my last section is on my estimation, will this organization be around for a while or is it destined to fail? What quantitative evidence can you show for your choice? At a minimum, you should discuss the elements of accounting, finance, probability, and statistics that indicate that the organization is either going to last or fail.

Not sure what to talk about in this section. Can you help?

Running head: ACCOUNTING AND FINANCIAL ISSUES OF MEDTRONIC Accounting and Financial Issues of Medtronic Anita Eid RES500 -1 - Fundamentals of Quantitative Analysis Colorado State University - Global Campus Dr. Angel D. Resto-Gallardo January 4, 2016 1 ACCOUNTING AND FINANCIAL ISSUES OF MEDTRONIC 2 Accounting and Financial Issues of Medtronic Medtronic is a publicly traded company founded in 1949 under the laws of Ireland. It is headquartered in Dublin, Ireland and is the global leader in medical Technology. The company specialized in delivering products to alleviate pain, restore health and extend life Their primary customers are hospitals, clinics, third-party healthcare providers, distributors, and other institutions, including governmental health care programs and group purchasing organizations. Company's organization The company offers pacemaker, defibrillators, and monitoring devices. The company's FYE is April 24. The company acquired Covidien, the acquisition was completed on January 26, 2015. The acquisition resulted in a new name of Medtronic, Plc. And shares were trading under the symbol MDT. The acquisition was expected to result in revenue growth and long-term sustainability. The company also expected to generate significant free cash flow and have flexibility in investing in the US healthcare technology. However, as we will see below their profit margins, ROA and ROE have decreased. Key Statistics regarding Employees over the last three years: Medtronic employs qualified personnel in a highly competitive labor market and are able to retain their employee due to the company's competitive compensation and benefits. (10-K 2015.) The total number of employees for FYE 2015 was at 92,552. This number has grown from 44,944 in 2012, 46,659 in 2013, and 49,247 in 2014. This increase is mainly related to the acquisition of Covidien. ACCOUNTING AND FINANCIAL ISSUES OF MEDTRONIC 3 Key Statistics regarding Customers over the last three years: The company's primary customers include hospitals, clinics, third-party health care providers, distributors, and other institutions, including governmental health care programs. (10K annual report). Since Medtronic is located over 140 countries it has a long list of customers her top customers are Alpine biomed, Lifetech scientific, Facebook (it helps diabetes patient share success stories on Facebook timeline), care link. Competitors: The company's competitors are the specialists who use the CRDM products including the cardiovascular surgeons, heart failure specialists, implanting cardiologist etc... primary competitors are Jude Medical, Inc. (St. Jude, STJ), Boston Scientific Corporation (Boston Scientific, BSX), Johnson & Johnson (JNJ). Key statistics regarding Trading volume over the last three years: Trading volume was fluctuating for FYEs over the last three years reviewed, Trading volume was 2,958,600 at 12/31/15 this is a drop from 4,737,400 at 2014, 3,299,685 at 2013, and 4,689,008 at 2012. (yahoo finance). The average volume within last there month is 5,564,530. Stock price over the last three years: Below is the table representing the stock price for Medtronic over the last three years. As can be seen the price is increasing. ACCOUNTING AND FINANCIAL ISSUES OF MEDTRONIC 4 Table 1 - Stock price Medtronic Medtronic, Plc - Stock Price P R I C E $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Oct-12 May-13 Nov-13 Close Jun-14 Dec-14 Jul-15 Jan-16 Date Medtronic's Key financial ratios EPS: The company's EPS is at 1.75. It is lower than its main competitors St. Jude at 3.52 and Johnson and Johnson of 5.21 but still higher than Boston Scientific at -0.31. Liquidity ratios: The company's liquidity ratios were improving from 2011 through 2015. Below is table 2, representing the liquidity as calculated by current ratio and working capital. While the company's current assets are rapidly growing from $17,852MM in 2013 to $30,844MM in 2015 through the increase in cash and short-term investments; its current liabilities are mainly centered ACCOUNTING AND FINANCIAL ISSUES OF MEDTRONIC 5 in Accounts payables and Short term debt increased only from $3,950MM to $9,173MM. This resulted in strong and improving liquidity as presented in table 2 below. Table 2 Liquidity Ratios Date Current ratio Working capital 2011 3.01:1 9,437 2012 2.8:1 10,409 2013 3.8:1 13,902 2014 3.4:1 15,651 2015 3.54:1 21,671 In billions Debt ratios: Debt/equity for the company was at 40% for FYE 2015 and 38% for FYE 2014. This ratio is calculated by using the short-term borrowings and long-term debt over total shareholder's equity of $52,230MM. The debt increased year over year mainly after the acquisition of Covidien, the company need to fund $50 billion to pay certain transaction and financing expenses. ROA for FYE 15 was at 2.51% this is a drop from 8.08% in 2014 this is also below the industry ROA average for 8.37 for FYE 14. ROE for FYE 15 was at 5.03%, this is a decrease from 15.76% in 2014. The acquisition has negatively affected the company's ROE. ROE is currently below the industry average of 18.89% for FYE 2014. Profitability ratios: ACCOUNTING AND FINANCIAL ISSUES OF MEDTRONIC 6 The company's profit margins are considered strong but have been dropping over the last three years reviewed. However, It is still at the same level of its competitors and still higher than the industry of 57%. Gross margin are considered strong and operating margin are also ranking between its competitors and lot higher than industry of -.05. Table 3 Gross margins Date GPM OPM 4/26/2013 75.1% 26.5% 4/25/2014 74.5% 25.4% 4/24/2015 68.46% 18.59% Medtronic's future projections In order to assess the future performance of an corporation quantitative and qualitative information are important, Analysis of the key ratios, gearing and profitability, any early warning sign such as drop in cash position, drop in cash position etc... Other factor could be the industry or the competitors, environmental or external factors, management reports. Lots of quantitative models have been developed over the years to perform prediction of future performance, z score (1968), other models based on the z score. Medtronic has been a major player in the manufacturing of therapeutic devices for chronic illnesses. Medtronic consists of 34.3% of its industry market value. Through diversification of its products and international expansion, Medtronic managed to maintain low revenue volatility. This industry performed well during the past five years. Industry has profit margins and revenues are expected to grow by 4.9% (IBIS WORLD). Talk about life cycle and barrier for entry. Risk highly regulated industry, always subject to patent ACCOUNTING AND FINANCIAL ISSUES OF MEDTRONIC In this last paragraph, we will discuss the company's projection for the future in terms of accounting, finance, probability and statistics. Accounting Talk about spreads, projections in terms of revenues growth, margins, A/R etc.... Projections add a table Projections are estimated to be conservative following the acquisition of Covidien, company will reduce its cost structure. Add historical growth Cash Flow: is very strong. The company is able to have enough cash to cover its operating activities at $4,902, projections show positive cash with 10.83% estimated growth in sales. It is noted that the acquisition in 2015 of Covidien negatively impacted the cash flow due to acquisition related items, accrued liabilities and defereed income taxes offset by $750 MM settlement payment. The cash flow from Investing activities was negatively impacted due to higher cash used for acquisition. Liquidity: Finance: Talk about growth of EPS and stock price. Stock Price is growing so fast and investors are estimating it as a byt Probability Statistics: 7 ACCOUNTING AND FINANCIAL ISSUES OF MEDTRONIC Linear regression 8 ACCOUNTING AND FINANCIAL ISSUES OF MEDTRONIC 9 References Yahoo Finance. (n.d.) Medtronic plc (MDT). Retrieved from: http://finance.yahoo.com/q? s=MDT Spiderbook. (2015). Medtronic Customers. Retrieved from: http://spiderbook.com/medtronic-customers.html Stock Analysis on Act. (2016). Medtronic PLC, operating profit margin calculation, comparison Benchmark. Retrieved from: https://www.stock-analysison.net/NYSE/Company/Medtronic-PLC/Ratios/Profitability Financial Times. (2016). Equities. Retrieved from http://markets.ft.com/research//Markets/Tearsheets/Financials? s=198609&subview=Overview&period=a IBIS world http://www.medtronic.com/content/dam/Medtronic/US/Citizenship/mdt_2015_integrated_report .pdf http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Corporate%20Failure.aspx