Research in Motion

Joseph Kurche

1/31/2012

RIMM: Financial Ratio Analysis

The technology sector, specifically the communication equipment industry, has grown increasingly competitive as innovations to handheld devices continuously enter the market place. The communication equipment industry has vastly changed in recent history as Apple and Android platforms have stolen market share from competitors such as Symbian and Research in Motion. Apple and Android have well positioned themselves as market leaders yet a very interesting fight has emerged for third place between Windows and Research and Motion. Research in Motion, maker of BlackBerry is positioning themselves for a comeback but investors remain skeptical of the company’s ability to return to profitability. Let’s take a look how Research in Motion has positioned themselves for what they believe to be the soon comeback of a lifetime.

Liquidity

RIMM has fallen on difficult times but currently holds a very strong position from a liquidity perspective. As the chart below shows, RIMM has had the ability to strengthen their short-term financial position over the past year and stay well above industry averages. RIMM currently maintains $1.5 billion in cash on its balance sheet, a very comforting figure for value investors. The company’s liquidity position is a major strong point, assuring they have the means to meet short-term liabilities without risk of default.

| |2012 |2011 |Industry |

|current ratio |2.23 |2.06 |1.67 |

|quick ratio |1.83 |1.76 |1.16 |

Solvency

A very interesting aspect of RIMM is that it maintains no long term debt. The carrying of debt is always a big concern for potential investors but is no debt at all a good thing? RIMM has chosen to maintain this position over the past two years in an industry with...