Amd Financial Analysis

AMD Financial Analysis

Financial Analysis

Introduction

Advanced Micro Devices (AMD) made some advances in its battle against Intel but hasn't capitalized on those gains. AMD ranks #2 in PC and server microprocessors, far behind its arch-rival. Though Intel commands the world processor market, AMD has at times eroded that market share, thanks to the popularity of its Athlon and Opteron processor families. The company also makes embedded processors and other chips for communications, graphics, storage, networking, and other applications. Hewlett-Packard is its largest customer. AMD gets a majority of its sales from international customers; those in China account for nearly half of the company's sales (Hoover’s, Inc. 2011).

Solvency Ratios

CURRENT RATIO

This ratio is a comparison of current assets to current liabilities, commonly used as a measure of short-run solvency, i.e., the immediate ability of a business to pay its current debts as they come due. Potential creditors use this ratio to measure a company's liquidity or ability to pay off short-term debts (D&B Key Business Ratios, 2011).

AMD’s ability to pay its current debts in comparison to the industry is very weak. As stated within AMD’s 10-K Security Exchange and Commission Report (2010), “Failures in the global credit markets have impacted and may continue to impact the liquidity of our auction rate securities.” It goes on to say, “As of December 25, 2010, the par value of all our auction rate securities, or ARS, was $66 million with an estimated fair value of $57 million. As of December 25, 2010, our investments in ARS included estimated fair values of approximately $32 million of student loan ARS and $25 million of municipal and corporate ARS. The uncertainties in the credit markets have affected all of our ARS and auctions for these securities have failed to settle on their respective settlement dates. The auctions failed because there was insufficient demand for these securities. A...