Final Paper

Income Statements and Balance Sheets for Synnex Corporation

Name

Institutional Affiliation

Abstract

Synnex is a leading provider of business process solutions to organizations in different parts of the world. The company has existed for over 30 years and provides a variety of business solutions, including technological services, marketing, financial services, and supply chain improvement. The company has recorded tremendous growth since it was founded in 1980 through both the acquisitions of clients in new markets as well as the purchase of other business solution providers in different markets. Currently, the company operates in more than 40 countries and has more than 600 clients.

Keywords: balance sheet, common size analysis, income statement, financial report

Income Statements and Balance Sheets for Synnex Corporation

Description of the Corporation

The Synnex Corporation offers a variety of business service processes to its clients that include supply chain management. The company aims at improving the efficiency of its clients’ business processes by introducing new technologies that simplify business processes and result in cost savings. It offers specialized marketing services that are intended to improve the reach of its clients in different markets. In addition, the company also provides financial assistance that can enable its client to immediately take advantage of existing market opportunities. Due to the number of services offered to clients, the recent earnings released by the organization show its expansion both in market share and in revenue. According to projections made by the company, revenues are expected to grow by over $300 million to total $5.85 billion by the end of the third quarter of 2019 (Synnex, 2019).

History of the Corporation

Synnex Corporation has been in existence for the last 30 years offering services ranging from financial services, marketing, technological services, and supply chain management. Since, it was established in 1980, the organization expanded its product portfolio making it attract more clients. Consequently, it registered growth in income. Apparently, the organization has more than 600 clients located in more than 40 countries. Concisely, Synnex Corporation has had positive financial trend over the years.

Net Income

The table below shows the net income of Synnex Corporation from the year 2016 to 2018.

The net income for the organization increased from $235,005,000 to $300,598,000 in 2018. However, the between 2017 and 2018, the net income of the company reduced from $ 301,173,000 in 2017 to $ 300,598,000 in 2018.

Income Statement

The operating income recorded by the company increased from 3.2% of the revenue in 2016 to 3.5% of the revenue in 2018 (Synnex, 2019b,). The increase is attributed to the decrease in the operating expenses of the company as well as the growth in the total revenues earned by the company from 2016 to 2018. The depreciation expense recorded by the company increased steadily from 2016 to 2018, which means that the company has been investing in new equipment and machinery. The depreciation expense as a percentage of revenue increased from 0.46% in 2016 to 0.5% in 2018. The earnings made by the company also increased from 2016 to 2018. This is shown by the increase in the EBITDA of the company from 3.7% in 2016 to 4.1% in 2018. The increase is attributed to the growth in the revenues of the company as well as the reduction of operating expenses during the three years. The EPS of the company increased significantly over the three years. The EPS increased from 7.04 in 2016 to 10.89 in 2018, which indicates increasing profitability.

Balance Sheets

The organization’s assets increased from $5,215,281 in 2016 to $11,480,434 in 2018; the assets increased by more than 100%. The organization’s liabilities increased from $3,239,483 in 2016 to $ 8048366 in 2018. The total equity increased from $1,975,798 to $3,432,068 in 2018. The results show that the organization expanded in terms of assets by acquiring new property, equipment, and gaining goodwill. However, the liabilities were controlled; hence, they did not increase drastically as to reduce the total equity.

Conclusions

The financial report for Synnex Corporation shows that its expansion is due to strategic management that focused on increasing its efficiency that led to reduced expenses. Furthermore, the organization’s management was strategic in their business process, which led to increase in accounts receivable and invested in new property.

Recommendations

Based on the financial performance of the organization, it should continue to diversify its market portfolio in order to sustain the growth. Notably, in 2018, the net income was slightly lower than in 2017, which shows that it should be correct to avoid the reduction in net income. Furthermore, the organization should decrease its operating income by a bigger margin compared to the current reduction.

Summary

A common size analysis of the company’s financial statements indicates that the expenses of the company have been reducing steadily from 2016 to 2018. This indicates that management is efficiently managing internal processes and as a result the operating expenses are decreasing. The operating income of the company has also been steadily increasing, as shown by the increase in operating income earned each year as a percentage of revenue.

References

Synnex Corporation (2019). FY19 Earnings. Web. Accessed on 10/8/2019 from http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_SNX_2018.pdf

Synnex Corporation (2019b). Form 10-K :Annual Report. Web. Accessed on 10/8/2019 from http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_SNX_2018.pdf