About the Company
Vestas Wind System manufactures wind turbines around the world. Vestas is an energy industry that install and service wind turbines. The company has more than 108 GW wind turbines in 80 countries.
Vestas is a Danish company founded in 1945, headquartered in Hedeager 42 Aarhus N, 8200 Denmark with more than 25,000 employees Vestas is under Energy Sector and under Renewable Energy Industry.
Vestas Wind System A/S (VWS) Extended Graph Analysis
1. VWS CASH FLOWS
|Net cash provided by operating activities||1,126,000,000||1,472,000,000||2,181,000,000||1,625,000,000||1,021,000,000||1,357,000,000|
|Net cash used for investing activities||-285,000,000||-425,000,000||-817,000,000||-407,000,000||-603,000,000||21,000,000|
|Net cash provided by (used for) financing activities||389,000,000||-360,000,000||-611,000,000||-974,000,000||-639,000,000||-249,000,000|
|Free cash flow||848,000,000||1,104,000,000||1,692,000,000||1,134,000,000||414,000,000||624,000,000|
- Cash provided by operating activities was $1.357 billion in 2019.
- Net cash used for investing activities was $21 million in 2019.
- Net cash provided by (used for) financing activities was -$249 million in 2019.
- Capital expenditure was -$733 million in 2019.
- Free cash flow was $624 million in 2019.
- Cash from operation had a growth of 21 percent in five years.
- Cash from investing activities, purchases of investments and other investing activities have a significant amount.
- Cash from financing activities were common stock repurchases and dividend payment.
- Capital expenditures are purchases of property, plant and equipment and purchase of intangibles.
- Free cash flow although erratic in movement in the last five years, it has a positive results year-over-year.
The company managed to generate cash for the operation of the business. Its net income is sufficient to generate positive operating cash flow.
2. VWS BALANCE SHEET
|Total current assets||4,696,000,000||5,976,000,000||6,950,000,000||8,006,000,000||8,555,000,000||8,555,000,000|
|Net property, plant and equipment||1,132,000,000||1,279,000,000||1,329,000,000||1,247,000,000||1,318,000,000||1,318,000,000|
|Total non-current assets||2,301,000,000||2,611,000,000||2,981,000,000||2,865,000,000||3,344,000,000||3,344,000,000|
|Total current liabilities||4,357,000,000||4,805,000,000||5,627,000,000||6,533,000,000||7,405,000,000||7,405,000,000|
|Total stockholders’ equity||2,379,000,000||2,899,000,000||3,190,000,000||3,112,000,000||3,092,000,000||3,092,000,000|
- Total cash was $3.3 billion in 2018.
- Current assets was $8.555 billion in 2018.
- Net property, plant and equipment was $1.3 billion in 2018.
- Non-current assets were $3.3 billion in 2018.
- Total assets were $11.899 billion in 2018.
- Short-term debt was zero from 2015 to 2018.
- Current liabilities were $7.405 billion in 2018.
- Long-term debt was $498 million in 2018.
- Total liabilities were $8.807 billion in 2018.
- Stockholders equity was $3.092 billion in 2018.
- Total cash increases year-over-year and has grown 82 percent in five years. Moreover, it represents 39 percent of total current assets.
- Current assets increases year-over-year and has a growth of 82 percent in five years. Further, it represents 72 percent of total assets.
- Net property, plant and equipment increased by 16 percent in five years. Further, it represents 39 percent of the total non-current assets.
- Non-current assets grows 45 percent in five years and it represents 28 percent of the total assets in 2018.
- Total assets increases year-over-year and has grown 70 percent in the last five years.
- There was zero short-term debt in the last four years.
- Current liabilities represents 84 percent of the total liabilities in 2018.
- Long-term debt represents 6 percent of the total liabilities in 2018.
- Total liabilities represents 74 percent of the total liabilities and stockholders equity in 2018.
- Equity represents 26 percent of the total liabilities and total equity in 2018.
The company has a strong balance sheet hence current assets is greater than its current liabilities which means that VWS is capable of paying its current obligations when due time comes.
3. VWS FINANCIAL RATIOS
|Asset Turnover (avg)||1.13||1.03||0.79||0.98||0.96||1.09||1.08||1.11||0.96||0.89||0.85|
|Return on Asset %||9.86||2.31||-2.25||-13.14||-1.30||6.20||8.79||10.42||8.60||6.01||5.02|
|Return on Equity %||21.77||5.10||-6.23||-45.88||-5.21||20.09||25.96||31.70||28.37||22.05||20.74|
|Financial Leverage (avg)||1.91||2.57||2.98||4.30||3.70||2.94||2.96||3.11||3.49||3.85||4.37|
|Return on Invested Capital %||21.23||5.69||-2.23||-27.28||-0.77||16.17||21.59||27.28||24.53||19.15||17.08|
- Asset turnover ratio was 0.85 in 2019.
- Return on assets were 5.02 percent in 2019.
- Return on equity was 20.74 percent in 2019.
- Financial leverage was averaging 4.37 in 2019.
- Return on invested capital was 17.08 percent in 2019.
- Interest coverage were 42.36 and 0.00 in 2018 and 2019 respectively.
- Asset turnover means that a ratio of 0.85 indicate a dollar of asset generated 85 cents of net sales.
- Return on assets indicates that every dollar invested in asset it generated 5.02 cents of net income.
- Return on equity indicates that every dollar of shareholders equity VWS generates 20.74 cents of net income.
- Financial leverage means that for every dollar invested in equity the company generated $4.37 in total assets.Further, $3.37 was borrowed. Furthermore, it indicates that VWS starts to get risky.
- Return on invested capital means that the company is making 17.08 percent over its invested capital. In other terms, for every dollar invested in capital the company generates 0.1708 cents.
- Interest coverage means that the company has the ability to make interest payments on its debt when due date comes. In other words, the company is making sufficient money from current operations to pay for current interest rates.
Financial ratios shows that the company is operating well its business except in the area of asset turnover which needs a little improvement.
4. VWS INCOME AND MARKET
- Sales was $10.866 billion in 2019.
- EBIT was $898 million in 2019.
- Net income was $640 million in 2019.
- Market capitalization was $14.472 billion in 2019.
- Intrinsic value was $15.3 billion in 2019.
- EBITDA was $871 million in 2019.
- Sales has a growth of 57 percent in five years.
- EBIT increased by 61 percent in five years and it represents 8 percent of sales.
- Net income grew 63 percent in five years and it represents 6 percent of sales.
- Market capitalization increased by 77 percent in the last five years.
- Intrinsic value was greater by 6 percent against market capitalization.
- EBITDA decreased 7 percent in five years. It represents 8 percent of sales.
The company had not seen any negative bottomline in the last five years, although it decreases year-over-year from 2017 to 2019 at an average rate of 12 percent.
5. VWS BOARD OF DIRECTORS COMPENSATION
TOTAL COMPENSATION (in DKK)
|Jens Hesselberg Lund||0||0||650,000|
|Kim Hvid Thomsen||700,000||700,000||650,000|
|Michael Abildgaard Lisbjerg||400,000||400,000||400,000|
|Sussie Dvinge Agerba||400,000||400,000||400,000|
- Bert Nordberg total compensation was DKK 2.1 million in 2018.
- Lard Josefsson total compensation was DKK 1.8 million in 2018.
- Carsten Bjerg total compensation was DKK 909 thousand in 2018.
- Eija Pitkänen total compensation was DKK 650 thousand in 2018.
- Henrik Andersen total compensation was DKK 1.1 million in 2018.
- Henry Stenson total compensation was DKK 483,888 in 2018.
- Jens Hesselberg Lund total compensation was DKK 650,000 in 2018.
- Kim Hvid Thomsen total compensation was DKK 650,000 in 2018.
- Michael Abildgaard Lisbjerg total compensation was DKK 400 thousand in 2018.
- Peter Lindhoist total compensation was DKK 400 thousand in 2018.
- Sussie Dvinge Agerbo total compensation was DKK 400 thousand in 2018.
- Torben Ballegaard total compensation was DKK 400 thousand in 2018.
- Bert Nordberg compensation represents 21 percent of the total compensation in 2018.
- Lard Josefsson compensation represents 18 percent of the total compensation in 2018.
- Carsten Bjerg compensation represents 9 percent of the total compensation in 2018.
- Eija Pitkanen compensation represents 6 percent of the total compensation in 2018.
- Henrik Andersen compensation represents 11 percent of the total compensation in 2018.
- Jens Hesselberg Lund compensation represents 6 percent of the total compensation in 2018.
- Kim Hvid Thomsen compensation represents 6 percent of the total compensation in 2018.
- Michael Abildgaard Lisbjerg compensation represents 4 percent of the total compensation.
- Peter Lindhoist compensation represents 4 percent of the total compensation in 2018.
- Sussie Dvinge Agerbo compensation represents 4 percent of the total compensation in 2018.
- Torben Ballegaard compensation represents 6 percent of the total compensation in 2018.
The total board of directors compensation represents 1.6 percent of the net income in 2018.
6. LOBBYING AND CONTRIBUTIONS
|TOTAL LOBBYING EXPENDITURES|
- Total lobbying expenditures in 2008 was $210 thousand.
- Total lobbying expenditures in 2009 was $150 thousand.
- Total lobbying expenditures in 2010 was $325 thousand.
- Total lobbying expenditures in 2011 was $310 thousand.
- Total lobbying expenditures in 2012 was $480 thousand.
- Total lobbying expenditures in 2013 was $220 thousand.
- Total lobbying expenditures in 2014 was $270 thousand.
- Total lobbying expenditures in 2015 was $270 thousand.
- Total lobbying expenditures in 2016 was $180 thousand.
- Total lobbying expenditures in 2017 was $540 thousand.
- Total lobbying expenditures in 2018 was $390 thousand.
- Total lobbying expenditures in 2019 was $250 thousand.
The company is spending a yearly lobbying from 2008 to 2019. A statement from OpenSecret stated that, all lobbying expenses report came from the Senate Office of Public Records. The data for the most recent years was downloaded on September 19, 2019.
7. VWS FINANCIAL STRENGTH
|Market value of equity||14,472,000,000|
|Book value of total liabilities||8,807,000,000|
|A – Working Capital / Total Assets||0.10||1.20||0.12|
|B – Retained Earnings / Total Assets||0.26||1.40||0.36|
|C – EBIT / Total Assets||0.08||3.30||0.27|
|D – Market Value of Equity / Book Value of Total Liabilities||1.64||0.60||0.99|
|E – Sales / Total Assets||0.91||1.0||0.91|
Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E
Z-Score is a statistical measurement that compare data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.
The result of the calculated Z-Score of VWS was 2.64. Dr. Edward Altman indicate that a grading scale of 1.8 to 3 tells us that the company will likely declare bankruptcy in the near future.
There are four main categories in the calculation of Z-Score namely, the profitability or the return on investment, liquidity, leverage and the operating or efficiency.
Hence this calculation relies on different metrics this is a significant measure in determining the financial strength of the company.
Researched and written by Criselda