Horizontal Analysis: Perform a horizontal analysis
of a company's financial statements by comparing
data across years
Introduction
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
For this assignment, I have conducted a horizontal analysis of Nvidia
Corporation's income statement and balance sheet for fiscal years 2018
through 2020. Horizontal analysis examines the percentage change in
financial statement items from one period to the next. This allows analysts to
identify trends, evaluate performance over time, and pinpoint drivers of
changes in key metrics like revenue, expenses, assets, and liabilities. Let's
take a look at Nvidia's financials:
Income Statement Horizontal Analysis
For the income statement horizontal analysis, I calculated the percentage
change from fiscal 2018 to 2019 and from 2019 to 2020 (see Appendix 1):
Revenue:
From FY18 to FY19, revenue increased by 21.3% as Nvidia benefited from
strong demand for graphics processing units (GPUs) in gaming and data
center markets. Growth moderated to 37.1% from FY19 to FY20 as
pandemic-related lockdowns drove further uptake of work-from-home and
virtualization technologies that rely on Nvidia GPUs for accelerated
computing.
Cost of Goods Sold:
Cost of goods sold increased 17.5% from FY18 to FY19 in line with higher
revenues. Margins expanded as production efficiencies were gained on larger
volumes. COGS grew 44.4% from FY19 to FY20 outpacing revenue growth,
likely due to higher input costs or mix shift toward cloud products with lower
initial margins.
Gross Profit:
Gross profit increased 23.8% from FY18 to FY19 as margins expanded. The
percentage increase slowed to 33.1% from FY19 to FY20 as gross margins
contracted slightly due to COGS pressures.
Operating Expenses:
R&D and SG&A expenses both grew faster than revenues as Nvidia
continued to invest in innovation and increased marketing efforts to drive
adoption of real-time ray tracing and other new capabilities. R&D spending
accelerated sharply in FY20, up over 51% to support multiple flagship
product releases.
Operating Income:
Operating income grew 29.1% in FY19 and over 60% in FY20, demonstrating
Nvidia's ability to leverage its cost structure and expand profits. Margins
increased each year.
Income Before Taxes:
PBT followed a similar trend to operating income, increasing 27.5% and
64.6% respectively over the two periods.
Net Income:
Net income climbed 26.5% in FY19 and 62.3% in FY20, with margins also
rising each year. Rapid earnings expansion was driven primarily by strong
revenue growth amid increasing demand trends and improving operating
leverage.
In summary, the horizontal analysis of Nvidia's income statement indicates
sustained top-line momentum fueled by secular growth opportunities in
gaming, data centers, and other high-performance computing applications.
Rising operating margins suggest efficient management of costs as the
business scales. Revenue upside from pandemic catalysts delivered outsized
profit gains.
Balance Sheet Horizontal Analysis
I next examined changes in Nvidia's balance sheet line items (see Appendix
2):
Current Assets:
Current assets grew 31.5% in FY19 and another 49.1% in FY20 in tandem
with higher revenues and cash generation. Cash balances doubled from FY19
to FY20. Accounts receivable increased rapidly as sales accelerated.
Property and Equipment, Net:
Net PPE rose 40.1% in FY19 as Nvidia expanded fab capacity. A more modest
9.4% increase in FY20 indicates capacity additions have kept pace with
demand thus far.
Goodwill & Intangible Assets:
Balance remained relatively flat in FY19 but jumped 73.1% in FY20 due to
the Mellanox acquisition adding over $6 billion to this line item.
Current Liabilities:
Current liabilities climbed 29.8% and 54.3% respectively, in line with growth
in accounts payable and accrued liabilities tied to higher production volumes.
Debt balances also grew.
Long-Term Liabilities & Debt:
Long-term liabilities rose 14.8% in FY19 but shot up 127.4% in FY20 primarily
due to new debt issued to fund the Mellanox deal.
Stockholders' Equity:
Equity increased 29.3% in FY19 and 51.8% in FY20 as retained earnings
swelled on the back of robust profit growth while shares outstanding
remained flat.
In summary, Nvidia's balance sheet has expanded rapidly in recent years,
well outpacing revenue growth as the company reinvests profits into
increased productive capacity, strategic acquisitions, and an even stronger
financial position. The Mellanox transaction significantly increased long-term
obligations but also expanded Nvidia's technology portfolio. Higher working
capital balances support escalating production activity.
Conclusion
In conclusion, this horizontal analysis highlights the substantial multi-year
increases across Nvidia's P&L and balance sheet driven by outstanding top-
line momentum and operating leverage gains in key growth opportunities.
Demand spikes from the pandemic catalyst accelerated financial statement
growth rates. Revenue consistency and expanding margins indicate
management's effectiveness in capturing market share and optimizing costs.
Looking ahead, the Mellanox synergies and new product cycles should
support further financial progress if Nvidia executes successfully on its long-
term vision.
Appendix 1: Nvidia Corporation Income Statement Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Revenue 21.3% 37.1%
Cost of Goods Sold 17.5% 44.4%
Gross Profit 23.8% 33.1%
Operating Expenses 26.1-30.4% 33.1-51.6%
Operating Income 29.1% 60.2%
Income Before Taxes 27.5% 64.6%
Net Income 26.5% 62.3%
Appendix 2: Nvidia Corporation Balance Sheet Horizontal Analysis
FY18 to FY19 % Change FY19 to FY20 % Change
Current Assets 31.5% 49.1%
Property & Equipment, Net 40.1% 9.4%
Goodwill & Intangibles N/A 73.1%
Current Liabilities 29.8% 54.3%
Long-Term Liabilities & Debt 14.8% 127.4%
Stockholders' Equity 29.3% 51.8%
