Financial Services代写 金融服务代写 case代写

FORDHAM UNIVERSITY

ACGB 6111  Fall 2019

Prof. Young

Case 3: Harley Davidson Inc. (Ticker: HOG)

Financial Services代写 the parent company for the groups of companies doing business as Harley-Davidson Motor Company and Harley-Davidson Financial Services.

The following is an excerpt from HOG’s 10-K report:

Harley-Davidson Motor Company was founded in 1903. Harley-Davidson, Inc. was incorporated in 1981, at which time it purchased the Harley-Davidson^® motorcycle business from AMF Incorporated in a management buyout. In 1986, Harley-Davidson, Inc. became publicly held. Unless the context otherwise requires, all references to the “Company” include Harley-Davidson, Inc. and all of its subsidiaries. Harley-Davidson, Inc. is the parent company for the groups of companies doing business as Harley-Davidson Motor Company (HDMC) and Harley-Davidson Financial Services (HDFS).

Segments                Financial Services代写

The Company operates in two reportable segments: the Motorcycles & Related Products (Motorcycles) segment and the Financial Services segment. While the two segments are strategic business units that offer different products and services and are managed separately based on the fundamental differences in their operations, the two segments work closely together as described below.

The Motorcycles segment consists of HDMC which designs, manufactures and sells at wholesale on-road Harley-Davidson motorcycles as well as motorcycle parts, accessories, general merchandise and related services. The Company’s products are sold to retail customers through a network of independent dealers. The Company conducts business on a global basis, with sales in the United States, Canada, Latin America, Europe/Middle East/Africa (EMEA) and the Asia Pacific region.Financial Services代写

The Financial Services segment consists of HDFS which provides wholesale and retail financing and insurance and insurance-related programs primarily to Harley-Davidson dealers and their retail customers. HDFS conducts business principally in the United States and Canada.

See Note 19 of the Notes to Consolidated Financial Statements for financial information related to the Company’s reportable segments and revenue by geographic area.

Motorcycles and Related Products Segment             Financial Services代写

The primary business of the Motorcycles segment is to design, manufacture and sell at wholesale on-road Harley-Davidson motorcycles as well as motorcycle parts, accessories, general merchandise and other related products and services.

Motorcycles – The Company manufactures and sells at wholesale cruiser and touring motorcycles that feature classic styling, innovative design, distinctive sound, and superior quality with the ability to customize. Harley-Davidson motorcycles generally have engines with displacements that are greater than 601cc’s, up to a maximum displacement of 1868cc’s.

Financial Services Segment            Financial Services代写

HDFS is engaged in the business of financing and servicing wholesale inventory receivables and retail consumer loans, primarily for the purchase of Harley-Davidson motorcycles. HDFS is an agent for certain unaffiliated insurance companies providing motorcycle insurance and protection products to motorcycle owners. HDFS conducts business principally in the U.S. and Canada. The Company’s independent dealers and their retail customers in EMEA, Asia Pacific and Latin America are not financed by HDFS, but have access to financing through other third-party financial institutions, some of which have licensing or branding agreements with the Company or HDFS.

Use information in the 10-K report for year ended 12/31/18 (www.sec.gov Ticker: HOG) to answer the following questions:

1. Using footnote information, what costing method does HOG use for inventory?

          What is the inventory balance in 2018 under FIFO? The balance under LIFO? Assuming a 25% tax rate, what, if any amount, has HOG saved on taxes through their inventory choice through            2018?

2. What would COGS be in 2018 be if HOG had used only FIFO for their inventory method?

           Does this difference imply that HOG paid more or less taxin 2018 due to their choice of inventory method?

3. Compute gross profit margins for the three income statement years – calculate this separately for the motorcycles and related products and financial services.

          Comment briefly on your findings.

4. Compute Inventory and Accounts Receivable receivables turnover  and days outstanding for the 2018 and 2017.

           (Inventory for y.e. 2016 = $499,917, A/R for 2016 = $285,106).  Which revenue amounts do you think are the appropriate amounts to  be used in these calculations? Comment briefly on                    your findings.

5. What percentage of assets are HOG’s property,

           plant and equipment for the two years reported? Using footnote information, which of these assets are depreciable? What is HOG’s depreciation policy?

6. Compute PPE turnover for 2018 and 2017.

          PPE at y.e. 2016 = 981,593. Compute the average age of the assets and the percentage used up for 2018 and 2017. Comment briefly on your findings.

7. Using the information in Footnote 1, briefly discuss HOG’s warranty policies.

          What are HOG’s total warranty expenses in each of the last three years? What percentage are these expenses of motorcycle sales each year? How much cash or other charges were incurred                during the period (i.e. ‘settlements’)?  Comment briefly on your findings.

8. Using the footnote information, how much tax expense did HOG record on their financial statements in each of the last three years?

          How much (in $s) of these amounts was payable in that year to the tax authorities?

9. What percentage of total assets is HOG’s long-term debt for 2018 and 2017?

          What is HOG’s debt to equity ratio for 2018 and 2017? What is HOG’s times interest earned for each of the three years? At the end of the Debt Footnote, HOG explains their debt covenants                 requirements. They specifically discuss the requirement that their debt equity ratios must stay above or below certain ratios. Has HOG met these covenants over the past two years? How do            you know? How close (or far) are they to (from) violating these covenants?

Comment briefly on your findings.

10. In the Debt Footnote, you will also notice that HOG has various forms of debt outstanding.

          Overall, was the debt issued at a discount or a premium? What does that discount or premium represent in terms of the cost of the debt for HOG?

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