Review of NCR Corporation’s balance sheet shows that the company has good cash and cash equivalents ($49800) in hand as of year ending on 31st December, 2016, which was around $328000 in the year 2015. Therefore, it could be said that the current financial position of NCR Corporation is much better at present as compared to the year 2015 (nasdaq.com, 2017).
Financial Strengths and Weaknesses of NCR Corporation
In the year ending at 31st Dec, 2014, the total revenue of the company was $6591000, while it was $6373000 in the end of 2015 and $6543000 in the end of 2016. These figures show that NCR’s total revenue didn’t fluctuate much in the last three financial years. The company is financially sound, but slight ups and downs hinder its revenue figures. The reason for the financial strength of the company is its ability to save good money from business (ncr.com, 2017).
As per the balance sheet of the company, it is evident that the “retained earnings” of the company in the end of 2014 was $1563000, which was much better than the previous year 2013. However, this figure showed a fall in subsequent years i.e. 2015 and 2016, which may due to the weakness of the company to expand its product range in the market. When the company doesn’t get the opportunity to expand its product range, it isn’t able to capitalize its profits hence shows financial losses and heavy liabilities (ncr.com, 2017).
Comparative Analysis of NCR
In the computer and IT industry, NCR Corporation faces several competitions. Companies like IBM and DBD (Diebold Nixdorf Inc) give tough competition to NCR in IT and security systems segment. The major factors of competition are numerous, but the common ones are: quality and value of the products, ownership cost, vendor knowledge, vendor’s ability to introduce the existing and new technology, offering end-to-end solutions, etc (NCR Corporation, 2014).
However, to compare the financial condition of NCR with DBD and IBM, the report presents the ratio analysis.
Ratio Analysis – IBM, DBD and NCR
Ratio analysis is by far the most effective method to compare the financial condition of two or more businesses. There are several types of ratio, but the most important are Net Profit Ratio and Return on Asset Ratio (Investopedia, 2017).
Let’s compare the ratios of all the 3 companies in the year 2016 to compare their businesses.
Net Profit Ratio = (Total Profit/ Total sales) x 100
NCR’s NPR = (274000/6543000) x 100 = 4.18%
DNB NPR = (-27000/3316300) x 100 = 0.82%
IBM NPR = (11872000/7991900) x 100 = 148.56%