Fiserv Financial Analysis and Recommendations

This assignment presents a detailed financial analysis of Fiserv, utilizing ratios calculated from their annual reports for three years. The analysis covers aspects like debt utilization, long-term growth potential, profitability trends (return on equity), and the company's ability to meet its financial obligations. Recommendations are provided regarding loan disbursement ($10 billion over 10 years) based on the analysis, as well as investment opportunities ($500 million) considering the company's performance. Additionally, the assignment explores employee compensation strategies, including a proposed base salary and bonus structure tied to achieving certain financial goals.

RUNNING HEAD: ACCOUNTING AND FINANCIAL REPORTING
accounting and financial reporting

ACCOUNTING AND FINANCIAL REPORTING 1
Contents
PROJECT C..........................................................................................................................................2
1.........................................................................................................................................................2
2.........................................................................................................................................................3
3.........................................................................................................................................................4
4.........................................................................................................................................................7
5.......................................................................................................................................................15
6.......................................................................................................................................................17
7.......................................................................................................................................................18
8.......................................................................................................................................................18
9.......................................................................................................................................................18
10.....................................................................................................................................................19
11.....................................................................................................................................................19
REFERENCES........................................................................................................................................20

ACCOUNTING AND FINANCIAL REPORTING 2
PROJECT C
1.
a. Link of Fiserv:
http://files.shareholder.com/downloads/FISV/5348753300x0x929748/A530F2BE-5974-
477E-A825-8F8F910218EC/FISV_12.31.2016_10-K_FINAL_with_Exhibits_.pdf
b. The main point that are particularly important to understanding the company's prospects are
business overview, financial information and director’s report and the auditor’s report.
c. Business overview of Fiserv:
Fiserv is the leading company in providing services in technology. The company is publicly listed
in NASDAQ (NASDAQ : FISV). The main business operations are located in US. The main
services are account processing systems, electronic payments processing products and services like
bill payments, card based transaction processing and network services. In other words, company
operates data and transaction processing centres, provide technology support, software
development and providing payment solutions and consulting services.
d. The recent development of Fiserv is that the company has launched “cardvalet’ mobile card
management application.
e. Future direction of the company is to serve more and more clients in many countries plus recently
the company has just issued 140+ patents and many more are pending.
f. The position of this company within the industry is sound.
g. The recent stock price (2016) of the company is $ 109.11. The expectation of the next year’s stock
price will be higher in $ 120.
h. The major competitors are:
i. Jack Henry & Associates, Inc.
ii. ACI Worldwide, Inc.
iii. Fidelity National Information Services, Inc.
i. It is shown from the recent trend is that the net income of the company is increasing every year
and the company is also investing in fixed assets every year.

ACCOUNTING AND FINANCIAL REPORTING 3
2.
Year
(__2016______)
Year
(__2015______) Year (_____2014___)
Current ratio 0.95 1.00 0.97
Acid test ratio 0.95 1.00 0.97
Cash ratio 0.16 0.18 0.2
Accruals ratio 0.73 0.78 0.88
Cash Flow Yield 1.54 1.89 1.73
Cash Flow to Sales 0.26 0.26 0.26
Cash Flow to Assets 0.15 0.14 0.14
Current Cash Debt Coverage Ratio 0.86 0.90 0.93
Free Cash Flow 875 984 1014
Accounts receivable turnover 6.46 6.57 6.54
Days’ sales outstanding 59.8 55.72 57.5
Accounts payable turnover 2.62 3.02 3.47
Days’ payable outstanding 153.2 128.48 114.66
Inventory turnover 0.00 0.00 0.00
Days’ sales in inventory 0.00 0.00 0.00
Cash Turnover 19.15 18.47 14.6
Fixed Asset Turnover 13.74 14.74 17.38
Total Asset Turnover 0.58 0.56 0.54
Cash Conversion Cycle -93.4 -72.76 -57.16
Basic Defence Interval 208.92 211.57 226.72
Expense Coverage Days 96.07 89.55 93.67
Debt ratio 0.74 0.72 0.65
Equity ratio 0.26 0.28 0.35
Debt to Equity 2.83 2.51 1.82
Times Interest Earned 7.82 6.22 6.38
Cash Interest Coverage 4.02 3.22 3.34
Cash Debt Coverage 0.21 0.22 0.22
Interest Expense to Total Debt 0.07 0.04 0.04
Financial Leverage 3.21 2.54 2.24
Gross Profit Margin 46.25% 44.63% 43.13%
Operating Profit Margin 26.25% 24.95% 23.88%
Pre-Tax Profit Margin 23.16% 20.12% 20.67%
Net Profit Margin 16.89% 13.55% 14.88%
Return on Total Assets 9.75% 7.64% 8.00%
Return on Common Equity 36% 24% 22%
Book Value for Common Share 6.42 6.72 8.33
Market Capitalization 143243.4 123458.4 95759.4
Effective Tax Rate 28.76% 31.74% 30.91%
Basic Earnings per Share 3.04 3.03 2.47
Price-Earnings 119.08 102.97 97.98

ACCOUNTING AND FINANCIAL REPORTING 4
Price-Sales 26.02 23.50 18.90
Price-book 56.39 46.43 29.05
Dividend Payout 0 0 0
Dividend Yield 0 0 0
Dividend Coverage 0 0 0
Current liability ratio 0.25 0.22 0.25
Inventory to Sales Ratio 0 0 0
Cash to Current Assets Ratio 0.17 0.18 0.2
Current Assets to Total Debt Ratio 0.38 0.35 0.38
Current Liabilities to Inventory Ratio 0 0 0
3.
a. cash
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
cash 294 275 300 25 9.09% 6 2.04%
b. total current assets
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
total current assets 1444 1506 1728 222 14.74% 284 19.67%
c. Total assets
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
Total assets 9308 9340 9743 403 4.31% 435 4.67%
d.
Total current
liabilities
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$

ACCOUNTING AND FINANCIAL REPORTING 5
Total current
liabilities 1486 1502 1820 318 21.17% 334 22.48%
e. Total liabilities
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
Total liabilities 6013 6680 7202 522 7.81% 1189 19.77%
f. retained earnings
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
retained earnings 7352 8064 8994 930 11.53% 1642 22.33%
g.
total stockholder's
equity
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
total stockholder's
equity 3295 2660 2541 -119 -4.47% -754 -22.88%
h.
number of shares
outstanding
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
number of shares
outstanding
395.
7
395.
7
395.
7 0 0.00% 0 0.00%
i. Net sales/revenues
Particulars A B C $
chan
ge
% change
(C-B)
$ change
(C-A)
% change
(C-A) 2014 2015 2016

ACCOUNTING AND FINANCIAL REPORTING 6
$ $ $ (C-B)
Net sales/revenues 5066 5254 5505 251 4.78% 439 8.67%
j. Cost of goods sold
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
Cost of goods sold 2881 2909 2959 50 1.72% 78 2.71%
k. Gross margin
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
Gross margin 2185 2345 2546 201 8.57% 361 16.52%
l. operating expenses
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
operating expenses 975 1034 1101 67 6.48% 126 12.92%
m
. operating margin
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
operating margin 1210 1311 1445 134 10.22% 235 19.42%
n. interest expense
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$

ACCOUNTING AND FINANCIAL REPORTING 7
interest expense 164 170 163 -7 -4.12% -1 -0.61%
o. Net income
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
Net income 754 712 930 218 30.62% 176 23.34%
p. earnings per share
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
earnings per share 3.03 3.04 4.22 1.18 38.82% 1.19 39.27%
q.
Executive
compensation
Particulars A B C $
chan
ge
(C-B)
% change
(C-B)
$ change
(C-A)
% change
(C-A)
2014
$
2015
$
2016
$
Executive
compensation 0 0 0 0 #DIV/0! 0 #DIV/0!
4.

ACCOUNTING AND FINANCIAL REPORTING 8
2014 2015 2016
$260.00
$265.00
$270.00
$275.00
$280.00
$285.00
$290.00
$295.00
$300.00
$305.00
$294.00
$275.00
$300.00
cash
cash
Linear (cash)
years
2014 2015 2016
$1,300.00
$1,350.00
$1,400.00
$1,450.00
$1,500.00
$1,550.00
$1,600.00
$1,650.00
$1,700.00
$1,750.00
$1,444.00
$1,506.00
$1,728.00
total current assets
total current assets
Linear (total current assets)
years

ACCOUNTING AND FINANCIAL REPORTING 9
2014 2015 2016
$9,000.00
$9,100.00
$9,200.00
$9,300.00
$9,400.00
$9,500.00
$9,600.00
$9,700.00
$9,800.00
$9,308.00 $9,340.00
$9,743.00
Total assets
Total assets
Linear (Total assets)
years
2014 2015 2016
$-
$200.00
$400.00
$600.00
$800.00
$1,000.00
$1,200.00
$1,400.00
$1,600.00
$1,800.00
$2,000.00
$1,486.00 $1,502.00
$1,820.00
Total current liabilities
Total current liabilities
Linear (Total current
liabilities)
years

ACCOUNTING AND FINANCIAL REPORTING 10
2014 2015 2016
$5,400.00
$5,600.00
$5,800.00
$6,000.00
$6,200.00
$6,400.00
$6,600.00
$6,800.00
$7,000.00
$7,200.00
$7,400.00
$6,013.00
$6,680.00
$7,202.00
Total liabilities
Total liabilities
Linear (Total liabilities)
years
2014 2015 2016
$-
$1,000.00
$2,000.00
$3,000.00
$4,000.00
$5,000.00
$6,000.00
$7,000.00
$8,000.00
$9,000.00
$10,000.00
$7,352.00
$8,064.00
$8,994.00
retained earnings
retained earnings
Linear (retained earnings)
years

ACCOUNTING AND FINANCIAL REPORTING 11
2014 2015 2016
$-
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
$3,000.00
$3,500.00 $3,295.00
$2,660.00 $2,541.00
total stockholder's equity
total stockholder's equity
Linear (total stockholder's
equity)
years
2014 2015 2016
$-
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$400.00
$450.00 $395.70 $395.70 $395.70
number of shares outstanding
number of shares outstanding
Linear (number of shares
outstanding)
years

ACCOUNTING AND FINANCIAL REPORTING 12
2014 2015 2016
4800
4900
5000
5100
5200
5300
5400
5500
5600
5066
5254
5505
Net sales/revenues
Net sales/revenues
Linear (Net sales/revenues)
years
2014 2015 2016
$2,840.00
$2,860.00
$2,880.00
$2,900.00
$2,920.00
$2,940.00
$2,960.00
$2,980.00
$2,881.00
$2,909.00
$2,959.00
Cost of goods sold
Cost of goods sold
Linear (Cost of goods sold)
years

ACCOUNTING AND FINANCIAL REPORTING 13
2014 2015 2016
$2,000.00
$2,100.00
$2,200.00
$2,300.00
$2,400.00
$2,500.00
$2,600.00
$2,185.00
$2,345.00
$2,546.00
Gross margin
Gross margin
Linear (Gross margin)
years
2014 2015 2016
$900.00
$950.00
$1,000.00
$1,050.00
$1,100.00
$1,150.00
$975.00
$1,034.00
$1,101.00
operating expenses
operating expenses
Linear (operating expenses)
years

ACCOUNTING AND FINANCIAL REPORTING 14
2014 2015 2016
$1,050.00
$1,100.00
$1,150.00
$1,200.00
$1,250.00
$1,300.00
$1,350.00
$1,400.00
$1,450.00
$1,500.00
$1,210.00
$1,311.00
$1,445.00
operating margin
operating margin
Linear (operating margin)
years
2014 2015 2016
$158.00
$160.00
$162.00
$164.00
$166.00
$168.00
$170.00
$172.00
$164.00
$170.00
$163.00
interest expense
interest expense
Linear (interest expense)
years
2014 2015 2016
$-
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
$800.00
$900.00
$1,000.00
$754.00 $712.00
$930.00
Net income
Net income
Linear (Net income)
years

ACCOUNTING AND FINANCIAL REPORTING 15
2014 2015 2016
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$3.03 $3.04
$4.22
earnings per share
earnings per share
Linear (earnings per share)
years
5.
Balance sheet
as at dec-31
in millions ($)
particulars 2016 2015 2014
ASSETS
cash and cash equivalents 3.08% 2.94% 3.16%
trade receivable 9.26% 8.59% 8.57%
prepaid expenses and other assets 5.40% 4.59% 3.78%
total current assets 17.74% 16.12% 15.51%
property and equipment, net 4.16% 4.24% 3.41%
intangible assets, net 18.81% 20.04% 21.52%
goodwill 55.15% 55.67% 55.96%
other long-term assts 4.15% 3.92% 3.60%
TOTAL ASSETS 100.00% 100.00% 100.00%
LIABILITIES AND SHAREHOLDERS
EQUITY
accounts payable and accrued expense 12.75% 10.96% 9.72%
current maturities of long-term debt 0.98% 0.05% 0.99%
deferred revenue 4.96% 5.06% 5.25%
total current liabilities 18.68% 16.08% 15.96%
long-term debt 45.85% 45.91% 39.73%
deferred income taxes 7.82% 7.77% 7.52%
other long-term liabilities 1.57% 1.76% 1.39%
TOTAL LIABILITIES 73.92% 71.52% 64.60%
COMMITIMENTS AND CONTIGENCIES

ACCOUNTING AND FINANCIAL REPORTING 16
SHAREHOLDER'S EQUITY
preferred stock, no par value: 25.0
million shares authorised; none issue 0.00% 0.00% 0.00%
common stock, $ 0.01 par value: 900.0
million shares authorized; 395.7 million
shares issued 0.04% 0.04% 0.04%
Additional paid-in capital 10.47% 10.19% 9.64%
accumulated other comprehensive loss -0.78% -0.79% -0.68%
retained earnings 92.31% 86.34% 78.99%
treasury stock, at cost, 180.2 million
and 170.4 million shares -75.96% -67.30% -52.59%
total shareholder's equity 26.08% 28.48% 35.40%
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY 100.00% 100.00% 100.00%
Income statement
year ended 31 dec
in millions ($)
particulars 2016 2015 2014
Revenue:
processing and services 619.52% 559.55% 622.69%
product 118.40% 112.33% 120.22%
total revenue 737.92% 671.88% 742.90%
expenses:
cost of processing and services 305.90% 287.00% 321.14%
cost of product 102.67% 95.09% 107.25%
selling, general and administrative 145.22% 129.31% 150.77%
total expenses 553.79% 511.41% 579.17%
operating income 184.13% 160.48% 163.73%
interest expense -23.74% -21.62% -25.15%
loss on early debt extinguishment -11.94% 0.00% 0.00%
income from continuing
operations before income tax and
income from investment in
unconsolidated affiliate 148.46% 138.86% 138.58%
income tax provision -52.95% -50.93% -50.62%
income from investment in
unconsolidated affiliate 4.49% 12.07% 12.35%
income from continuing
operations 100.00% 100.00% 100.31%
loss from discontinued
operations, net of income taxes 0.00% 0.00% -0.31%

ACCOUNTING AND FINANCIAL REPORTING 17
net income 100.00% 100.00% 100.00%
6.
a) The company paying its accounts payable more rapidly over time. The company’s use
of accounts payable is increasing.
b) The company paying its accounts receivable more rapidly over time. The company’s
use of accounts receivable is increasing.
c) The company has no inventories.
d) The company converting its resource inputs into cash flows more rapidly over time.
The company’s cash position is increasing.
e) The company’s investment in fixed assets is increasing.
f) The assets are managing are very efficiently by the company.
g) the company’s use of long term debt is increasing.
h) Yes, the company is utilizing its debts more efficiently.
i) the stockholder’s investment becoming more profitable.
j) Increase by 10.22% from last year.
k) Decrease from the last year.
l) The market capitalization increase significantly over time.
m) The times interest earned increase over time.
n) There is no dividend yield or no dividend payout.
o) The effective tax rate decrease over time.
p) The estimated interest rate decrease over time.
q) The free cash flow decrease over time.
r) The earnings per share increase over time.
s) The book value per share decrease over time.

ACCOUNTING AND FINANCIAL REPORTING 18
t) The price-earnings ratio increase over time.
u) The trends of the profitability ratios are improved.
v) The trend of the liquidity ratios is declined.
w) The trend of the activity ratios is declined.
x) The trend of the coverage ratio is improved.
y) Improved trends in the various market ratios.
z) No, there are no differences in the accounting methods.
7.
The company’s credit policy are very good because it is seen from the ratios calculated in
project A that in comparison of three years it is seen that the ratio trend was improved from
the last year. It is therefore can be concluded that the company is able to meet current
obligations and to use current assets efficiently to produce profits efficiently and thus the
short term financial position is sound and $ 1 billion can be lended.
8.
It is seen from the ratios that was calculated in project A, the company’s is effectively
utilising its debt with the payments of the interest regularly. This is concluded that the
company is able to meet long-term liabilities, to use long-term debt and stockholder’s equity
effectively without jeopardizing the firm’s future, and to manage long-term assets in a way
that will maximize revenues. Thus the long term growth of the company is sound and thus the
loan of $ 10 billion can be lended with the repayment period of 10 years.
9.

ACCOUNTING AND FINANCIAL REPORTING 19
The company is earning profits in increasing trend which shows that the company is
potentially sound with the return on equity is 36% in 2016 which is highly inclined from the
previous year 2015 with 24%. This shows that the shareholders are highly satisfied with the
performance of the company and thus one can invest $500 million in the company.
10.
The company’s financial position is very strong and healthy by conducting ratio analysis of
taking three years as a comparison which shows that the company is providing to their
employees with the best opportunities to grow and also secure the welfare of the employees.
Thus, providing a base salary of $20 million with the bonus tied wanted to become a CFO of
the company.
11.
The main objective of the company must to earn a high profits and must provide a sound
return to the shareholders according to the amount invested.

ACCOUNTING AND FINANCIAL REPORTING 20
REFERENCES
Fiserv. (2016). Annual report. retrieved on 11 October 2016 from
http://files.shareholder.com/downloads/FISV/5348753300x0x929748/A530F2BE-5974-
477E-A825-8F8F910218EC/FISV_12.31.2016_10-K_FINAL_with_Exhibits_.pdf.
Fiserv. (2015). Annual report. retrieved on 11 October 2016 from
http://files.shareholder.com/downloads/FISV/5348753300x0x876210/A93BCC85-0C55-
41A8-A928-23F0895C0B14/2015_Annual_Report_on_Form_10-K.pdf.
Fiserv. (2014). Annual report. retrieved on 11 October 2016 from
http://files.shareholder.com/downloads/FISV/5348753300x0x818291/DA7FD17E-83E3-
459D-A51C-3BFB47868C6E/2014_Annual_Report_on_Form_10-K.pdf.
Fiserv. (2017). Our history. retrieved on 11 October 2016 from
https://www.fiserv.com/about/our-history.aspx?_ga=2.228499677.1562473677.1507645598-
445019464.1507439948.