Analysis for Annual Report of NVIDIA and AMD

NVIDIA and AMD
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Nvidia Corporation, also known as NVIDIA, is a multinational technology corporation having its headquarters in Santa Clara, California. For quite a long time, the company has been designing graphics processing units for the professional and gaming industries, and system on chip-units for the automotive market and mobile computing. On the other hand, Advanced Micro Devices, Inc. (AMD) is an American company that develops the same kinds of products as NVIDIA manufacturers. It is into creating, developing and selling computer processors and other similar technologies. After NVIDIA, AMD is considered the largest and most famous supplier of microprocessors. Since 2015, NVIDIA has been focusing on basic and advanced visualization, data centers and the gaming industry. Most recently, the company entered the industry of artificial intelligence, followed by AMD, which acquired ATI in 2006. Both of the companies have long maintained a duopoly in the graphics processing unit market, and have always tried to give a tough competition to each other as well as other similar companies operating globally. In this paper, we will perform the vertical analysis for the two companies and compare their results, perform their ratio analysis and analyze the cash flow while shedding light on their financial statuses and market reputation.
Vertical Analysis of the Income Statement
Just like other multinational companies, AMD and NVIDIA use financial documents to record and journalize all the business transactions. Though their finance-related matters are dealt with internally, their financial documents are evaluated by outside sources for their effectiveness and usefulness. For the vertical analysis of AMD and NVIDIA, the valuations I took into consideration are the prices of products sold every year, net income of the two companies as a percentage, current assets compared to the total assets, and current liabilities compared to the total liabilities. In order to determine the vertical analysis of NVIDIA, I divided the company’s current asset by total assets. The current assets were $4,880, the total assets were $31,720, and the value we obtained was 6.5 percent. Similarly, the current assets of AMD were $5,410, and its total assets were $29,010, and the value we obtained was 5.6 percent. Taking the total assets of the two companies ($31,720 and $29,010), we were able to divide it b the shareholder equity ($13,320). The values obtained through this process were 2.38 percent for NVIDIA and 2.17 percent for AMD. It gave us an idea of how much the liability and assets of the two companies have increased in recent years. For example, in 2014, the current assets of NVIDIA were only $2,540, which increased by 200 percent in only three to four years. Similarly, the current assets of AMD were far lower than what they are now, and this shows that the company has made significant improvements for nearly five years.
Ratio Analysis for the Last Two Years
As far as the ratio analysis of the two companies is concerned, we should notice that their industrial averages are more important than anything else since the consumers, shareholders, and stakeholders want innovation in all fields and walks of life. At any rate, when any of these two companies apply for a business loan, it will have to submit the business documents along with income statements and balance sheets. Here is a brief comparison of the balance sheets and income statements for both AMD and NVIDIA.
Ratio Analysis of AMD and NVIDIA, and Comparison of Balance Sheets and Income Statements
As of August 2018


NVIDIA

AMD

Assets

Current Assets:

Cash

$ 12,450

$2,230

Marketable Securities

$ 4,000

$ 1,100

Account Receivable (Net)

$16,550

$14,760

Inventories

$26,570

$23,340

Total Current Assets

$59,570

$41,430

Fixed Assets

Plant and Equipment

$61,000

$54,000

Less: Accumulated Depreciation

$18,000

$13,000

Net Plant and Equipment

$45,000

$35,000


Total Assets

$124,000

$102,000


Liabilities

Current Liabilities: