Financial Valuation

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Before one makes an investment into any of these companies, one should know how financially sound that investment would be. The best way to evaluate the financial strength of a company at a given time is to analyze its annual financial report and compare it to a competitor in the same industry or against industry ratios. DISH Network Corp. (DISH) and Time Warner Cable (TWC) are competitors in the pay-tv industry and they are both also internet service providers. In order to evaluate DISH’s standing over the past few years, I will compare it to Time Warner Cable, one of the leaders in the sector.Although TWC has reported earnings much higher than DISH as the company is much larger, DISH has been able to keep its net profit margins slightly above its competitor (8.56% vs 8.16%) although both are below industry average of 9.38%. TWC differs from DISH as it has diversified its activities with a significant portion of its net income coming from “Other Income” (DISH reported a loss of $7.5B in that category). As DISH has just begun venturing into delivering the internet to its customer, TWC’s business and home internet represent a large portion of it annual revenue. Nevertheless, DISH’s performance has been strong. According to both companies’ Financial Reports, over the previous 5 years, DISH had an average ROA of 5.80% while TWC stands at 3.92% with an industry average at 4.21%. Furthermore, ROE in the same period shows that DISH was managed more efficiently than TWC (58.29% vs. 22.94%). Management effectiveness is also translated by the quick ratio, which measure immediate solvency. Indeed, DISH’s quick ratio (0.48) was equal to the industry’s ratio while TWC’s ratio was lower at 0.38. Moreover, also in term of short-term liquidity, DISH reported better numbers than TWC and above industry average. With its current assets greater than its current liabilities over the last three calendar years,...