Nautilus Incorporation Research Paper Example | Topics and Well Written Essays - 1500 words

Nautilus Incorporation - Research Paper Example The summarized findings of the financial analysis are outlined below: 1. Sales level of the company has been on a declining trend and the company’s sales are reduced to $180 million from $517 million. 2. For investors, both earning per share as well as dividend payout ratio, have shown very disgusting results. 3. The profitability position of the company is quite disappointing as the company incurred losses in first four years, but generated some profits in 2011. 4. Total Assets of the company have been on a declining trend as well, but there is a slight improvement in 2011. 5. Leverage position of the company has reflected negative results such that debt ratio has increased from 50% to 60% and the level of debt is on an increasing trend which is an alarming sign for the company. 6. Equity position of the company has also shown some bitter results such that it is reduced by 6 times from 2007. 7. Operating cash flows have remained quite volatile during last five years. 8. Free cash flows to firm are predicted to be increased by 10% every year. 9. The risk position of the company is not good at all and the company still in high risk zone. 10. A discount rate of 35% is used to discount the free cash flows. Introduction Nautilus Inc. is one of the constituent of NASDAQ member companies. ... well as the predicted free cash flows for the next five years have also been estimated by utilizing a relatively higher but an appropriate discount factor. Appendix has also been attached after the conclusion of this article in which the computations of some ratios have been displayed. Conclusion in the end will summarize financial analysis under this article. Sales Analysis If the sales of NLS are taken into consideration, it can be noticed that the company seems far behind from the objective of maintaining a persistent growth rate. The sales behavior of the company cannot be termed as healthy by any means due to significant shrinkages in the level of sales. From 2007 till 2010, the company suffered a continuous decline in its sales on yearly basis. The overall growth rate of sales level of the company has remained negative. The prime reason behind this sales decline is the change in the preferences of the people after recession as they took a defensive stance and avoided incurring expenditures on health and fitness based equipments. However, there is a very light ray of hope in the year 2011 where the company managed to increase its sales by around 7%. Overall the company’s past record imposes a solid question mark regarding the future level of sales because with this level of growth, the company would not be able to sustain for a longer period of time. The following table highlights the actual sales level and growth from 2007 till 2011: Years 2011 2010 2009 2008 2007 Sales 180,412 168,450 189,260 411,178 501,471 Growth 7.10% -11.00% -53.97% -18.01% - Investors’ Ratio Analysis There are two basic ratios that have been computed in order to judge the performance of the company with respect to the equity investors. These two ratios are earning per share and dividend