Financial Statements Analysis of Cardinal Company

After examining Cardinal’s 2018–2020 performance, I have concluded that it is increasing its customer service, revenue, and advertising costs, but retains growth potential.

Major changes include the following:

1) Revenue growth despite quarantine restrictions. The increase in total revenue by more than 10 times is evidence of the growing demand for the company’s service and its invulnerability to the forced transition to remote service, which has affected most businesses operating in a variety of industries. This, in particular, is proven by the cost of maintaining an office, which is only $6,000 at the end of 2020. Cardinal is among the small number of businesses for whom the pandemic has been a factor in growth rather than loss. Customers who previously didn’t need credit services faced financial difficulties and had to solve them by taking out loans.

2) I noticed that the company was increasing its advertising costs year after year. In 2020, they were $125,000 or over $10,000 monthly. That’s a big enough budget that it could still be expanded, especially since the company’s profits are in the millions of dollars. In the initial stages of commercial operations, companies invest 10–20% or more of the money they make in order to promote the brand, which helps in the long run.

3) I was attracted to the indirect revenue streams that non-core investments provide. According to the financial report, cash flow from investments in 2020 was $1285,000. In 2018, it was zero.

4) I noticed a big difference between assets and liabilities. In 2020, assets are 3 times the size of liabilities. The same ratio is common in previous years. This demonstrates that the company maintains a clear balance sheet and is resilient to possible problems.

5) I was attracted and surprised by the amount of investment in staff funding. In 2020, the value is over $50,000,000. It’s hard enough to imagine why it would cost so much to pay professionals. Even if we are talking about highly qualified experts, these costs can still be reduced.

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