Sony Ratios and Analysis of

¶ … Sony Ratios and Analysis of Current Financial Position "A carefully selected, diversified set of financial ratios "provide(s) a vehicle to focus attention across the entire universe of financial information in a relatively disciplined fashion. Ratios are an excellent tool for evaluating large amounts of financial information and analyzing the performance of a company over time and compared to its industry peers." (Beers and Lund) For the fiscal years 2007 through 2009, Sony's changes in underlying accounting principles do not appear to affect comparability of key financial ratios.

Of course, the meaningfulness of the ratios calculated in this report still depends on the accuracy of Sony's financial statements. Appendix B shows detailed financial ratios calculated from Documents submitted to the SEC (EDGAR) Form 20F and others. Earnings tell only part of the story. These financial ratios are very useful in understanding various indicators of the company's present and future prospects including profitability, management effectiveness, financial health, growth and operating efficiency. Financial ratio analysis paints a gloomy assement for Sony.

Across most of these financial ratios, with the exception of inventory turnover, Sony has shown a marked decline for the FY 2009-year vs. FY 2008 and FY 2007. 2.1.1.3 Profit margin, a measurement of how much out of every dollar of sales a company actually keeps in earnings, is not fairing well in FY 2009. This number was at -1.28% in FY 2009, 4.16% in FY 2008 and 1.52% in FY 2007. Year to year growth for FY 2009 was -130.74%.

2.1.1.4 Operating Margin, a measure of how successful a company's management has been in generating income from the operation of the business, is also causing room for concern for this company. At -2.13% for FY 2009, this number is down from 3.79% in FY 2008 and 0.94% from FY 2007. Year to year growth for FY 2009 was an alarming -156.03%. 2.1.1.5 EBITDA margin measures the extent to which operating expenses use revenue. It is often more useful than operating margin because it excludes non-cash items such as depreciation.

Sony's EBITDA margin is 6.43% in FY 2009 down from 12.06% in FY 2008 and 10.20% in FY 2007. 2.1.1.6 Return on Assets, an idea as to how efficient management is at using its assets to generate earnings, is -0.82% for FY 2009. This compares unfavorable to FY 2008's 2.94% and FY 2007's 1.06%. 2.1.1.7 Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. This measure is -3.34% for FY 2009, compared to 10.66% in FY 2008 and 3.75% in FY 2007.

2.1.1.8 a quick ratio or liquid ratio measures the ability of a company to use its near cash or quick assets to immediately extinguish or retire its current liabilities. The higher the quick ratio, the better the position of the company. Sony's quick ratio has fallen to 0.14 in FY 2009 down from 0.24 in FY 2008 and 0.19 in FY 2007. 2.1.1.9 a high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt.

This is important to examine because it can result in volatile earnings as a result of the additional interest expense. Sony's debt/equity ratio has increased to 3.05 in FY 2009 versus 2.62 in FY 2008 and 2.47 in FY 2007. 2.1.1.10 Growth as measured by sales is horrible for Sony in FY 2009 when sales growth was -12.19% in comparison to positive increases of 26.86% in FY 2008 and 10.37% in FY 2007. 2.1.1.11 Earnings per share, total earnings divided by the number of shares outstanding, was -1.01 for FY 2009 following 3.51 in FY 2008 and 1.02 in FY 2007.

2.1.1.12 the inventory turnover ratio shows how many times a company's inventory is sold and replaced over a period of time. A low.