Please respond on the below analysis, do you have any other suggestion that might want to consider in their factors that could affect their financial analyses?
Conn’s, Inc. would be the publicly traded company of my choice to explore. Conn’s, Inc. specializes in electronics and appliances for your home, therefore the importance of considering the financial risk of rivals, customers, suppliers and other counter-parties is vital to the company. One area management needs to be aware of is major competitors such as Best Buy, in looking at the quarterly financials of both companies Conn’s, Inc. profits seemed to have dropped about 6% from Q4 2017. While these figures may seem somewhat low, looking at Best Buy, their 2018 revenues are actually up around 17% for Q1 2018.
Looking at certain areas as cash flows to determine the financial standing of a company is a good area of review. Investors will explore the companies cash flows to determine the stability of their investments. For example, if an investor considers purchasing stock at the current price of $25 and predicts a $5 per share dividend at the time of sale a year from now, requiring at least a 10 percent return of the investment, the true value to Conn’s, Inc. stock would only be about $24/share.
Present value= ($5+25)/1.25=$24
In looking at the level of time Conn’s, Inc. should spend on financial planning and protecting their business from competitive risk, much like that of Best Buy, I truly believe this is an area that ranks as a high priority. To lack in financial planning would be detrimental to the survival of their company as a whole. Best Buy appears to have quite a competitive edge, therefore Conn’s, Inc. only chance for making it in the industry is to have a rock solid financial plan.