Sirius XM Financial Analysis - 946 Words

Sirius XM Radio Financial Statement Analysis In the previous project assigned to me, I completed a SWOT analysis of Sirius XM Radio where it was noted that the Sirius XM is firmly at the top of its industry. For the purposes of this project, I went through the financial statements of Sirius XM as well as computed several key financial ratios to indicate Sirius XM’s profitability, growth, performance, and efficiency amongst other things. I then compared these ratios to the industry averages as well as with Sirius XM’s top competitors. After completing this close analysis, I found that although Sirius XM is enjoying incredible growth and a strong place in the market, there are still several flags that an investor should still note. The†¦show more content†¦Sirius XM also proves that it can, for the most part, meet its short-term obligations by boasting a current ratio of 0.79. Sirius XM’s current ratio is relatively low because of its strong operating cash flow (over 800M). Just like the debt to equity ratio, this low current ratio can also mean a higher return on assets for Sirius XM. It should however be noted that, when I calculated the quick ratio, I took into account the quick ratio with accounts receivable (0.78) and without accounts receivable (0.32). One glaring issue that I found in the notes to the financial statements of Sirius XM radio is the fact that Liberty Media owns over 50% of Sirius XM radio. Because of this fact, Liberty Media owned all of Sirius XM’s Series B Preferred Stock. In September of 2012, Liberty Media converted over 6 million of these shares into over a billion shares of common stock, which no doubt affected Sirius XM’s earnings per share as well as price to earnings ratio. It should also be noted that in January 2013, Liberty Media converted the rest of its Series B Preferred Stock into common stock as well, which will further affect earnings per share. Overall, Sirius XM is a profitable company, but I am unsure of how much longer Sirius XM will be able to sustain such profitability simply because of its reliance on the auto industry and new customers. Sirius XM’s low retention rate shows that there is no loyalty among its customers, which to me means that on any givenShow MoreRelatedXm Radio And Sirius Financial Analysis Essay1775 Words   |  8 PagesSirius vs. XM: Ratio Analysis and Statement of Cash Flows Paper From the previous company selection paper, we are now familiar with the selected satellite radio broadcasting companies, Sirius and XM Satellite Radio. Our group will now take a further, in-depth look at the ratio analysis and statement of cash flows to get a better understanding of how the companies are doing financially and with in their market. 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