HP Vs Gateway

Part (1) Description of the operations and history of company

Hewlett-Packard Company incorporated in 1947, is a global provider of products, technologies, solutions and services. The Company’s offerings span in information technology (IT) infrastructure, personal computing and access devices, and global services and imaging and printing. In May 2002, the Company merged with Compaq Computer Corporation. As a result of the merger with Compaq, the two companies’ previous businesses and product lines have been integrated and reorganized into four major groups.

The Enterprise Systems Group (ESG) provides key technology assets of enterprise IT infrastructure, including enterprise storage, servers, management software and solutions. HP products in ESG include UNIX servers, fault-tolerant servers, Windows-based IA-32 servers, Linux-based IA-32 servers, enterprise storage, management software and high-performance technical computing. HP Services (HPS) provides mission-critical infrastructure services, services for open IT environments and enterprise-ready Microsoft integration and support services. The Imaging and Printing Group

HPQ has shown a very stable liquidity ratio for the last 3 years, the increase or decrease of Current Asset and Inventory are proportional to Current Liabilities. The current ratio for the last 3 years were above 1, which means that the company uses short term funding to finance short term activities and/or the company has limited room for new investments without borrowing. However, HPQ has 1.5x more of current assets to be able to sell if the company has to liquidate. As a whole HPQ has performed quite well since these ratios are almost the same as the industry ratio.

The leverage ratio for HPQ is below 1. Overall, HPQ is depending on borrow money from bank and shareholders. However, the proportion from shareholders is smaller and it is obvious by looking at the long-term debt to total capitalization ratio is almost 100%. That is not necessarily bad if the company can earn a greater return from the borrowed money than the cost of borrowing it in the first place. Leverage also puts the HPQ at the mercy of bankers when interest rates rise and economic growth slows. HPQ shows a very sound leverage ratios since all the leverage financial ratios are lower than the industry ratio. HPQ would be able to fulfill all the payment during the economy downturn. However, long-term debt has increased since 2000 and this can be lucrative during bad times, when borrowed assets earn less than they cost.

Some topics in this essay:
Inc GTW, Current Liabilities, Leverage HPQ, Profit Margin, SIC Code, Overall GTW, Analysis Investors, Worldwide Operations, Compaq HPQ, Financial Services, industry ratio, ratio 3, net income, financial services, stock price, current liabilities, short term, stock prices, ratio gtw, fixed asset, decrease net income, hp financial services, lower industry ratio, economic growth slows, industry ratio hpq,