Blackberry Limited Financial Analysis

Financial Ratios

1. Liquidity Ratio

 [pic 1][pic 2]

When referring to figure 1 in regards to the liquidity ratios, you will see that it appears that Blackberry Limited is in a position in which they are able to pay off their short term liabilities given their ratio figures. It also appears that they are somewhat in check with the industry average, which shows that they appear to have the potential of being able to continue business into the future.  

1. Profitability Ratios

[pic 3][pic 4]

In reference to figure 2, these ratios give us a clear indication of how well Blackberry is utilizing their assets in order to gain profit and in turn create shareholder value. Overall we see a terrible fluctuation in Blackberry’s profit ratios, mainly being negative. One component that stands out is how the gross profit margin has fluctuated to the point where costs of goods are exceeding that of total revenue. This is alarming because it proposes two scenarios in which it could be due to macroeconomic inefficiencies, or that the company has a great difficulty in controlling costs. Given the recent downward spiral of this company, I would relate the issue to a lack of structure within their management makeup. In addition to this, Blackberry’s inability to create profit from assets in order to create shareholder value will continue to impact their stock price negatively as it has been doing.    

1. Activity Ratios
   [pic 5]
   When referencing the activity ratios of Blackberry in figure 3, something that jumps out immediately is their inability to turnover inventory which shows that less sales are being made given their level of inventory. This overall hurts them because without sales and high costs, it hurts their bottom line in the end. Another ratio to mention is their low receivables turnover which ultimately shows an inefficiency with collections, which could also allude to inefficient management.   [pic 6]

1. Leverage Ratios
   [pic 7]
   When referencing the leverage ratios in figure 4, given the industry standard, it appears that Blackberry has a very high debt makeup in comparison to their assets, equity, and capital. These figures show how they are paying for assets through debt financing, which isn’t all that uncommon; however, for a company that has been around for quite some time, a number as high as theirs can be somewhat alarming for current and potential investors. This shows that they are highly debt financed which in turn could hurt them if they were forced to liquidate.    [pic 8]

Income Statement

In reference to the income statement, refer to Appendix D. When analyzing Blackberry’s income statement, it was very alarming to see their total revenue decreasing at astronomical rates in excess of 50%. This decrease in total revenue has brought on a three year operating loss in which they saw a loss of $7.16M in 2014. Although the industry has seen some stagnation and even decline, this does not however reflect upon the extreme losses Blackberry has endured. One notable decrease they have made is in their R&D spending, which coincidently enough has decreased consistently with that of overall total revenue. This could be an indication for Blackberry that they need to start researching the consumer market in order to try and regain some of the market share they lost. Without any attempt to become more innovative and progressive with their developments, there is no chance for Blackberry to see profitable years like in the past.