HARLEY-DAVIDSON INTERNAL AND EXTERNAL ANALYSIS

Topics: Financial ratio, Financial ratios, Ratio Pages: 5 (1625 words) Published: March 13, 2014
Financial

Gather the financial information necessary to do a complete ratio analysis and the BSC key metrics information.

If you were going to create a BSC, what would be the key metrics you would measure in each of the four BSC areas: •Financial
•Customer
•Internal Business Process
•Learning and Growth

Perform a ratio analysis using H-D's five-year financial performance. Interpret the meaning of the ratios and financial performance.

Summarize and support your findings in a 2—3 page Word document entitled "The Analysis of H-D's Current Strategy: Two Views." Be sure to include the ratio analysis. You may also include other graphics to support your narrative.

Competitors

Based on your analysis, you must decide which two competitors present the biggest competitive threat to H-D.

Perform a financial ratio analysis for the competitor after looking at trends in financial performance over five years, and compare the trends to industry averages.

Be sure you have a clear ranking of the industries' competitors

Lateresa Blackwell
March 12, 2014
Business Policy & Strategic Solutions | BUS499 R01
Faculty:  Boris Mendez

While analyzing Harley-Davidson and their effectiveness with handling obligations of current ratios of 1.9 and the quick ration of 1.47 when it should be on average approximately near 2 and quick ratio near 1 within the motor-cycle industry on averages are consistent with those numbers. In the case of Harley's current ratio it shows to be slightly below the industry average while the quick ratio is above it, with that being said, these numbers indicate Harley-Davidson should have no issues paying its obligations. They have proven to show consistency with their numbers over the past few years, even with them showing a slight decrease in the ratios from 2008. According to the 2009 report Harley-Davidson’s ratios indicate they have a strong financial position to cover their obligations. With Harley showing a decline in revenues in 2009 they have been put in a position to borrow on a higher percentage of its financing than most of the companies in the industry due to a slowing in the economy may have contributed to the debt percentage being slightly higher. When looking at the overall number of the industry, Harley-Davidson’s profits are struggling because of their ratios; they are not showing the ability to generate a profit they are receiving from their shareholders, from their assets or its sales according to the report. Looking at the revenue from their motorcycles and related parts segments, it appears Harley has shown a steady decline which says they are in a deeper issue than just the slow economy. In their annual report they continue to show a decline in their income since 2007 ("2009 Harley-Davidson Annual Report"). However, Harley is showing effectiveness in its collecting receivables, as evidenced by its day’s sales in receivables. While the industry average was high with averages around 55, Harley had a collection period averaging 20 days. A chart of Harley-Davidson's financial information and industry averages (Harley-Davidson, 2010). Harley-Davidson, Inc. Financial Ratios

2009 2008 2007
HOG Quartile Ind. Avg. HOG Quartile Ind. Avg. HOG Quartile Ind.Avg. Solvency Ratios:
Current 1.91 MED 2.1 2.1 MED 2.2 1.82 MED 1.9
Quick 1.47 MED-UQ 1.1 1.8 UQ 1.2 1.54 MED-LQ 0.9
Current Liabilities to Net Worth 107 MED-LQ 67 124 LQ 64.6 80.2 MED 69.5 Current Liabilities to Inventory 702 LQ 252.8 649 LQ 336.4 545 LQ 256.5 Total Liabilities to Net Worth 334 LQ 100.7 176 LQ 95.1 138 LQ 89.4 Fixed Assets to Net Worth 46.7 LQ 21.5 53.7 LQ 20.6 47.9 LQ 16.1 Leverage Ratios:

Leverage 0.77 N/A 0.47 0.47 N/A 0.61 0.58 N/A 0.61
Debt to Equity 3.34 N/A 0.88 1.76 N/A 1.55 1.38 N/A 1.6
Profitability Ratios:
Return on Sales (Profit Margin) -1.15 MED-LQ 2.4 11 UQ 3.6 15.2 UQ 1.5 Return on Assets -0.6 MED-LQ 2.8 8.36 MED 5 16.5 UQ 3.7
Return on Net Worth (Return on...
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