Public Company Project

https://wrds-www.wharton.upenn.edu/pages

LET ME KNOW IF YOU NEED LOGIN OR PASSWORD AMERICAN AIRLINES, INC IS THE COMPANY

Peloton Interactive, Inc. / NASDAQ: PTON
Maya Kavuličová, Nicola Saunders, Amy Silva, Elysia Taniguchi
Public Company Project Report
MBA 702-01 Financial & Managerial Accounting
Dr. Lijun (Gillian) Lei
October 31, 2023
Table of Contents
Executive Summary …………………………………………………………………………………………………………………… 3
Company Background ……………………………………………………………………………………………………………….. 4
Financial Statement Analysis ……………………………………………………………………………………………………… 5
Return on Equity …………………………………………………………………………………………………………………….. 5
Return on Assets……………………………………………………………………………………………………………………… 5
Profit Margin & Asset Turnover ………………………………………………………………………………………………. 6
Overview ………………………………………………………………………………………………………………………………… 7
Financial Leverage …………………………………………………………………………………………………………………. 8
Profitability Ratios …………………………………………………………………………………………………………………….. 8
Gross Profit Margin ………………………………………………………………………………………………………………… 8
Operating Expense Margin ……………………………………………………………………………………………………… 9
Operating Profit Margin ………………………………………………………………………………………………………… 10
Overview ………………………………………………………………………………………………………………………………. 10
Productivity Ratios ………………………………………………………………………………………………………………….. 11
Accounts Receivable Turnover ……………………………………………………………………………………………….. 11
Inventory Turnover ……………………………………………………………………………………………………………….. 12
Payable Turnover ………………………………………………………………………………………………………………….. 12
Days in Sales ………………………………………………………………………………………………………………………… 13
Days in Inventory ………………………………………………………………………………………………………………….. 13
Days in Payable …………………………………………………………………………………………………………………….. 14
Cash Conversion Cycle ………………………………………………………………………………………………………….. 14
Property, Plant, Equipment (PPE) Turnover……………………………………………………………………………. 15
Overview ………………………………………………………………………………………………………………………………. 16
Solvency & Liquidity Ratios …………………………………………………………………………………………………….. 16
Liability to Equity Ratio …………………………………………………………………………………………………………. 16
Times Interest Earned Ratio …………………………………………………………………………………………………… 17
Current Liquidity Ratio ………………………………………………………………………………………………………….. 17
Quick Ratio…………………………………………………………………………………………………………………………… 18
Competitor ………………………………………………………………………………………………………………………………. 19
Nautilus Company Background ……………………………………………………………………………………………… 19
Comparing Peloton to Nautilus ………………………………………………………………………………………………. 19
Strengths & Suggestions …………………………………………………………………………………………………………… 21
Conclusion ………………………………………………………………………………………………………………………………. 24
References ……………………………………………………………………………………………………………………………….. 25
2
Executive Summary
This report is written for an assignment in the Financial and Managerial Accounting class
at the University of North Carolina Greensboro. In this report, Peloton Interactive Inc. is
described, financially analyzed, and compared to a major competitor. This financial analysis
gives insight into Peloton’s successes, strengths, and potential for future success.
Peloton Interactive Inc. is a cutting-edge fitness company which is renowned for its
innovative approach to home fitness. Their flagship product is a stationary bike with a large
touchscreen display that streams live and on-demand classes led by world-class instructors, and
they have since released more fitness equipment which is also integrated with its digital
platform. Some of Peloton’s successes include rapid growth and community engagement, which
contribute to their strong brand presence and loyal customer base.
Peloton saw major success specifically in 2021 due to an increase in demand for at-home
fitness equipment following the COVID-19 lockdown. However, the burst in sales did not last
and the company is currently facing financial challenges and operational inefficiencies. Peloton
saw decreases in return on equity, return on assets, profit margin, financial leverage, profitability
ratios, accounts receivable turnover, inventory turnover, payable turnover, days in sales, days in
inventory, days in payable, and PPE. Even though Peloton is not as strong in 2023 as it may have
been in 2021, there are many strengths to capitalize on such as a dedicated community,
subscription platform, corporate partnerships, instructor influence, and product expansion.
Peloton also has opportunities for improvement that include performing an evaluation of their
current marketing strategy and furthering global expansion.
3
Company Background
Founded in 2012, Peloton is a pioneering American fitness technology company that has
revolutionized the way people exercise from the comfort of their own homes. The brainchild of
John Foley, Tom Cortese, Hisao Kushi, Yony Feng, and Graham Stanton, Peloton emerged from
a desire to create an engaging and immersive workout experience accessible to anyone,
regardless of their location or schedule. The company’s flagship product, the Peloton Bike, was
launched in 2014 and quickly gained popularity for its unique combination of cutting-edge
hardware, live-streamed and on-demand classes, and a vibrant online community. This fusion of
technology and fitness was a game-changer. Over the years Peloton has expanded its product line
to include the Tread, a treadmill, Peloton Row, a rower, and introduced an array of other fitness
content, including strength training, yoga, and meditation, all accessible through their connected
devices.
Peloton interactive states, “Peloton (NASDAQ: PTON) is the leading connected fitness
platform with a highly engaged community of nearly 7 million Members worldwide.” Peloton
has experienced rapid growth and became a household name in fitness, debuting on the
NASDAQ stock exchange for public trade in 2019. The global pandemic in 2020, with its
widespread closures of gyms and fitness studios, propelled Peloton’s popularity, as many turned
to at-home workouts for their fitness needs. The company’s subscriber base surged, highlighting
the enduring demand for its innovative approach to fitness. With a passionate and dedicated user
community, Peloton has not only disrupted the traditional fitness industry but also set new
standards for what a connected, technology-driven fitness experience can be. Today, Peloton
continues to lead the way in redefining how people engage with their health and wellness
routines.
4
Financial Statement Analysis
Return on Equity
The ROE for Peloton in 2021 was -18%, in 2022 -241% and in 2023 -847%. The figures
indicate a significant decline in the company’s financial performance over the years 2021, 2022,
and 2023. ROE is a financial metric that measures a company’s profitability and efficiency in
generating returns for its shareholders based on their equity investment. A negative ROE
suggests that the company is not generating profits from its shareholders’ equity.
In 2021, Peloton was not generating a positive return on shareholders’ equity. The
company’s net income was insufficient to cover the equity investment, which is not a favorable
circumstance. As seen in Figure 1, it is apparent the negative ROE worsened significantly in
2022 and continued it’s downward trend. A -241% ROE suggests that the company’s financial
situation deteriorated even further, with a substantial loss relative to its shareholders’ equity. The
ROE deteriorated further in 2023, with an ROE of -847%. This is a very alarming figure, as it
indicates a severe decline in the company’s ability to generate profits or even cover its losses
with the shareholders’ equity. Overall, these negative ROE figures suggest that Peloton has been
experiencing financial difficulties and is not effectively utilizing shareholders’ equity to generate
profits. Investors and stakeholders should be cautious.
Return on Assets
The ROA for Peloton in 2021 was -5%, in 2022 -66% and in 2023 -37%. The figures
indicate the company’s inability to generate profits from its assets. ROA is a financial metric that
measures how efficiently a company is using its assets to generate income. A negative ROA
suggests that the company is not effectively utilizing its assets to generate profits.
5
In 2021, Peloton had a negative ROA of -5% which suggests that the company’s assets
were not effectively utilized to generate profits. The negative ROA worsened significantly in
2022 with an ROA of -66%. This is a concerning figure, indicating a substantial decline in the
company’s ability to generate profits from its assets. The ROA remained negative in 2023 with an
ROA of -37%. Although it is an improvement from the previous year, it still indicates that
Peloton’s asset utilization and profitability remain poor.
Profit Margin & Asset Turnover
The Profit Margin for Peloton in 2021 was -5%, in 2022 -79% and in 2023 -45%. Profit
margin is a key financial ratio in accounting and finance which measures the profitability of a
company’s operations. It is expressed as a percentage and represents the portion of each dollar of
revenue that translates into profit. A negative profit margin of -5% in 2021 indicates that Peloton
was not able to generate a profit from its operations, and its expenses exceeded its revenue,
resulting in a loss. The profit margin deteriorated significantly in 2022, reaching -79%. This
suggests a substantial increase in losses relative to revenue. While the profit margin improved
compared to 2022, it was still negative at -45%. Figure 2 highlights how the company continued
to experience financial losses in 2023. A consistently negative profit margin is a concerning sign,
as it indicates that Peloton was not profitable during these years and was operating at a loss. It
suggests that the company was spending more on expenses than it was in generating revenue.
The Asset Turnover for Peloton in 2021 was 1.62, in 2022 1.03, and in 2023 1.63. Asset
turnover is a financial metric that measures a company’s efficiency in using its assets to generate
revenue or sales. An asset turnover of 1.62 in 2021 indicates reasonably efficient use of assets to
generate sales. In 2022, the asset turnover decreased to 1.03, which suggests that the company
6
became less efficient in utilizing its assets to generate revenue. The asset turnover increased in
2023 to 1.63, indicating improved asset utilization to generate revenue.
Overview
The data concerning Peloton’s financial performance indicators, including ROE, ROA,
and Profit Margin for the years 2021, 2022, and 2023, has been derived from the company’s 10K filings with the SEC from 2022 and 2023. Figure 1 depicts the trends observed over a threeyear period. A noteworthy observation is the persistent negative trend in ROE, particularly the
sharp decline in 2023, along with consistently negative, yet relatively stable, ROA and Profit
Margin.
Figure 1 | ROE, ROA, Profit Margin Trend Graph by Year
The data regarding Peloton’s Total Revenue, Gross Profit, Total Operating Expenses, and
Net Loss for the years 2021, 2022, and 2023 has been computed based on the company’s 10-K
filings with the SEC from 2022 and 2023. Figure 2 illustrates the trends observed over a threeyear period. Notably, a consistent negative trend is evident in both Total Revenue and Gross
Profit signaling potential financial challenges. In 2022, the company experienced a significant
impact with Gross Profit, Total Operating Expenses, and Net Loss being substantially affected
7
due to actions such as workforce reductions, product recalls, a change in leadership with a new
CEO, and a negative brand perception stemming from marketing setbacks.
Figure 2 | 3-Year Profit Overview Graph
Financial Leverage
The financial leverage for Peloton in 2021 was 1.2, in 2022 1.0 and in 2023 1.0. Financial
leverage is the use of debt or borrowed capital to finance a company’s operations and
investments. A financial leverage ratio of 1.2 suggests that the company relied more on borrowed
capital (debt) to finance its operations and investments compared to its own equity. A financial
leverage ratio of 1.0 indicates that, in 2022, Peloton’s total assets were equal to its shareholders’
equity. This suggests that the company’s capital structure was balanced, with an equal mix of
debt and equity. In 2023, the financial leverage remained at 1.0, which means that the company
continued to maintain a balanced capital structure with total assets equal to shareholders’ equity.
Profitability Ratios
Gross Profit Margin
The gross profit margin for Peloton in 2021 was -5%, in 2022 -79% and -45% in 2023.
This financial metric measures the profitability of a company’s operating activities by assessing
8
COGS and total revenue. In 2021, Peloton’s gross profit margin was -5%. This means that for
every dollar in revenue generated from its operations, the company incurred a cost of goods sold
that exceeded the revenue by 0.05. Peloton was operating at a loss at the gross profit level,
indicating that it was not making a profit from its activities. In 2022, the gross profit margin
deteriorated significantly to -79%. This indicates a substantial increase in the loss at the gross
profit level, suggesting that Peloton’s costs of goods sold were significantly higher than its
revenue from operations. In 2023, the gross profit margin improved slightly to -45%. While the
situation was better than in 2022, it was still negative, indicating that Peloton was not generating
a profit from its activities, and the cost of producing goods and services continued to exceed the
revenue. Consistently negative gross profit margins over these years indicate that Peloton was
not effectively covering its production and operational costs with the revenue generated from its
activities. Figure 3 highlights the significant impact of the year 2022 for each of the three
profitability ratios.
Operating Expense Margin
The operating expense margin for Peloton in 2021 was -12%, -82% in 2022 and -59% in
2023. The operating expense margin is a financial metric which measures the proportion of
operating expenses to a company’s total revenue. The company was operating at a loss at the
operating expense level, indicating that its operating costs were higher than the revenue from its
activities. In 2022, the operating expense margin significantly deteriorated to -82%. The
company operating expenses were substantially higher than the revenue generated from its
activities, leading to a more significant operating loss. In 2023, the operating expense margin
improved to -59%. While it was better than in 2022, the company was still operating at a loss at
the operating expense margin level. Consistently negative operating expense margins indicate
9
that Peloton was not able to cover its operating costs with the revenue generated from its
activities during these years. This can suggest challenges in cost management or operating
strategies that affected the company’s profitability.
Operating Profit Margin
The operating profit margin of Peloton in 2021 was -5%, -76% in 2022 and -43% in
2023. This metric measures the profitability of a company’s core operations by assessing the
proportion of operating income (or profit) generated from its total revenue. In 2021, Peloton had
a negative operating profit margin of -5%. This means that the company’s core operations
resulted in an operating loss, and for every dollar of revenue, the company incurred a 5%
operating loss. A negative operating profit margin indicates that the company’s business activities
were not profitable during that year. In 2022, the operating profit margin decreased significantly
to -76%. This indicates a further deterioration in the profitability of the company’s core
operations. The company experienced a substantial operating loss in relation to its revenue. In
2023, the operating profit margin improved to -43%. While it is still negative, the margin showed
an improvement compared to the previous year. It is important to note that a -43% operating
profit margin is still highly negative and suggests that the company’s core operations were not
profitable.
Overview
The data concerning Peloton’s Gross Profit Margin, Operating Expense Margin, and
Operating Profit Margin for the years 2021, 2022, and 2023 has been derived from the
company’s 10-K filings with the SEC from 2022 and 2023. Figure 3 visually depicts the
percentage trends observed over a three-year period. It is noteworthy to point out that these
10
figures show substantial negative margins from 2021 to 2022, with a modest recovery evident in
2023.
Figure 3 | Ratios in % Graph
Productivity Ratios
Accounts Receivable Turnover
The accounts receivable turnover for Peloton in 2021 was 56.33, 46.22 in 2022 and 30.98
in 2023. The accounts receivable turnover ratio measures how efficiently a company is collecting
payments from its customers and converting its accounts receivable into cash over a period. In
2021, Peloton collected payments from its customers approximately 56.33 times during the year,
which suggests a relatively efficient collection process. It implies that the company was able to
quickly convert accounts receivable into cash. In 2022, the accounts receivable turnover
decreased to 46.22. This suggests that the company took slightly longer to collect payments
compared to the previous year, but the collection process was still relatively efficient. In 2023,
the accounts receivable turnover decreased further to 30.98. This indicates a further slowdown in
the collection process, with the company taking more time to convert accounts receivable into
11
cash. The decline in the accounts receivable turnover ratio over the years suggests that Peloton is
experiencing challenges in collecting timely payments from its customers.
Inventory Turnover
The inventory turnover for Peloton in 2021 was 2.39, in 2022 2.38 and 1.63 in 2023.
Inventory turnover is a financial ratio that measures how efficiently a company manages its
inventory by assessing how quickly it sells and replaces its inventory during a specific period. In
the 2021 the 2.39 figure indicates on average; Peloton sold and replaced its inventory 2.39 times
during the year. This suggests relatively efficient management of inventory, with inventory items
being sold and restocked at a moderate pace. In 2022, the inventory turnover remained similar at
2.38, indicating that the company continued to manage its inventory at a consistent pace, with
only a slight decrease. In 2023, the inventory turnover decreased to 1.63, which suggests a
slowdown in the management of inventory. The company was selling and restocking its
inventory at a slower rate compared to the previous two years. Declining turnover can suggest
negative effects in their supply chain, overstocking and carrying excess inventory, decrease in
market demand or consumer preference or disruptions in the production process.
Payable Turnover
The payable turnover for Peloton in 2021 was 2.6, 2.23 in 2022 and 2.14 in 2023. This
ratio measures how efficiently a company manages its accounts payable by assessing how
quickly it pays its suppliers and creditors. The figure of 2.6 in 2021 suggests on average, Peloton
paid its suppliers and creditors 2.6 times during the year. A higher ratio suggests relatively
efficient management of accounts payable, with the company making payments at a moderate
pace. In 2022, the payable turnover decreased to 2.23, suggesting a slight slowdown in the
payment process to suppliers compared to the previous year. In 2023, the payable turnover
12
decreased further to 2.14, indicating that the company was paying its suppliers at a slower rate
compared to the previous two years. A decreasing ratio can suggest that Peloton is experiencing
financial distresses as it is taking them longer each year to pay their suppliers and creditors.
Days in Sales
The days in sales for Peloton in 2021 were 6.48, 7.9 in 2022 and 11.78 in 2023. The days
in sales ratio measures how long it takes a company to turn its inventory into sales. The 2021
figure of 6.48 indicates that, on average, it took Peloton approximately 6.48 days to sell and
replace its inventory during the year. A lower number of days suggests efficient management of
inventory and a quicker inventory turnover. In 2022, the days in sales increased to 7.9,
suggesting that it took slightly longer to sell and replace inventory compared to the previous
year. This may indicate a slight slowdown in the company’s inventory turnover. In 2023, the days
in sales increased further to 11.78, indicating a more extended period for selling and replacing
inventory. This suggests a slower inventory turnover, and that it took them longer to convert
inventory into sales during the year. Peloton is carrying excess inventory in stock which can
increase storage costs and further suggests they are making less profit from inventory.
Days in Inventory
The days in inventory for Peloton in 2021 was 152.91, 153.09 in 2022 and 223.47 in
2023. This metric measures how long, on average, a company holds its inventory before selling
it. The 2021 figure of 152.91 indicates on average, Peloton held its inventory for approximately
152.91 days before selling it. A longer number of days in inventory suggests that the company’s
inventory turnover is relatively slow, meaning it takes a substantial amount of time to sell and
replace its inventory. In 2022, the days in inventory increased slightly to 153.09, indicating that
the company’s inventory turnover remained at a similar level to the previous year. In 2023, the
13
days in inventory increased significantly to 223.47. This suggests that Peloton took even longer
to sell and replace its inventory during the year, indicating a substantial slowdown in inventory
turnover. Peloton is selling its inventory at a slower pace each year, adding to the evidence of
poor financial performance as seen with previous ratios.
Days in Payable
The days in payable for Peloton in 2021 were 140.62, 163.52 in 2022 and 170.59 in 2023.
This metric measures how long, on average, a company takes to pay its suppliers and creditors
after receiving goods or services. The 2021 figure of 140.62 indicates that, on average, Peloton
took approximately 140.62 days to pay its suppliers and creditors after receiving goods or
services. A longer number of days in payable suggests that the company was paying its suppliers
more slowly. In 2022, the days in payable increased to 163.52, indicating that the company was
taking even longer to pay its suppliers compared to the previous year. In 2023, the days in
payable increased further to 170.59, suggesting that the company was continuing to extend the
payment period to its suppliers. An increased trend in days payable is usually a negative indicator
in the company’s financial performance and even possibly negative supplier relations when it
comes to negotiating discounts.
Cash Conversion Cycle
The cash conversion cycle figures for Peloton are as follows, 18.77 in 2021, -2.53 in
2022 and 64.66 in 2023. This metric measures the amount of time it takes for a company to
convert its investment in inventory and accounts receivable into cash. In 2021, Peloton had a
CCC of 18.77 days. This means that, on average, it took the company 18.77 days to convert its
investment in inventory and accounts receivable into cash, considering the time it took to collect
payments from customers and pay suppliers. In 2022, the CCC decreased significantly to -2.53.
14
A negative CCC typically indicates that the company’s accounts payable turnover (days in
payable) is longer than the sum of its days in inventory and days in receivables. It suggests that
Peloton was theoretically collecting cash and paying suppliers faster than it was maintaining
inventory and collecting accounts receivable. A negative CCC occurs when a business sells an
item to a customer before paying the original supplier. In 2023, the CCC increased dramatically
to 64.66, which is substantially longer than in the previous years. This suggests a significant
slowdown in the cash conversion process. The company took much more time to convert its
investments in inventory and accounts receivable into cash, impacting cash flow and overall
financial efficiency.
A positive CCC reflects the time it takes to convert investments in inventory and accounts
receivable into cash, and a negative CCC would imply that the company is theoretically paying
suppliers and collecting cash faster than managing inventory and accounts receivable. The
dramatic increase in CCC from 2022 to 2023 suggests that Peloton may have faced challenges in
working capital management, leading to a slowdown in the cash conversion process and
potentially affecting cash flow and liquidity.
Property, Plant, Equipment (PPE) Turnover
The PPE turnover figures for Peloton are as follows, in 2021 6.79, 5.96 in 2022 and 5.31
in 2023. This ratio measures how efficiently a company utilizes its fixed assets (such as
machinery, buildings, and equipment) to generate revenue. In 2021, Peloton had a PPE turnover
of 6.79. This indicates that, on average, the company generated $6.79 in revenue for every dollar
invested in property, plant, and equipment during the year. A higher PPE turnover suggests
efficient utilization of fixed assets. In 2022, the PPE turnover decreased to 5.96, indicating a
slight decrease in the efficiency of utilizing fixed assets to generate revenue. The company
15
generated $5.96 in revenue for every dollar of PPE investment. In 2023, the PPE turnover further
decreased to 5.31, suggesting a continued decline in the efficiency of utilizing fixed assets for
revenue generation. The company generated $5.31 in revenue for every dollar invested in PPE.
Overall, it is evident that Pelotons PPE is decreasing, meaning there is a lower efficiency of asset
utilization most likely due to slower growth in revenue.
Overview
The data pertaining to Peloton’s Productivity Ratios in 2021, 2023 and 2022 were
calculated based of the company’s 10-K from SEC from 2023 and 2022. The graphs present the
trends seen over a 3-year period. Key information to note is the increases in days in sales, days in
inventory, and days in payable, and cash conversion cycle.
Figure 4 | Productivity Ratio Chart
Solvency & Liquidity Ratios
Liability to Equity Ratio
The liability to equity ratio for Peloton in 2021 was 1.56, in 2022 5.79 and 2023 was not
calculated due to negative equity. This financial metric measures the proportion of a company’s
16
total liabilities to its total equity (shareholder’s equity). In 2021, Peloton had a liability to equity
ratio of 1.56, indicating that the company had $1.56 in total liabilities for every dollar of
shareholder’s equity. This suggests a moderate level of financial leverage, with a reasonable
amount of debt relative to its equity. In 2022, the ratio increased significantly to 5.79, indicating
a substantial increase in financial leverage. The company’s total liabilities grew substantially
compared to its equity, suggesting higher financial risk. In 2023, the liability to equity ratio was
not calculated because the company had negative equity. Negative equity means that the
company’s liabilities exceeded its assets, leaving no equity to calculate the ratio. This is a sign of
severe financial distress.
Times Interest Earned Ratio
The times interest earned ratio for Peloton in 2021 was 1.35, -16.24 in 2022 and -9.51 in
2023. This financial metric measures a company’s ability to meet its interest payments on its
debt. In 2021, Peloton’s operating income was 1.35 times greater than its interest expenses. In
2022, the TIE was -16.24 which indicates Peloton’s operating income was insufficient to cover
its interest expenses. In 2023 it reached a -9.51 TIE which is a slight increase compared to the
previous year. Despite the increase, a negative TIE is a cause of concern as the company’s
operating income was insufficient to cover its interest expenses in those years.
Current Liquidity Ratio
The current ratio for Peloton in 2021 was 2.27, 2.38 in 2022 and 2.15 in 2023. This
financial metric measures a company’s short-term liquidity and its ability to meet its immediate
financial obligations with its short-term assets. In 2021, Peloton had a current ratio of 2.27. A
current ratio above 1 suggests that the company had more than enough short-term assets to cover
17
its short-term obligations. In 2022, the current ratio increased to 2.38, indicating an improvement
in the company’s short-term liquidity. In 2023, the current ratio decreased to 2.15. While this is
still a healthy ratio, it represents a slight decline in the company’s short-term liquidity. The trend
shows a slight decrease in the current ratio from 2022 to 2023, the ratios for all three years are
still well above 1, indicating that Peloton has maintained a healthy level of short-term liquidity. It
should be able to cover its short-term obligations comfortably.
Quick Ratio
The quick ratio for Peloton in 2021 was 1.35, 1.21 in 2022 and 1.20 in 2023. This
financial metric assesses a company’s short-term liquidity and its ability to meet its immediate
financial obligations without relying on the sale of inventory. In 2021, Peloton had $1.35 in
easily liquidated assets (such as cash, marketable securities, and accounts receivable) available to
cover each dollar of its short-term liabilities. This is considered a good sign because it indicates a
strong ability to meet immediate financial obligations without relying on inventory sales. In
2022, Peloton still had more than enough liquid assets to cover its short-term liabilities, though
the ratio decreased slightly from the previous year. The ratio in 2023 is like the 2022 figure and
suggests that Peloton maintained a healthy level of liquidity to meet its short-term obligations.
Overview
The data concerning Peloton’s solvency and liquidity ratios for the years 2021, 2022, and
2023 has been computed based on the company’s 10-K filings with the SEC from 2022 and 2023.
Figure 5 illustrates the trends observed over a three-year period. Notably, a critical point to
highlight is the company’s increased financial leverage, as it assumed a debt load that surpassed
its capacity for repayment. This situation became evident when the company struggled to cover
18
interest expenses starting in 2021. However, it is worth noting that Peloton remains capable of
meeting its short-term financial obligations, thanks to its stable current and quick ratios.
Figure 5 | Solvency & Liquidity Ratios Chart
Competitor
Nautilus Company Background
Nautilus Inc is known for its brands: Bowflex, Schwinn, Nautilus, and JRNY. These
brands design and sell in-home fitness equipment, some of which is integrated with their digital
fitness platform, JRNY. This company started in 1986 with the creation of its first fitness
machine, the Blue Monster; and it became publicly traded in May 1999. They released JRNY as
a digital fitness subscription service/platform in October 2019.
Comparing Peloton to Nautilus
Nautilus and Peloton both offer a variety of fitness equipment and a digital platform, but
they differ in focus. Nautilus’ primary objective is manufacturing a large variety of physical
fitness equipment such as treadmills, ellipticals, exercise bikes, strength training machines, and
19
adjustable dumbbells. Nautilus offers a digital fitness platform, but it is not as extensive as
Peloton’s. The renowned digital platform of Peloton offers live and on-demand workout classes
that cover a variety of activities using their equipment. Another way that they differ is that
Nautilus’ equipment is a one-time purchase, and the digital platform is then offered for a
subscription fee in comparison to the required subscription that comes with the purchase of a
Peloton.
Financially speaking, Nautilus is overall performing better in comparison to Peloton.
Because Nautilus has been established longer, the negative impact that COVID-19 had was
significantly lessened. However, there were diminished numbers because there was an influx of
people looking to try something new, which led people to purchase products from Peloton rather
than from Nautilus’s subsidiary companies. When looking at the numbers from 2021 through
2023, Nautilus saw a significantly lessened loss. In 2023, which was the greatest amount of
revenue loss from Peloton, Nautilus lost only 11% of what Peloton had lost. In addition to only
losing a fraction of Peloton’s revenue loss, Nautilus also saw a positive profit margin in all three
years, which Peloton has not seen since its boom in the late 2010s. Despite seeing net gains in
profit margin and a smaller amount of loss in terms of return on equity, Nautilus was mostly in
line with Peloton for their return on assets generated in 2021 and 2023.
Some things that potentially impacted Nautilus experiencing negative figures for ROA
and ROE is the outstanding class action lawsuit for Bowflex and Schwinn, subsidiaries of
Nautilus, due to falsifying the amount of horsepower that was in their treadmills and bumping up
the reported number to an amount of horsepower that would consume extreme amounts of
power. Nautilus also sold the rights to their name in May 2023, to have more cash on hand to
negate the losses seen above. Overall, financially, Nautilus is more set up for success than
20
Peloton because of the company’s longevity in the fitness equipment industry and having more
partnerships with outside companies.
Overview
The data related to Peloton and Nautilus’ financial performance metrics, including ROE
(Return on Equity), ROA (Return on Assets), Profit Margin, Current and Quick Ratios for the
years 2021, 2022, and 2023, has been derived from Peloton’s and Nautilus’ respective 10-K
filings with the SEC from 2022 and 2023. Figure 6 illustrates the trends observed over a 3-year
period. It’s worth noting that Peloton, established in 2012, is a young company, whereas Nautilus
has been in operation since 1987. This distinction is important because Peloton’s ROE has
experienced a significant decline, a concern considering that a more established company has
maintained more consistent figures over these three years.
Figure 6 | Financial Comparison: Peloton & Nautilus
Strengths & Suggestions
Peloton’s strengths lie mostly in the die-hard community they have built over the last 11
years. They should continue to leverage their customer loyalty by expanding the offerings on
21
their subscription platform to include the current “hot” new fitness class types so that members
are always able to engage in the newest workouts regardless of the equipment they own. The last
subscription price increase did anger some members but not enough to lose them and so there
may be potential to increase it again in the future to aid in revenue generation.
Another potential revenue stream could come about from Peloton marketing itself to
corporate offices, hotels, etc. When people are away from their home gym, they can still gain
access to the equipment and there will be a lot more exposure to those that have never tried it.
“Now, to re-energize its business, the company is focused on pushing beyond the at-home fitness
market. It is incentivizing businesses to offer Peloton as a workplace benefit and adding Peloton
equipment to local gyms, apartments, and hotels, Bloomberg reported.” (Hartmans, Tobin,
Mayer, 2023) While looking at Nautilus, who has had a long-standing relationship with gyms,
hotels, and even local retailers, it shows that having these partnerships can bolster the amount of
revenue that is generated. Partnering with businesses, local gyms, apartments, and hotels, such as
InterContinental Hotel Group and popular gyms like Planet Fitness, could increase subscriptions
for travelers and product sales for home workouts for Peloton.
On its own Peloton does not have a strong social media presence but the instructors
themselves do have a cult-like following that could and should be leveraged for free Peloton
advertising. Some instructors such as Cody Rigsby, (a UNCG alum), are becoming individually
famous by authoring books and taking part in tv competitions such as “Dancing with the Stars.”
The marketing team should contemplate doing instructor or even subscriber highlights on social
media to create a more individualized touch to their posts. The feeling of seeing someone who is
an everyday person doing these workouts would reach out to their consumer market and
hopefully expand it to more people than their current market. Doing larger promotions or ad
22
campaigns for when new products, such as the rower and treadmill, release also creates a larger
traffic to their website and would in turn lead to larger product and/or subscription purchase.
Peloton should continue to try to expand their equipment offerings as they have done
recently with the new Peloton Row, to the people that can afford those more expensive
equipment options and at the same time find creative new ways to make them accessible to those
that cannot, such as by offering potential rentals, leases and 3-year no interest financing.
A suggestion for Peloton’s marketing strategy is to reevaluate the marketing team and
their current approach. This recommendation is made due to the significant criticism the
company faced after the release of the 2019 holiday advertisement, which garnered substantial
negative attention (Ciment, 2019). Before embarking on further campaigns or collaborations
with movies and television shows, it is important for the marketing team to exercise due
diligence in determining the appropriateness of the placement of their ads or products. Such
considerations should encompass a full and comprehensive assessment of the potential benefits
and drawbacks associated with such placements. An example of this would be Peloton’s decision
to allow its product to be featured in the show “Sex in the City,” where it was linked to the death
of a main character. This move did not yield the desired attention or outcomes that Peloton had
hoped for, highlighting the need for careful and strategic decision-making in future marketing
endeavors.
Lastly, Peloton is now present in only the US, the UK, Canada, Germany & Australia.
They have the potential to expand further into many other international markets and further
globalize their brand and increase revenues. Lowering the pricing of products depending on the
new international markets that Peloton is looking to move towards would also allow for a larger
23
range of people to be enticed by the product. There would be a net loss in the short term, but if
the price changes lead to more purchases, in the long term, Peloton would see a net positive for
revenue.
Conclusion
Peloton’s future appears promising with the company poised to continue its trajectory as a
trailblazer in the fitness technology space. As the demand for convenient and engaging at-home
fitness solutions continues to rise, Peloton is well-positioned to capitalize on this trend. Their
commitment to product innovation, coupled with a thriving digital community, sets them apart in
the market. Additionally, Peloton’s expansion into international markets and potential
diversification of their product offerings could further solidify their position as a global fitness
powerhouse. While competition in the sector is fierce, Peloton’s established brand, exceptional
user experience, and continued investment in cutting-edge technology, signal a bright and
sustainable future for the company. By implementing the suggestions above, Peloton can
continue to move forward towards a positive stream of revenue and financial statement
successes.
24
References
1. Ciment Shoshy. (2019, December 2). People are confused by Peloton’s new holiday ad,
which shows a woman taking selfies while riding the bike over the course of a year.
Business Insider. https://www.businessinsider.com/peloton-holiday-commercial-issparking-hate-confusion-from-watchers-2019-12
2. Hartmans Avery , Tobin Ben , Mayer Grace . (2023, August 18). Peloton wants to expand
beyond at-home fitness with a push into gyms, businesses, and hotels. Here’s how it went
from a pandemic-era success story to losing money. Business Insider.
https://www.businessinsider.com/peloton-company-history-rise-fall-2022-2
25
NAME:
AMERICAN AIRLINES GROUP INC
TICKER SYMBOL:
AAL
PRIMARY SIC CODE:
4512
STOCK EXCHANGE:
14
CUSIP:
NASDAQ-NMS Stock Market
02376R
STATEMENT OF FINANCIAL POSITION
Fiscal Year:
2019
2020
2021
2022
2023
2024
(FYR Ending):
(31DEC2019 )
(31DEC2020 )
(31DEC2021 )
(31DEC2022 )
(31DEC2023 )
( N/A )
ASSETS
Cash & Equivalents
3,984.000
7,473.000
13,421.000
9,960.000
8,488.000
Receivables – Total (Net)
1,750.000
1,342.000
1,505.000
2,138.000
2,026.000
Inventories – Total
1,851.000
1,614.000
1,795.000
2,279.000
2,400.000
621.000
666.000
615.000
892.000
658.000
8,206.000
11,095.000
17,336.000
15,269.000
13,572.000
Plant, Property & Equip (Gross)
62,391.000
56,495.000
55,558.000
58,323.000
60,800.000
Accumulated Depreciation
18,659.000
16,757.000
18,171.000
20,029.000
22,097.000
Plant, Property & Equip (Net)
43,732.000
39,738.000
37,387.000
38,294.000
38,703.000
610.000
541.000
Prepaid Expenses
Current Assets – Other
Current Assets – Total
Investments at Equity
Investments and Advances – Other
Intangibles
204.000
161.000
239.000
6,175.000
6,120.000
6,079.000
6,150.000
6,142.000
.000
.000
.000
Deferred Charges
Assets – Other
1,678.000
4,894.000
5,426.000
4,393.000
4,100.000
TOTAL ASSETS
59,995.000
62,008.000
66,467.000
64,716.000
63,058.000
LIABILITIES
Accounts Payable
2,062.000
1,196.000
1,772.000
2,149.000
2,353.000
.000
.000
.000
.000
.000
3,679.000
4,135.000
4,255.000
4,694.000
5,115.000
.000
.000
.000
.000
.000
Debt (Long-Term) Due In One Year
4,569.000
4,448.000
3,996.000
4,739.000
4,941.000
Other Current Liabilities
8,001.000
6,790.000
8,983.000
9,914.000
9,653.000
Total Current Liabilities
18,311.000
16,569.000
19,006.000
21,496.000
22,062.000
Long Term Debt
28,875.000
36,573.000
42,181.000
38,948.000
35,722.000
29.000
9.000
9.000
10.000
9.000
.000
.000
.000
.000
.000
12,898.000
15,724.000
12,611.000
10,061.000
10,467.000
.000
.000
.000
.000
.000
60,113.000
68,875.000
73,807.000
70,515.000
68,260.000
Preferred Stock
.000
.000
.000
.000
.000
Common Stock
4.000
6.000
6.000
6.000
7.000
Notes Payable
Accrued Expenses
Taxes Payable
Deferred Taxes (Balance Sheet)
Investment Tax Credit
Liabilities – Other
Noncontrolling Interest – Redeemable
TOTAL LIABILITIES
SHAREHOLDERS’ EQUITY
Capital Surplus
3,945.000
6,894.000
7,234.000
7,291.000
7,374.000
Retained Earnings (Net Other)
-4,067.000
-13,767.000
-14,580.000
-13,096.000
-12,583.000
Less: Treasury Stock
.000
.000
.000
.000
.000
-118.000
-6,867.000
-7,340.000
-5,799.000
-5,202.000
TOTAL SHAREHOLDERS EQUITY
-118.000
-6,867.000
-7,340.000
-5,799.000
-5,202.000
TOTAL LIABILITIES AND EQUITY
59,995.000
62,008.000
66,467.000
64,716.000
63,058.000
Shareholders Equity – Parent
Noncontrolling Interest – Nonredeemable
INCOME STATEMENT
Sales (Net)
Cost of Goods Sold
Gross Profit
Fiscal Year:
2019
2020
2021
2022
2023
2024
(FYR Ending):
(31DEC2019 )
(31DEC2020 )
(31DEC2021 )
(31DEC2022 )
(31DEC2023 )
( N/A )
45,768.000
17,337.000
29,882.000
48,971.000
52,788.000
32,027.000
22,290.000
27,969.000
37,631.000
38,716.000
13,741.000
-4,953.000
1,913.000
11,340.000
14,072.000
Selling, General, & Admin Expenses
7,717.000
4,069.000
5,092.000
7,237.000
7,805.000
Operating Income Before Depreciation
6,024.000
-9,022.000
-3,179.000
4,103.000
6,267.000
Depreciation, Depletion, & Amortiz
2,318.000
2,365.000
2,335.000
2,298.000
2,254.000
Operating Income After Depreciation
3,706.000
-11,387.000
-5,514.000
1,805.000
4,013.000
1,095.000
1,227.000
1,800.000
1,962.000
2,145.000
81.000
195.000
340.000
544.000
512.000
Special Items
-436.000
966.000
4,426.000
-201.000
-1,259.000
Pretax Income
2,256.000
-11,453.000
-2,548.000
186.000
1,121.000
570.000
-2,568.000
-555.000
59.000
299.000
Income Before EI&DO
1,686.000
-8,885.000
-1,993.000
127.000
822.000
Extraordinary Items
.000
.000
.000
.000
.000
Discontinued Operations
.000
.000
.000
.000
.000
Net Income (Loss)
1,686.000
-8,885.000
-1,993.000
127.000
822.000
Income Before EI&DO
1,686.000
-8,885.000
-1,993.000
127.000
822.000
Preferred Dividends
.000
.000
.000
.000
.000
Available for Common Before EI&DO
1,686.000
-8,885.000
-1,993.000
127.000
822.000
Common Stock Equivalents – Savings
.000
.000
.000
.000
.000
1,686.000
-8,885.000
-1,993.000
127.000
822.000
Interest Expense
Non-Operating Income/Expense
Income Taxes – Total
Minority Interest
Adjusted Available for Common
EARNINGS PER SHARE
EPS – Primary, Excluding EI&DO
3.800
-18.360
-3.090
.200
1.260
EPS – Primary, Including EI&DO
3.800
-18.360
-3.090
.200
1.260
EPS – Fully Diluted, Excluding EI&DO
3.790
-18.360
-3.090
.190
1.210
EPS – Fully Diluted, Including EI&DO
3.790
-18.360
-3.090
.190
1.210
Common Shares for Primary EPS Calculation
443.363
483.888
644.015
650.345
653.612
Common Shares for Fully Diluted EPS Calc.
444.269
483.888
644.015
655.122
719.669
Common Shares Outstanding at Fiscal Yr End
428.203
621.480
647.728
650.642
654.273
COMMON SHARES
STATEMENT OF RETAINED EARNINGS
Fiscal Year:
2019
2020
2021
2022
2023
2024
(FYR Ending):
(31DEC2019 )
(31DEC2020 )
(31DEC2021 )
(31DEC2022 )
(31DEC2023 )
( N/A )
Retained Rearnings – Beginning Balance
-5,138.000
-4,067.000
-13,767.000
-14,580.000
-13,096.000
Net Income
1,686.000
-8,885.000
-1,993.000
127.000
822.000
178.000
43.000
.000
.000
.000
-3,630.000
-12,995.000
-15,760.000
-14,453.000
-12,274.000
-87.000
-56.000
-28.000
-42.000
-68.000
Cash Dividends
Retained Earnings After Dividends
Change – Foreign Currency Translation
Adj. to Long-Term Marketable Securities
-2.000
-2.000
-2.000
-6.000
-2.000
Other CMP Adj,(Stock Splits/Retirement)
-6,329.000
-7,101.000
-5,940.000
-4,579.000
-4,892.000
Non-Compustat Adjustments (Plug Calculation)
5,979.000
6,385.000
7,148.000
5,978.000
4,651.000
Retained Earnings – Ending Balance
-4,067.000
-13,767.000
-14,580.000
-13,096.000
-12,583.000
Retroactive Adjustments (Acct’g Chgs)
.000
.000
.000
.000
.000
Retained Earnings – After Adjustments
-4,067.000
-13,767.000
-14,580.000
-13,096.000
-12,583.000
STATEMENT OF CASH FLOWS
Fiscal Year:
2019
2020
2021
2022
2023
2024
(FYR Ending):
(31DEC2019 )
(31DEC2020 )
(31DEC2021 )
(31DEC2022 )
(31DEC2023 )
( N/A )
INDIRECT OPERATING ACTIVITIES
Income Before Extraordinary Items
1,686.000
-8,885.000
-1,993.000
127.000
822.000
Depreciation and Amortizations
2,318.000
2,370.000
2,335.000
2,298.000
2,254.000
.000
.000
.000
.000
.000
560.000
-2,568.000
-555.000
65.000
299.000
Extraordinary Items and Disc. Operations
Deferred Taxes
Equity in Net Loss (Earnings)
Sale of PPEq and Investments – Loss (Gain)
Funds from Operations – Other
Receivables – Decrease (Increase)
-112.000
-95.000
-22.000
.000
.000
-1,000.000
1,409.000
-349.000
-140.000
119.000
73.000
538.000
-304.000
-637.000
95.000
327.000
-626.000
461.000
585.000
873.000
Inventory – Decrease (Increase)
Accounts/P and Accrued Liabs – Inc(Dec)
Income Taxes – Accrued – Increase(Decrease)
.000
.000
.000
.000
.000
-37.000
1,314.000
1,131.000
-125.000
-659.000
3,815.000
-6,543.000
704.000
2,173.000
3,803.000
Investments – Increase
.000
.000
28.000
321.000
.000
Sale of Investments
.000
41.000
5.000
.000
.000
Other Assets and Liabilities – Net Change
Operating Actiities – Net Cash Flow
INVESTING ACTIVITIES
Short term Investments – Change
Capital Expenditures
Sale of Property Plant and Equipment
Acquisitions
Investing Activities – Other
Investing Activites – Net Cash Flow
957.000
-3,378.000
-5,932.000
3,716.000
1,589.000
4,268.000
1,958.000
412.000
2,906.000
2,596.000
904.000
1,016.000
374.000
147.000
230.000
.000
.000
.000
.000
.000
164.000
-63.000
10.000
.000
275.000
-2,243.000
-4,342.000
-5,983.000
636.000
-502.000
.000
2,970.000
460.000
.000
.000
1,097.000
173.000
18.000
21.000
.000
FINANCING ACTIVITIES
Sale of Common and Preferred Stock
Purchase of Common and Preferred Stock
Cash Dividends
178.000
43.000
.000
.000
.000
Long Term Debt – Issuance
3,960.000
11,780.000
12,190.000
1,069.000
4,822.000
Long Term Debt – Reduction
4,190.000
3,535.000
7,343.000
3,752.000
7,718.000
-63.000
-5.000
-1.000
73.000
-310.000
-1,568.000
10,994.000
5,288.000
-2,631.000
-3,206.000
Exchange Rate Effect
.000
.000
.000
.000
.000
Cash and Cash Equivalents – Change
4.000
109.000
9.000
178.000
95.000
Interest Paid – Net< 1,111.000 944.000 1,632.000 1,852.000 2,180.000 Income Taxes Paid 8.000 6.000 3.000 2.000 6.000 Current Debt - Changes Financing Activities - Other Financing Activities - Net Cash Flow OTHER INFORMATION ADDITIONAL SCHEDULES Fiscal Year: 2019 2020 2021 2022 2023 2024 (FYR Ending): (31DEC2019 ) (31DEC2020 ) (31DEC2021 ) (31DEC2022 ) (31DEC2023 ) ( N/A ) Receivables - Trade 1,750.000 1,342.000 1,505.000 2,138.000 2,026.000 Income Tax Refund .000 .000 .000 .000 .000 Receivables - Other - Current .000 .000 .000 .000 .000 1,750.000 1,342.000 1,505.000 2,138.000 2,026.000 1,851.000 1,614.000 1,795.000 2,279.000 2,400.000 Receivables - Total (Net) Inventories - Raw Materials Inventories - Work In Process Inventories - Finished Goods Inventories - Other Inventories - Total LESS: Debt (Long Term) Due In One Year -4,569.000 -4,448.000 -3,996.000 -4,739.000 -4,941.000 Debt - Convertible Subordinated .000 .000 .000 .000 .000 Debt - Senior Convertible .000 1,000.000 1,000.000 1,000.000 1,000.000 Debt - Subordinated .000 .000 .000 .000 .000 5,977.000 11,132.000 15,196.000 14,446.000 13,100.000 Debt - Notes Debt - Debentures 754.000 1,064.000 1,129.000 1,050.000 967.000 26,254.000 28,002.000 28,573.000 26,816.000 25,453.000 670.000 572.000 737.000 761.000 506.000 28,875.000 36,573.000 42,181.000 38,948.000 35,722.000 4,268.000 1,958.000 412.000 2,906.000 2,596.000 62,391.000 56,495.000 55,558.000 58,323.000 60,800.000 18,659.000 16,757.000 18,171.000 20,029.000 22,097.000 Deferred Taxes - Federal 498.000 -2,335.000 -508.000 59.000 268.000 Deferred Taxes - Foreign .000 .000 .000 .000 .000 Deferred Taxes - State 62.000 -233.000 -47.000 6.000 31.000 Debt - Long Term - Other Debt - Capitalized Lease Obligations Long Term Debt Total Property, Plant and Equipment (Cost) Beginning Balance Capital Expenditures Retirements Other Changes Ending Balance Accumulated Depreciation on PPE Beginning Balance Depreciation Expense Depletion Expense Retirements Other Changes Ending Balance Income Taxes - Federal .000 .000 .000 Income Taxes - Foreign 8.000 .000 .000 Income Taxes - State 2.000 .000 .000 Income Taxes - Other .000 .000 .000 .000 .000 Income Taxes - Total 570.000 -2,568.000 -555.000 59.000 299.000 Common Shares Reserved For Conversion Convertible Debt Preferred Stock Stock Options Warrants and Other Total ADDITIONAL DATA Fiscal Year: 2019 2020 2021 2022 2023 2024 (FYR Ending): (31DEC2019 ) (31DEC2020 ) (31DEC2021 ) (31DEC2022 ) (31DEC2023 ) ( N/A ) Acquisitions - Income Contribution Acquisitions - Sales Contribution Adjustmnet Factor-Cum, Ex-Date Advertising Expense 1.000 1.000 1.000 1.000 1.000 129.000 50.000 105.000 105.000 114.000 12.995 12.527 13.000 14.000 54.000 1,757,679,604.000 17,134,104,633.000 9,607,454,170.000 8,862,263,065.000 6,922,323,460.000 Average Short Term Borrowing Rate Average Short term Borrowing Common Shareholders (# of) Common Shares Traded (Calendar Yr) Compensating Balance Convertible Debt and Preferred Stock .000 1,000.000 1,000.000 1,000.000 1,000.000 Debt (Long Term) Maturing Due in 2 Years 3,636.000 2,560.000 4,350.000 3,750.000 5,329.000 Debt (Long Term) Maturing Due in 3 Years 1,683.000 4,278.000 3,647.000 9,458.000 4,696.000 Debt (Long Term) Maturing Due in 4 Years Years 4,182.000 4,523.000 9,362.000 4,595.000 4,689.000 Debt (Long Term) Maturing Due in 5 Years 1,637.000 8,009.000 4,584.000 5,090.000 23,276.000 28,755.000 31,785.000 30,804.000 28,032.000 -211.000 .400 -749.000 -458.000 -386.000 -363.000 .100 .000 .000 .000 180.000 43.000 .000 .000 .000 Debt - Long-Term Debt - Tied to Prime Debt - Martgages and Other Securities Debt - Unamortized Debt Discount and Other Dividends (Cash)per Share Ex-Date Dividends (Cash) - Common Dividends (Cash) - Preferred Employees (# of) Equity in Earnings - Unconsolidated Subs 4,499.000 10,900.000 .000 .000 .000 .000 .000 133.700 102.700 123.400 129.700 132.100 59,995.000 62,008.000 66,467.000 64,716.000 63,058.000 Foreign Currency Translation Adj - Bal. Sheet .000 .000 .000 .000 .000 Foreign Currency Translation Adj - Inc. Stmnt. -32.000 -24.000 -4.000 -38.000 -30.000 Investment Tax Credit .000 .000 .000 .000 .000 Labor Related Expenses 14,390.000 12,551.000 .000 .000 .000 .000 .000 Preferred Stock - Dividends In Arrears .000 .000 .000 .000 .000 Preferred Stock - Liquidation Value .000 .000 .000 .000 .000 Preferred Stock - Redemption Value .000 .000 .000 .000 .000 Price - Calendar Year Close 28.680 15.770 17.960 12.720 13.740 Price - Calendar Year High 37.230 30.780 26.090 21.420 19.080 Price - Calendar Year Low 24.230 8.250 14.710 11.651 10.860 Price - Fiscal Year Close 28.680 15.770 17.960 12.720 13.740 Interest Capitalized (in fiscal yr) Interest Capitalized - Net Income Effect Interest Expense on Long Term Debt LIFO Reserve Order Backlog Present Value - Noncapitalized Leases Receivables - Estimated Doubtful 31.000 36.000 34.000 Rental Commitments - Minimum Year+1 1,990.000 1,946.000 1,929.000 1,954.000 1,809.000 Rental Commitments - Minimum Year+2 1,817.000 1,777.000 1,791.000 1,663.000 1,510.000 Rental Commitments - Minimum Year+3 1,620.000 1,586.000 1,410.000 1,324.000 1,289.000 Rental Commitments - Minimum Year+4 1,429.000 1,192.000 1,039.000 1,054.000 1,120.000 Rental Commitments - Minimum Year+5 1,030.000 812.000 762.000 862.000 988.000 Rental Expense 4,585.000 3,758.000 4,483.000 4,587.000 4,736.000 Rental Income Research and Development Expense Tax Loss Carry Forward 12,100.000 21,500.000 26,200.000 26,500.000 23,900.000 Treasury Stock ($) - Common .000 .000 .000 .000 .000 Treasury Stock ($) - Preferred .000 .000 .000 .000 .000 Treasury Stock - # Shares .000 .000 .000 .000 .000 INPUTS INTO FINANCIAL STATEMENTS AND MARKET RELATIONS Fiscal Year: 2019 2020 2021 2022 2023 2024 (FYR Ending): (31DEC2019 ) (31DEC2020 ) (31DEC2021 ) (31DEC2022 ) (31DEC2023 ) ( N/A ) Cash & Equivalents 3,984.000 7,473.000 13,421.000 9,960.000 8,488.000 Receivables - Total (Net) 1,750.000 1,342.000 1,505.000 2,138.000 2,026.000 Inventories - Total 1,851.000 1,614.000 1,795.000 2,279.000 2,400.000 Current Assets - Other 621.000 666.000 615.000 892.000 658.000 Current Assets - Total 8,206.000 11,095.000 17,336.000 15,269.000 13,572.000 Plant, Property & Equip (Gross) 62,391.000 56,495.000 55,558.000 58,323.000 60,800.000 Accumulated Depreciation 18,659.000 16,757.000 18,171.000 20,029.000 22,097.000 Plant, Property & Equip (Net) 43,732.000 39,738.000 37,387.000 38,294.000 38,703.000 610.000 541.000 Prepaid Expenses Investments at Equity Investments and Advances - Other Intangibles 204.000 161.000 239.000 6,175.000 6,120.000 6,079.000 6,150.000 6,142.000 .000 .000 .000 Deferred Charges Assets - Other 1,678.000 4,894.000 5,426.000 4,393.000 4,100.000 TOTAL ASSETS 59,995.000 62,008.000 66,467.000 64,716.000 63,058.000 Accounts Payable 2,062.000 1,196.000 1,772.000 2,149.000 2,353.000 Notes Payable Accrued Expenses Taxes Payable .000 .000 .000 .000 .000 3,679.000 4,135.000 4,255.000 4,694.000 5,115.000 .000 .000 .000 .000 .000 Debt (Long-Term) Due In One Year 4,569.000 4,448.000 3,996.000 4,739.000 4,941.000 Other Current Liabilities 11,680.000 10,925.000 13,238.000 14,608.000 14,768.000 Total Current Liabilities 18,311.000 16,569.000 19,006.000 21,496.000 22,062.000 Long Term Debt 28,875.000 36,573.000 42,181.000 38,948.000 35,722.000 29.000 9.000 9.000 10.000 9.000 .000 .000 .000 .000 .000 Liabilities - Other 12,898.000 15,724.000 12,611.000 10,061.000 10,467.000 TOTAL LIABILITIES 60,113.000 68,875.000 73,807.000 70,515.000 68,260.000 Noncontrolling Interest - Redeemable .000 .000 .000 .000 .000 Preferred Stock .000 .000 .000 .000 .000 Common Stock 4.000 6.000 6.000 6.000 7.000 Deferred Taxes (Balance Sheet) Investment Tax Credit Capital Surplus 3,945.000 6,894.000 7,234.000 7,291.000 7,374.000 Retained Earnings (Net Other) -4,067.000 -13,767.000 -14,580.000 -13,096.000 -12,583.000 Less: Treasury Stock Shareholders Equity - Parent .000 .000 .000 .000 .000 -118.000 -6,867.000 -7,340.000 -5,799.000 -5,202.000 Noncontrolling Interest - Nonredeemable TOTAL SHAREHOLDERS EQUITY -118.000 -6,867.000 -7,340.000 -5,799.000 -5,202.000 Sales (Net) 45,768.000 17,337.000 29,882.000 48,971.000 52,788.000 Cost of Goods Sold 32,027.000 22,290.000 27,969.000 37,631.000 38,716.000 Gross Profit 13,741.000 -4,953.000 1,913.000 11,340.000 14,072.000 Selling, General, & Admin Expenses 7,717.000 4,069.000 5,092.000 7,237.000 7,805.000 Operating Income Before Depreciation 6,024.000 -9,022.000 -3,179.000 4,103.000 6,267.000 Depreciation, Depletion, & Amortization 2,318.000 2,365.000 2,335.000 2,298.000 2,254.000 Operating Income After Depreciation 3,706.000 -11,387.000 -5,514.000 1,805.000 4,013.000 Interest Expense 1,095.000 1,227.000 1,800.000 1,962.000 2,145.000 81.000 195.000 340.000 544.000 512.000 Non-Operating Income/Expense Special Items -436.000 966.000 4,426.000 -201.000 -1,259.000 Pretax Income 2,256.000 -11,453.000 -2,548.000 186.000 1,121.000 570.000 -2,568.000 -555.000 59.000 299.000 1,686.000 -8,885.000 -1,993.000 127.000 822.000 .000 .000 .000 .000 .000 Income Taxes - Total Minority Interest INCOME BEFORE EI&DO Extraordinary Items Discontinued Operations .000 .000 .000 .000 .000 Net Income (Loss) 1,686.000 -8,885.000 -1,993.000 127.000 822.000 Preferred Dividends .000 .000 .000 .000 .000 EPS - Primary - Excluding EI&DO 3.800 -18.360 -3.090 .200 1.260 EPS - Primary - Including EI&DO 3.800 -18.360 -3.090 .200 1.260 EPS - Fully Diluted - Excluding EI&DO 3.790 -18.360 -3.090 .190 1.210 EPS - Fully Diluted - Including EI&DO 3.790 -18.360 -3.090 .190 1.210 SHARES - for Primary EPS Calculation 443.363 483.888 644.015 650.345 653.612 SHARES - for Fully Diluted EPS Calculation 444.269 483.888 644.015 655.122 719.669 SHARES - Outstanding at Fiscal Year End 428.203 621.480 647.728 650.642 654.273 Operating Activities - Net Cash Flow 3,815.000 -6,543.000 704.000 2,173.000 3,803.000 Capital Expenditures 4,268.000 1,958.000 412.000 2,906.000 2,596.000 904.000 1,016.000 374.000 147.000 230.000 .000 .000 .000 .000 .000 -2,243.000 -4,342.000 -5,983.000 636.000 -502.000 178.000 43.000 .000 .000 .000 Interest Paid - Net 1,111.000 944.000 1,632.000 1,852.000 2,180.000 Income Taxes Paid 8.000 6.000 3.000 2.000 6.000 STATEMENT OF CASH FLOWS Sale of Property Plant and Equipment Acquisitions Investing Activites - Net Cash Flow Cash Dividends CASH STATEMENT - SOURCE & USE Funds From Operations - Total Current Debt - Changes Working Capital Changes - Other - Inc(Dec) Adjustmnet Factor-Cum, Ex-Date 1.000 1.000 1.000 1.000 1.000 129.000 50.000 105.000 105.000 114.000 .400 .100 .000 .000 .000 Dividends (Cash) - Common 180.000 43.000 .000 .000 .000 Dividends (Cash) - Preferred .000 .000 .000 .000 .000 Preferred Stock - Liquidation Value .000 .000 .000 .000 .000 Preferred Stock - Redemption Value .000 .000 .000 .000 .000 Price - Calendar Year Close 28.680 15.770 17.960 12.720 13.740 Price - Fiscal Year Close 28.680 15.770 17.960 12.720 13.740 Advertising Expense Dividends (Cash)per Share Ex-Date Receivables - Estimated Doubtful Rental Expense Research and Development Expense 31.000 36.000 34.000 4,585.000 3,758.000 4,483.000 4,587.000 4,736.000 Public Company Project Objective The project involves a team of one to three participants analyzing financial statements of one public company, preparing a written analysis, and then presenting their findings. Upon completion of the project, participants will be very familiar with the company and financial statement analysis techniques. This project will help participants develop the ability to understand, analyze, and make decisions based on financial information—these skills are essential to every professional business career. Students will also learn how to work effectively as a team. WRDS The project also involves the use of WRDS, a comprehensive portal of financial data useful for researching the company, its industry, and macro-economic environment. Please follow the instruction on Canvas to register a WRDS class account to access financial data on WRDS. Project Description Each team is given the task of reviewing the financial and nonfinancial information of a public company to: (1) obtain in-depth understanding of the company’s business strategy, operating status, and financial performance; (2) discuss strengths of the company; and (3) identify strategies to improve firm performance and enhance shareholder value. The analyses should allow participants to (1) discuss the business strategies and performance of the company with sophisticated institutional shareholders as senior executives and (2) identify weaknesses and provide suggestions to improve firm performance as sophisticated institutional shareholders (e.g., hedge funds). The instructor will provide a google sheet with a list of public companies for you to choose from on the “first-come first-served” basis. The required delivery is a written report and a peer evaluation. The written report should include (1) a title page, (2) an executive summary, (3) company background, (4) financial statement analyses, (5) strengths and suggestions, and (6) conclusions. Teams can use financial information from any source (e.g., 10-K) and perform any analysis (e.g., horizontal, vertical) for financial statement analysis. All performance indicators, discussed in class or not, can be used, but teams are required to calculate the following performance indicators: • • • • Return on equity, return on assets, and leverage Profitability ratios Productivity ratios Liquidity and solvency ratios The written report must be limited to 25 pages, including the title page, tables, figures, exhibits, charts, graphs, etc. The title page is not numbered. The page following the title page will be numbered “2”. Body of the written report must be double-spaced. Title page, executive summary, material in tables, figures, exhibits, charts, graphs, etc. may be single-spaced. The written report must be submitted by one team member via Canvas by 11:59 p.m., November 5, 2024, and will be graded by me as indicated below: Content Format Clarity and Grammar Total 60% 20% 20% 100%