The final step of the project is to compile a written report incorporating the first five assignments. The body of your report must be five pages or less with 1 1/2 line spacing and font size 11 or 12. In addition to the five-page report, you may include a cover page, reference pages, and an appendix including the basic financial statements (income statement, balance sheet, cash flow statement, and statement of stockholders equity) and any tables or charts you wish to include. DO NOT SUBMIT THE ENTIRE 10-K!
Cash flow analysis: The company has performed well in terms of operating cash flows because the operational cash flows are $3,408.6 million which have been used for investing and financing activities as well during the year. The company has made repayment of long-term loan $1204.7 million, purchase of treasury stock $2,446.3 million which have been financed from operating cash flows and shows positive operational performance and capacity to generate cash for the organization. The company has a net income of $2,030.4 million and the net operating cash generated is 43,408.6 million which shows that the company has efficiently managed its working capital (The Sherwin – Williams Company, 2021). The major movement in operating cash is due to non-cash expenses such as the depreciation of $268 million, amortization of $313.4 million, an increase in accounts payable by $227.2 million, etc. Further, the net operating cash has also been increased from the previous year by approx 47% which is also a healthy indicator for the organization. Under investing activities, the company has invested $322.4 million during the year which has been financed from operating cash and shows the positive performance of the company. The company has invested into capital assets $303.8 million which shows that the company is also expanding its business and managing its cash flows entirely from operations. There is also an increase in other investments by $79.3 million which shows that the company is parking its idle funds into other non-current assets as well which shows the efficiency of the organization to manage long-term and capital assets (The Sherwin – Williams Company, 2021). The company has also sold unused assets for $60.7 million which is also showing timely realization of proceeds from unused assets. Under financing activities, the company has paid $3,020.1 million which is entirely financed from operating cash. The major item is repayment or purchase of treasury stock which shows that the company is capitalizing its market value and providing an opportunity to shareholders to realize their gain by selling shares to the company itself. Further, the company has paid a cash dividend of $488.0 million which shows that the company is also providing a handsome amount of cash profit as a dividend which is also entirely paid from operating cash (The Sherwin – Williams Company, 2021). The company has also raised $999.0 million from the long- term which has been set off against repayment of loans and in totality, the company is reducing its debt which is also a positive indicator and shows the efficiency of the company to manage long-term solvency efficiently. Thus, the overall cash flow movement or management of the company has shown a positive trend and the company has managed its operating, financing, and investing cash flows in an efficient manner during the year 2020. Reference: TheSherwin–WilliamsCompany(2021).AnnualReport,2020.Availableat https://www.sec.gov/ix?doc=/Archives/edgar/data/89800/000008980021000010/shw- 20201231.htm Total Debt (2020) = Short term borrowings + Long term debt = $100,000 + $8,266,900,000 = $8,267,000,000 Number of shares outstanding at the end of 2020 = 262,197,140 Share price as on 19 November 2021 = $332.25 Therefore, Market Capitalization as on 19 November 2021 = $87,115,000,000 Total Capital = Total Debt (2020) + Market Capitalization = $8,267,000,000 + $87,115,000,000 = $95,382,000,000 Capital Structure: Debt % = Total Debt/Total Capital = $8,267,000,000/$95,382,000,000 = 8.68% Equity % = Market Capitalization/Total Capital = $87,115,000,000/$95,382,000,000 = 91.32% Capital Structure of Competitors Competitor Debt % Equity % AkzoNobel 33.46% 66.54% PPG Industries Inc. 53.73% 46.27% Compared to the leading competitors in the market the management should not use more leverage to enhance stockholders returns, because with the increase in leverage the interest expenses will rise and this will reduce the total net income of the company, also with the increase in leverage the company gets riskier and therefore many stockholders do not want to keep invested in the company. Therefore, as can be seen the competitors which more leverage is not earning more profits than the company (The Sherwin-Williams Company), so increase leverage will not be a good strategy to enhance stockholders returns. Suggested Capital structure The suggested capital structure according to me will be 12%, which is also the industry average across the globe, and this will also mean that the company is not leveraged therefore not spending too much of its revenues on interest expenses. The other reason for my suggestion is that the company is already having a total debt or leverage of 8.68% in the capital structure, so if in the future it must expand it will need more capital and that time the company can look to increase the leverage to 12% in order to increase the revenue and profitability which will ultimately enhance stockholders returns. Assignment #1 Student: Liliana Machuca Company: Sherwin Williams Ticker Symbol: SWW 10-K link: https://www.sec.gov/ix?doc=/Archives/edgar/data/89800/000008980021000010/shw-20201231.htm BUS 5440 Business Management Assignment 2 Professor: Karen Chambliss, Ph.D. Student: Liliana Machuca September 9th, 2021 Sherwin Williams Introduction Sherwin Williams is a paint and coating company which is based in Ohio, Cleveland. It deals with manufacturing, distribution and selling of paints, floor coverings, industrial, commercial and customer retail products in parts of North and South America and Europe. As of 2020, the company operates in more than 120 countries. Sherwin Williams was founded in 1884 by Henry Sherwin and Edward Williams. The company was expanded gradually through acquisition and mergers of various companies in the 19th and the 20th century. It was declared as the largest coating manufacturer in United States in the 1920s. The company is also traded in the NYSE as well as S&P 500. The major products of Sherwin Williams are paints, coatings, stains, caulks and sealants. Recently, the company started research and development works in painting and coatings in Brecksville, Ohio. The company operates in three segments or divisions which are Americas Group, Consumer Brands Group and Performance Coatings Group. The revenue of the company was $18.36 billion as of 2020 and there are almost 61031 employees working currently. Competitors Domestic: Pittsburgh Plate Glass or PPG was founded in 1883 by John B Ford and John Pitcairn as a supplier of paints, coatings, speciality products and optical materials. It is headquartered in Pittsburgh, Pennsylvania. PPG is a leader in manufacturing innovative, sustainable colours which are supplied to industries as well as to the customers. There are more than 47000 employees employed in PPG. The company is present in North America, Europe, Latin America, Middle East, Asia-Pacific and Africa. As of 2020, the net sales of the company are $13.8 billion and is traded only in NYSE. There are two research center of PPG which are PPG coatings innovation center and PPG Monroeville Business and Technology center (PPG, 2020). International: Akzo Nobel N.V. is a Dutch multinational company and create paints as well as performance coatings for domestic industries as well as for the global customers. It was founded in the year 1994 in the city of Amsterdam. The company is present in more than 80 countries and there are more than 32000 people employed as of 2020. In the year 2020, Akzo Nobel was able to sell €8.5 billion of products globally. It is traded in Amsterdam stock exchange as AKZA. The major products of Akzo Nobel are chemicals, decorative paints, coatings and industrial finishing materials. The most famous paint brand of Akzo Nobel sold worldwide is Dulux. Financial results for 2020 As per the 10K of Sherwin Williams the sales of the company are $18361.7 million while the net income is $2030.4 million. As on 2019, the company’s sales were $17900.8 million and net income was $1541.3 million. The sales of the company in 2020 grew by 2.57% while the net income grew by 31.73% compared to 2019. This shows that the company has performed well in 2020 compared to 2019. Finally, the cash flow at the end of the year was $226.6 million in 2020 compared to $161.8 million in 2019. This is another indication that the company is performing well in the current year compared to the past (The Sherwin Williams Co; 2020). Financial results comparison with competitors The net sales of Sherwin Williams as on 2020 was $18361.7 million compared to this that of PPG was $3015 million. The net sales of Akzo Nobel as on 2020 is $26994 million. This signifies that it’s Sherwin Williams which is slightly lower than Akzo Nobel in terms of sales in United States but is better than PPG (Akzo Nobel; 2021). On the contrary, the net income of Sherwin Williams is $2030.4 million, PPG is $102 million and that of Akzo Nobel is $2374 million. Thus, in terms of net income also Akzo Nobel is performing better compared to Sherwin Williams. Therefore, it can be stated that Akzo Nobel is a major competitor of Sherwin Williams in terms of net income (PPG, 2021). REFERENCES PPG, (2020); FACTS ABOUT PPG; https://news.ppg.com/facts-about-ppg/default.aspx The Sherwin Williams Co; (2020); UNITED STATES SECURITIES AND EXCHANGE COMMISSION; Form 10-K; https://www.sec.gov/ix?doc=/Archives/edgar/data/89800/000008980021000010/shw-20201231.htm#i49a1606a43bd4252889ae41b10edea46_97 Akzo Nobel; (2021); https://www.akzonobel.co.in/pdf/Akzo%20Nobel%20India%20Limited%20Annual%20Report%202020-21.pdf PPG, (2021); https://investor.ppg.com/home/default.aspx Assignment 3 Macroeconomics is a broad concept that refers to the factors that affect various aspects of a business, such as the availability of resources and their use. Understanding these factors can help prepare for, implement, and sustain a long-term business strategy. For example, COVID-19 is only one of the eight key factors that will shape the way business is conducted in the next decade. Other changes include climate change, increasing distrust, and a reduction in international relationships. The duration of the pandemic will also affect how quickly people