Introduction of Financial Analysis of Activision

The aim of this paper is to provide a brief financial overview of the Activision organization. In the paper the financial ratio analysis has been performed to evaluate the financial position. Moreover CAGR has been evaluated to know the growth of the corporation. The detail financial analysis of the organizations is discussed as follows:

Income Statement of Financial Analysis of Activision

The above table shows the income statement of the Activision Blizzard Inc. The income statement demonstrate an increasing trend of revenue and profitability of the organization. It can be seen that gross profit was $3052 in the year 2013 which increase up to $4516 in the year 2017. However the net income of the organization has experienced a fluctuation in the 5 year period. Net income decreased in 2014 and again increase in 2016 but in 2017 the net income of the corporation decrease dramatically. The operating income of the organization also experience fluctuation over the 5 year period (Pandey, 2015).

It can be seen that the revenues of the organization are growing with rate of 6.19 in the year 2017 year over year. The growth rate has decline from previous year because in 2016 the revenue growth rate was 41.68%. The operating income of the organization has experienced the growth rate of 7.05% in 2016 however in 2017 the growth rate decline up to -7.29%. Activision net income grow 8.3% in 2016 (Pandey, 2015).

Margins of Financial Analysis of Activision

The gross margin of the Activision organization is 64.4% in the year 2017. It can be seen the gross margin has experience decline because in 2013 it was 66.6%. The operating margin in the year 2017 is 18.7% which was 29.94% in 2013. The organization will have to focus on its profitability because through operating and gross margin analysis it is clear that the organization profitability is declining and if the organization does not have taken steps than serious issues can arise in future (Higgins, 2007).

Earnings, Dividends, Free Cash Flow of Financial Analysis of Activision

Activision Corporation is paying dividend to its shareholders. It can be seen that the amount of dividend is increasing in each upcoming year. In 2017 Pepsi has paid 0.3 USD dividend on the shares. Earnings per share however has experienced fluctuation in the 5 year period. The Free Cash flow of the organization has increased in the 5 years period from $1190 to $2058.

Liquidity Analysis of Financial Analysis of Activision

The liquidity ratios have been evaluated in order to get a brief overview regarding the liquidity of the corporation. Through ratio analysis it has been found out that the Activision organization have enough cash to pay its short term obligations. The liquidity position of the organization is good and organization can perform its routine activities efficiently.

Capital Structure Analysis of Financial Analysis of Activision

It can be seen that the capital structure of Activision organization consist of both debt and equity. Activision organization is financed more from equity than debt. However the significant amount of debt is a matter of concern for the organization because if the level of debt is not managed appropriately than major financial issues can occur in future (Fridson & Alvarez, 2011).

Pro Forma Income Statement of Financial Analysis of Activision

Following Pro Forma Income statements are prepared by implementing the last year revenue growth rate.

Conclusion on Financial Analysis of Activision

The financial analysis of the corporation shows that the corporation is financially strong and have stable financial condition. However there is a lot of room for improvement because the corporations needs to improve their profitability. The corporation have taken significant amount of debt which also need to manage accurately.

References of Financial Analysis of Activision

Fridson, M. S., & Alvarez, F. (2011). Financial Statement Analysis: A Practitioner's Guide. John Wiley & Sons.

Higgins. (2007). Analysis for Financial Management. Tata McGraw-Hill Education.

Pandey, I. (2015). Financial Management. Vikas Publishing House.