There is also a larger selection of games available for these consoles However

There is also a larger selection of games available

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There is also a larger selection of games available for these consoles. However, the Wii U maintains a competitive edge with parents for offering family-friendly game and much lower price point.C. FinancialsNintendo is a worldwide corporation that has seen in a decline in sales and revenue in recent years. However, many of their financials are comparable or better than their competitors, even though they are a smaller organization. Looking at the short term liquidity ratios, the numbers favor Nintendo over their competitors. Nintendo has a current ratio of 7.61, quick ratio of 7.08, and a cash ratio of 6.35. Sony has a current ratio of 0.88, quick ratio of 0.64, and a cash ratio of 0.40. Microsoft has a current ratio of 2.50, a quick ratio of 2.31, and a cash ratio of 1.94. These numbers favor Nintendo because they have a lot more assets than liabilities and will be able to pay off debts better than Sony and Microsoft.The next set of ratios are long term solvency measures used to estimate how much a company has been using debt financing to help their growth. Nintendo has a total debt ratio of 0.14 and a debt-equity ratio of 0.16
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which translates to Nintendo not using a lot of debt financing and not having to rely on outside debt funding. Sony, has a total debt ratio of 0.85 and a debt-equity ratio of 0.31 translating to using a lot of debt financing and less equity financing. Microsoft has a total debt ratio of 0.55 and a debt-equity ratio of 0.35. Microsoft uses a fair amount of debt financing. The main focus that Nintendo should be working on is in their asset management. The inventory turnover is 2.82, days sales in inventory is 129.43, receivables turnover is 13.01, days sales in receivables is 28.07, total asset turnover is 0.41, and capital intensity is 2.46. This shows that Nintendo takes a long time to sell their inventory. They need to be more efficient and have better ways to improve their asset management. Nintendo’s profit margin is 7.61%, return on assets 3.15%, and return on equity 3.66%. These numbers are good in comparison to Sony, who have negative profitability ratios. Their profit margin is -1.53%, return on assets -0.81%, and return on equity of -5.51%. Some of these ratios can be misleading as Nintendo’s revenues have been decreasing every year since the introduction of the Wii U in November 2012. The net income was negative in the 2014 though Nintendo managed to turn it around to a positive net income in 2015. Overall, these financials show that Nintendo needs to change to increase their sales and provide an overall higher net income.III. RecommendationsTo remain competitive in the gaming industry, Nintendo must invest heavily in research and development to continue their tradition of innovative products. They need to improve their hardware to achieve superior capabilities and include features such as better graphics via virtual reality, changes to the game controller, video streaming, and the improvement of their online network to connect gamers around the world. It
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  • Spring '14
  • RahmanS.
  • Wii, Video game console, Nintendo

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