Brightpoint Inc – Assignment Example
The paper "Brightpoint Inc" is an excellent example of a business personal statement.
Calculations show that Brightpoint, Inc.’s current ratios for 2008 and 2007 are 1.35:1 and 1.6:1, respectively, while its quick ratio is .92:1 and 1.06:1, respectively. These ratios show that the company has enough current assets that it can convert to cash to pay for its current liabilities. However, it should be noted that for 2008, the current and quick ratios went down, indicating that the company may be having problems in meeting its short-term obligations in 2008. One bright spot on this is the fact that the cash conversion cycle for the company’s inventories decreased in 2008 (page 39 of the Annual Report), indicating that the company is able to sell off its inventories and convert its accounts receivable to cash in a much shorter period than in 2007, providing a relief in its liquidity status.
Does the company have any significant intangible assets? What are they and where did they come from?
Yes, the company has significant intangible assets. The most significant is goodwill, which came from the excess of its acquisition cost over the fair value of the net assets of its acquired subsidiaries or business units. Other intangible assets are intangibles with finite lives acquired in connection with the CellStar and Dangaard Telecom transactions (page 36 of Annual Report). These intangibles are amortized over a 15-year period and are subjected to impairment tests.
Does the company provide business segment data? If so, is anyone segment significantly more or less profitable than the others?
Yes, the company provides business segment data according to geographic locations. According to the 2008 notes to financial statements, the company’s segments are divided into 3 geographic locations – Americas, Asia-Pacific and EMEA (Europe, the Middle East and Africa). Based on the 2008 segment reporting (page 59 of the Annual Report), EMEA has the highest revenues among the three with $2.6 billion. However, this segment has an operating loss of $308 million for the same year, due largely to a goodwill impairment charge of $326 million. Without this charge, EMEA’s operating income would have been $19 million. The Americas has the lowest revenue of $890 million but posted the highest operating income among the three with $39 million, making it the most profitable among the three.
What is the basis for the company’s accounting? Is it GAAP? If not, what is it? Have there been any changes in the way that GAAP is applied?
The company’s accounting and disclosures are based on the United States Generally Accepted Accounting Principles or U. S. GAAP. For 2008, there was no major change in the way GAAP is applied. The company, however, disclosed that effective January 1, 2008, it adopted SFAS 157, Fair Value Measurements, but adoption of this standard did not have any significant impact on the company’s financial statements.
Are there any major items identified in the footnotes that are NOT included in the financial statements? What are they?
The company’s notes to financial statements include some major items not included in its financial statements. One of these is the stock-based compensation of the company (pages 60 to 62 of the Annual Report), which disclosed the equity compensation plan of the company, the outstanding stock grant options, and other relevant disclosures. Another major item disclosed (found in page 64 of the Annual Report) is the unrecognized tax benefits of the company, which, if recognized, will affect the balance sheet and the effective tax rate of the company. Another disclosure is the restructuring of the segment reporting of the company, which did not affect the over-all balances in the financial statements. Still another major disclosure can be found in Note 10, Guarantees, whereby the company disclosed that has standby letters of credit as of the balance sheet date ($5.1 million for 2008). Lastly, there are the legal proceedings and contingencies in Note 13 (page 70 of the Annual Report), which disclosed the major cases and legal proceedings against the company and its subsidiaries, the related amounts and the estimated impact of such cases.
Who is the company’s auditor? What was their audit opinion? Were there any exceptional audit items noted?
The company’s independent auditor is Ernst & Young LLP or EY. The audit opinion given for the 2008 financial statements was a clean audit opinion and there were no exception audit items noted.