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Merger and Acquisition of Hoya Corporation and Pentax Essay Example

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Topics:

Database, Debt, Investment, Working capital

Pages: 3 (582 words)
Published: April 8, 2017
Type: Case Study

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Pre-Merger and Post-Merger Financial Analysis and Financial Performances of Hoya Corporation

Liquidity ratio pre-merger post-merger the current ratio is one of the most commonly cited financial ratios, measures the firm’s ability to meet its short-term obligations. Before Hoya merged with Pentax, the current ratio for Hoya in the year 2006 is 2.7 and in year 2007 is 3.5. After merger, the current ratio of Hoya decreases to 2.4 which is a big change before and after merger. Luckily in year 2009 the current ratio of Hoya increases to 2.

The normal current ratio should be more than 1.00 because that’s mean the current assets can cover the current liability. Pre-merger and post-merger Net working capital is also known as net current assets because it is current assets minus current liabilities.

Based form the graph showed, in the pre-me

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rger part, the networking of Hoya increase from RM132968 to RM197525 in year 2006 to year 2007. After Hoya merged with Pentax, the networking capital of Hoya increasing from RM241417 to RM253476 in year 2008 and year 2009.

Debt Ratio Pre-Merger and Post-Merger

The debt ratio measures the proportion of total assets financed by the firm’s creditors. The higher this ratio, the greater the amount of other people’s money being used to generate profits.

In the year 2006, the debt ratio of Hoya is 22. 44% and decrease to 18% in year 2007. After merged with Pentax, the debt ratio of HOYA started to increase in year 2008 and 2009, from 42. 76% to 42. 81%. The increase in debt ratio is a bad feedback from the merger because the merger between Hoya and Pentax can affect Hoya to become more liabilities.

Profitability Ratio Pre-Merger

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and Post-merger

After Hoya merged with Pentax in year 2008, the earnings per share of Hoya decreased to RM 189.01 and more decrease to the money amount in the next year which is RM 58.01.

The return on total assets (ROA) measures the overall effectiveness of management in generating profits with its available assets. The higher the firm’s return on the total assets is the better. Here, return on total assets for Hoya in year 2006 is about 21.20% and decrease to 20.60% in year 2007. These two companies have a weak and low return on total assets.

After merged, the Hoya return on total assets decreased to 14. 40% in year 2008. This decrease is because both companies have less total assets and after merged. It hugely decreases in year 2009 to 3.90% which to a critical rate to control their assets. Pre-MergerPost-Merger The return on common equity (ROE) measures the return earned on the common stockholders’ investment in the firm.

Generally, the higher this return, the better off is the owners. Before HOYA merged with Pentax, the return on equity of Hoya is 27.10% in year 2006 and decrease to 25.90% in 2007.

After Hoya merged with Pentax, the company's returns decrease to 21.60% in year 2008 and become more critical in year 2009 with a return on equity rate of 6.0%. The bad decrease in the return equity can affect Hoya's loss of more investors to invest in their company to let them have more money to expand their company.

References

http://www. hoya. co. jp/english/investor/investor_09_22.html
http://www. hoya. co. jp/english/investor/fs20100507_2e. pdf
http://www.hoya. co. jp/english/investor/2009_4Q_Quarterly. pdf
http://www. hoya.co. jp/english/investor/d0h4dj0000000dej-att/2008_2thq_04. pdf
http://www. hoya. co.jp/english/investor/d0h4dj0000000dhw-att/2007_4thq_02. pdf
http://www. hoya. o.jp/english/investor/d0h4dj0000000dl8-att/2006_4thq_02. pdf
http://www. hoya.

co.jp/english/investor/d0h4dj0000000dej-att/2008_4thq_04. pdf

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