focuses on creating products that are simple, manageable and adaptable to the customer. So, they want to keep this in mind to change their products as the customers are changing their needs • HP is the leader supplier to small and medium-size businesses and a leader in enterprise computing. HP wants to increase the number of customers in small and medium-size businesses by creating new technology that will work for them. • HP is focusing now on four key growth areas which are rich digital media, mobility, management software and security. • Their strategy is to offer products, services and solutions which are high tech and deliver the best customer experience.
Income Statement • The format of the income statement is multi-step. • Gross profit has increased from 2002 to 2003 this means they sold more products on 2003 due to effective cost management and cost reductions • Income from operations increased on 2003 this means they spend less money on operations • Net income increased on 2003 because they acquired Compaq at the beginning of May 2002.
Balance Sheet • Cash and cash equivalents increased by $2,996 millions from 2002 to 2003. • Total Assets increased by $3,998 millions • Accounts payable increased by $2,273 millions • Current assets increased by $4,921 million
Statement of Cash Flow • Cash flow from operations are more than net income for the past two years. • The company is growing through investing activities such as buying property, plant and equipment. • The primary financing source for HP are stock sales. • Cash has increased over the past two years on 2003 there was a cash ending balance of $14,188 millions, and in 2002 there was a cash ending balance of $11,192 millions.
Accounting Policies • Revenue recognition: revenue is recognize when persuasive evidence of a sales arrangement exists, delivery occurs or services are rendered, the sales price is fixed or determinable and collectibility is reasonably assured. • Cash and cash equivalents: HP classifies investments as cash equivalents if the maturity of an investment is 3 months or less from the purchase date. • Inventory: is valued at the lower of the cost or market, with cost computed on a first-in, first-out basis. • Property, Plant and equipment: is stated at cost less accumulated depreciation. HP adopted the straight-line method of depreciation.
Accounting PoliciesTopics of the notes to the financial Statements. • Summary of significant accounting policies • Net earning (loss) per share • Acquisitions and Divestitures. • Goodwill and Purchased Intangible assets • Restructuring charges • Balance sheet details • Financial Instruments • Financing receivables and operating leases • Guarantees • Borrowings • Taxes on Earnings • Stockholders’ Equity • Comprehensive Income (loss) • Supplemental cash flow information • Retirement and Post-retirement benefit plans • Commitments • Litigation and contingencies • Segment Information
