Garmin Analysis - Following the Business Decisions Research Paper

Garmin Analysis - Following the Business Decisions - Research Paper Example Apart from this, Garmin’s return on capital employed, equity and shareholders’ funds have all declined due to lower profitability in 2011. There are no significant changes recorded in the balance sheet of the company apart from the increase in investment in marketable securities and the issuance of additional paid in capital (Garmin, 2011). Â   2011 2010 2009 2008 2007 Current Ratio 2.98 3.73 3.50 4.14 2.91 Acid Test Ratio 2.51 3.16 3.05 3.25 2.28 Return on Capital Employed 0.27 0.39 0.49 0.77 0.89 Return on Equity 0.16 0.19 0.25 0.33 0.36 Return on Ordinary Shareholders' Funds (ROSF) 28.98 32.52 70.30 73.15 78.81 (Garmin, 2011; Garmin, 2010; Garmin, 2009; Garmin, 2008) Cash Flow Trends As far as the cash flows from operating activities are concerned, the company managed to improve the picture through efficient performance in 2011. Although the net income of the company declined slightly in comparison with the previous financial year, the management still managed to sh ow an increase in the operating cash flows. Â   2011 2010 2009 2008 2007 Operating Cash Flows 822,334 770,637 1,094,456 862,164 682,088 Investing Cash Flows (488,198) (72,869) (547,869) (56,349) (175,695) Financing Cash Flows (307,413) (510,821) (161,243) (809,109) (136,117) (Garmin, 2011; Garmin, 2010; Garmin, 2009; Garmin, 2008) On the other hand, cash flows from investing activities remained negative as they have continued to be the same in the past years. However, in 2011 there has been a significant rise in the negative balance of cash outflows from investing activities. The reason behind this significant increase is the purchase of marketable securities by the company worth $ 1,172,555,000 in 2011. Similar to the trends shown in cash flows from investing activities, the cash flows from financing activities have also continued to show negative balance in 2011 as they have been in the previous four years. Major Capital Expenditures The major capital expenditures of the company in 2011, as mentioned earlier in the balance sheet analysis, included the purchase of $ 1,172,555,000. This purchase is in line with the investment policy of the company, in light of which, the company aims at investing in less risky securities. In 2011, the net investments of Garmin in fixed securities increased to $ 491 million as compared to the figure of $ 25.5 million in 2010. The result of these safe play investment decisions has earned Garmin returns of 1.7 percent in 2011 (Garmin, 2011). Although this investment policy may be justified on the grounds that there are still traces of the recent financial crisis which can influence risky play, but at the same time, it is expected that Garmin’s management shall be more prolific in determining the course of its business by exploring investment or capital expenditure options which are more effective and helpful in enabling the company to regain its lost momentum (Cavallaro, 2009). Apart from this, the company acquired severa l business entities, which is appreciable since it will allow the company to stretch its market presence further. The recently acquired business entities include NAVIGON AG, TriTronics Inc. and two other worldwide distributing companies. Although the company has faced fierce competition from other brands and has faced threatening anticipations of market share loss due to the popularity gained by smart