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Adjusting Enterprise Operations: An Overview of HP's Financial Strategies

This module presents an insightful analysis of HP's operational adjustments and financial strategies. It explores the company's background, focusing on inventory management, leasing practices, and special purpose entities. Key highlights include HP's restructuring efforts, billions in impaired acquisitions, and layoffs alongside a five-year growth plan aimed at reviving revenue by 2015. The module also provides a detailed revenue breakdown using FIFO and LIFO accounting methods, discusses lease asset implications, and investigates assumptions regarding ESO liabilities and tax benefits, with a goal of understanding projected growth in revenue segments.

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Adjusting Enterprise Operations: An Overview of HP's Financial Strategies

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  1. Module 11: Adjusting Enterprise Operations Brian Phelan

  2. Agenda • Background on HP • Inventory • Leasing • SPEs • ESO

  3. Industry Structure Source: Ibis World US

  4. Industry Structure Source: Ibis World US

  5. Background • Restructuring • Billions in Impaired acquisitions • Layoffs • 5 year plan -> growth by 2015

  6. Revenue Breakdown

  7. FIFO Inventory Source: HPQ 10k

  8. FIFO to LIFO Source: Investopedia

  9. Leases Source: HPQ 10k

  10. HPQ Operating Lease Assets Source: HPQ 10k

  11. HPQ Overstated Assets

  12. Lease Issues • No present value of minimum lease payments for HPQ capital leases • Adjusting for HPQ assets leased to customers as operating leases

  13. Special Purpose Entities Source: HPQ 10k

  14. ESO Assumptions

  15. ESO

  16. ESO Liability

  17. ESO Tax Benefit

  18. No Excess ESOP Tax Benefit Source: HPQ 10k

  19. Data Still Searching For • Projected growth rate by revenue segment • Reported debt tax shield • Breakdown of expenses

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