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Published bySheryl Anderson Modified over 9 years ago
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Tyson Foods By: Sophia Toy
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History John Tyson Springdale, Arkansas Fortune 500 2 nd largest food production
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Benchmarking/Trending Tyson VS. Industry Averages Strong points Inventory Turnover Days Sales Outstanding (DSO) Profit Margin on Sales Weak points Return on Equity (ROE) Return on Assets (ROA)
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Capital Budgeting Increase in chicken production Expected employment growth Exports United Kingdom Belgium Spain Hong Kong Japan South Africa Yemen
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Debt Ratio 2008 46.0% < 59.30% Industry Average 2007 46.5% < 59.30% Industry Average
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Times-interest-earned (TIE) 2008 1.53 < 2.50 Industry Average 2007 2.63 < 2.50 Industry Average
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Interest Rate Long-term Investment Gain 1.09% 2008: $2.89 Billion 2007: $2.62 Billion Average Borrowing Interest Rate 2008: 7.0% 2007: 7.4%
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Return on Equity (ROE) 2008 1.71% < 5.80% Industry Average Difference: 4.09% RMA: 3.07% 2007 5.66% < 5.80% Industry Average RMA: 8.67%
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Weighted Average Cost of Capital (WACC) 2007: WACC: 6% 2008: WACC: 7% Good indication for the company
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Cash Flow from Operations &Interest Expense Coverage Operating Income (Loss) 2007: $613 million 2008: $331 million Interest Expense 2007: $232 million 2008: $215 million
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Off-Balance Sheet Financing Guarantees of debt of outside third parties: Lease & Grower Loans Residual Value (covers certain operating leases for various types of equipment)
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Growth Expansion International Enterprise Brazil India China Exportation to over 90+ Countries Chicken Beef Pork Prepared foods Sales Growth Rose 4.4% Retained Earnings 2007: $2.9 Billion 2008: $3.0 Billion
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Dividends Quarterly Dividends Class A or Class B Stock Low-regular-dividend-plus- extra Policy Steady over the years 2008 & 2007 $56 Million Dividends Per Share 2008: $0.24/share 2007: $0.75/share Total Share Outstanding 2008: $356 Million 2007: $355 Million
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Income Statement Sales 2007: $26 billion 2008: $27 billion Net Sales 2007: $268 million 2008: $86 million Operating Loss $26 million of charges Plant closing Impairments of unimproved real property Software
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Spontaneous Assets, Liabilities, & Equipment 2008: Adopted FIN 48 Accounting for Uncertainty in Income Taxes No dramatic change Slight increase in Total Assets, Total Liabilities, & Stockholders’ Equity $10.23 million to $10.85 million
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Plant Property & Equipment/Acquistions Cash Spent on investing activities: 2007: $285 million 2008: $425 million New equipment to upgrade facilities Capital spending Equipment updates Chicken plants & Packaging equipments
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Economies of Scale 20072008 CGS Sales $24,300 25,729 94.45%$25,616 26,862 95.36%Increase Fixed Expense Sales $814 25,729 3.16%$879 26,862 3.27%Increase Total Asset Sales $10,227 25,729 39.95%$10,850 26,862 40.39%Increase Fixed Assets Sales $3,608 25,729 14.02%$3,519 26,862 13.10%Decrease
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Working Capital/Net Working Capital Working Capital: Current Assets used in operations 2008: $4.36 billion 2007: $3.68 billion Net Working Capital: Current Assets - Current Liabilities 2008: $2.26 billion 2007: $1.57 billion
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Working Capital/Net Working Capital Cash Conversion Cycle: 2008: 35.36 days 2007: 34.34 days Industry Average:49 days Overall, Tyson had a faster CCC than the industry average Would not be able to operate with zero working capital Financed a lot of financial activities with their working capital
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Current Asset Policy Tyson’s C/R 2.7x VS. Industry Average 2.0x Relaxed Current Asset Policy
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Management of Cash Risks Foreign exchange gain/loss exposure Fluctuation in currency exchange rates Impacts receivables & payable balance Inventory Costs 2007: $2.16 billion 2008: $2.54 billion
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Financial Transactions Long-term Debt 2008: $2.9 billion 2007: $2.6 billion Total Liabilities & Shareholders’ Equity 2008: $10.9 billion 2007: $10 billion
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