Financial analysis can be characterised as a systematic tool for monitoring the financial condition of a company. The primary source of information are the financial statements of the company.However, financial analysis is not only a sort of statistical assessment of the current situation, but it is also reflective of the past management and to some extent it can also predict the future financial conditions.
In this scholar project our team was tasked with performing the financial analysis of a chosen company starting with the financial statements in the last three years disclosed.
Our choice of company if GameStop, a business that has hit the news a number of times in 2021 due to a series of events partly attributed to a high number of retail investors that gained interest in the company as a result of rumours and speculations in social media. This business report disregards the current year's events and takes a scholarly approach aimed at answering fundamental questions about GameStop by looking at the company snapshot as of 31st of December 2020.
In writing this report we considered our primary audience to be the potential investor and we are aiming to conclude if GameStop was a solid investment as of EOY 2020. From this perspective the report is looking at the main indicators : the Liquidity and Efficiency of the company, it's Solvency but also the Profitability and ability to generate positive market expectations.
GameStop is a company with a history of over 3 decades and strong history of adapting to change to market demands and ability to diversify its revenue streams. Founded in Tucson, Arizona under the name Babbage's hinting at the passion for mathematics of the two Harvard graduate co-founders, it started selling Atari and Nintendo games. Gamestop's digital journey begins as early as 1994 in the form of a merger with a personal computing software company resulting in a retail group that initially struggled with sales to the point of filing for bankruptcy. New found capital by Barnes and Noble's principal stockholder who acquires the drifting company in 1996 along with executive changes set the company on a path to success with their very first online store gamestop.com being open in the middle of the .com boom.
Following a 1999 acquisition by Barnes and Noble, a well executed merge of operations with another video games retailer - Funco, followed by a synergetic presence in the written specialty media after B&N's acquisition of Game informer in 2000, GameStop was on a clear path to a successful IPO and presence as an independent company.
Following a successful IPO, GameStop has seen over a decade of expansion both in and outside the American continent, gaining a strong footprint in Europe, Australia and New Zeeland. Most of the physical expansion coincided with acquisitions which landed GameStop with a portfolio of products and services diverging from its main business model that would only slightly complement its revenue stream. These included Apple reselling, misc consumer electronics and famously their Sprint Mobile acquisition in 2013, later to be sold in 2019 with an intent to use the money in consolidating the main business line.
History of Gamestop
As of 2020 GameStop had a clear vision of focusing solely on the Gaming industry with a "perspective to continuously drive value with shareholders, customers, vendors and employees". 2019 marked a change in corporate culture, especially in relation to human capital.
Brands of Gamestop
According to GameStop’s 2017 annual report, it was the world’s largest omnichannel video game retailer, the largest AT&T authorized retailer, the largest Apple certified products reseller and the owner of www.thinkgeek.com, one of the world’s largest sellers of collectible pop culture themed products.