Section 1 - Company Overview

Huawei is the largest telecommunications equipment manufacturer in the
world, having overtaken Ericsson in 2012. The firm operates in the carrier,
enterprise and consumer segments of the market. Since 2013, Huawei
increased aggressively its presence on the mobile phone market, particularly
smartphones, where at the moment, the company ranks behind Samsung
and apple.
Section 2 - Ratio

Dupont Ratio
281.54%

2013; 105.27%

2013; 26.04%
2013; 8.79%
2013

311.31%

297.38%

2015; 115.85%

2014; 104.07%

2014; 29.72%

2014; 9.60%

2015; 35.43%
2015; 9.82%

2014

2015

ROE (NI / OEavg)

Profitability (NI / Sales)

Efficiency (Turnover = Sales / Assetsavg)

Leverage (Leverage = Assetsavg / OEavg)

Huawei ROE has been increasing for the last three years (from 26.04%
to 35.43%).
While each of the individual component has improved over the last three
years, the increase in the ROE was mainly due to the leverage
(Asset/Equity), which gained 30 percentage points since 2013.
The profitability has also improved consistently during the period (up to
1 point), mainly because the revenue increased by 65% during since
2013.
The Efficiency was improved in 2015 by 9 points (115.85%) following a
decline of 1 point in 2014.

It suggests that Huawei relies less on debt to fund its growth. as seen above. Huawei’s CCC was 87 days.44% 2013 Section 3 – Cash Conversion Cycle CCC chart Days Receivables Outstanding (DRO) [ARavg / (Sales/365)] Days Inventory (DI) [Inventoryavg / (COGS/365)] Days Payables Outstanding (DPO) [365 / (Purchases / Accts Payableavg)] CASH CONVERSION CYCLE (DI . 9. it is clear why CCC was degraded in 2014.80 compared to 9. which stayed 20 more days in warehouse compared to the previous year. In 2014. 17 days shorter than the 104 days in 2014 but 12 days longer than in 2013.44 in 2013.DPO + DRO) 75 104 87 92 78 61 81 106 100 81 2013 2014 2015 80 86 In 2015.LT Debt-to-Assets 7. which positively impacted the company profitability.07% 2014 LT Debt-to-Assets ratio fell to 7.79% 2015 9. Combining to the fact that suppliers were paid earlier than in 2013 (from 92 days to 78 days). . the company experienced some difficulties to sell inventory.

00 78566 80000 75000 0. Huawei tried to decrease its cash cycle by targeting its A/R.20 1.com).3% (Investopedia. .60 0. The company should be able to maintain or improve the current REO by expanding its market for mobile phones. Huawei’s accrued expense for employees and notes payable increased by 66 and 90 percentage points respectively since 2013.60 0.CL) Current Ratio (CA / CL) Quick Ratio [(Cash + ST Securities + AR) / CL)] The working capital has been increasing while the current ratio and quick ratio declined.40 85000 1.80 89019 90000 1. gaining 17 days in the CCC.40 70000 65000 1.80 75180 0.00 Working Capital (CA . In fact.In 2015. This suggests that Huawei took more liabilities to operate during the past year. Section 4 – Current and Future Financial Performance Overall. Additional Ratio 95000 1. The company managed to get cash from customer in roughly 20 days shorter than in 2014. Huawei technologies has a good performance in the telecommunication industry with a ROE higher than the average of 22.20 1 2 3 0.

82% 115.98 86 4.60% 104.79% 105.Huawei Technologies Company name: Huawei Technologies Company ticker: Your name (cohort): Bakayoko Vaflaly (cohort #4) Year End (3 years) Ratios and Other Analysis Measures 2015 2014 2013 ROE and DuPont Ratios 35.45 81 4.FINANCIAL STATEMENT ANAYLYSIS -.68 61 3.73 0.07% 9.98 (Purchases / Accts Payableavg)] 80 78 92 CASH CONVERSION CYCLE (DI .8 5% 311.54 % 4.79% 9. including current portion / total Assets) Cash Liquidity and Cash Sources & Uses Working Capital (CA .3 1% 29.61 0.3 8% 26.DPO + DRO) 87 104 75 7.50 3.72 % 9.27 100 4.78 ROE (NI / OEavg) Profitability (NI / Sales) Efficiency (Turnover = Sales / Assetsavg) Leverage (Leverage = Assetsavg / OEavg) Additional Efficiency Ratios AR Turnover (Sales / ARavg) Days Receivables Outstanding (DRO) [ARavg / (Sales/365)] Inventory Turnover (COGS / Inventoryavg) Days Inventory (DI) [Inventoryavg / (COGS/365)] AP Turnover (Purchases / APavg) Days Payables Outstanding (DPO) [365 / Additional Leverage Ratio LT Debt-to-Assets (LT Debt.58 81 4.CL) Current Ratio (CA / CL) Quick Ratio [(Cash + ST Securities + AR) / CL)] .0 7% 297.27 % 281.44 75180 1.43 % 9.69 0.64 3.42 78566 1.50 106 5.04% 8.44% 89019 1.