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Please follow the requirement about 12 pages  The information is on TTWO.

MGT 231 – Corporate Finance

Team Project

https://www.sec.gov/edgar

This project will consist of compiling information and providing an analysis of a publicly traded company assessing risks, investment returns, and overall valuation. This project must be completed in your groups, each person providing input to the overall project, and should be done so that the final product is a PDF report.

Each report should have a cover page (most creative/humorous cover page wins an additional prize), along with the below content – aggregate all information and analysis into a report providing the below criteria in organized sections. Reports should be fluid and consistent in nature.

Company Introduction

Provide an introduction to the company you are reporting by describing the company’s business – translate into your own words a consolidated overview of the “Business” section of the company’s most recent 10-K filing (Item 1, Part 1).

Company Risks

Provide an overview of the risks the company faces – translate into your own words a consolidated overview of the “Risk Factors” section of the company’s most recent 10-K filing (Item 1A, Part 1). Also include an overview of the market risk of the company – in your own words, translate the “Quantitative and Qualitative Disclosures about Market Risk” section (Item 7A – Part 2).

Time Trend Analysis

Provide an annual time-trend analysis of the following financial ratios for the previous three years. Provide tables and charts of your calculations along with a written summary analyzing each of the calculated ratios, if applicable.

· Short-Term Solvency & Liquidity

· Current Ratio

· Quick Ratio

· Long-Term Solvency

· Total Debt Ratio

· Asset Management & Turnover

· Inventory Turnover

· Days’ Sales in Inventory

· Receivables Turnover

· Days’ Sales in Receivables

· Profitability

· Profit Margin

· EBITDA Margin

· Return on Assets

· Return on Equity

· Market Value

· Price-Earnings Ratio

· Market Capitalization

Peer Group Analysis

Provide a peer group analysis [of three similar companies] of the following financial ratios for the previous fiscal year. Provide tables and charts of your calculations along with a written summary analyzing each of the calculated ratios, if applicable.

· Short-Term Solvency & Liquidity

· Current Ratio

· Quick Ratio

· Long-Term Solvency

· Total Debt Ratio

· Asset Management & Turnover

· Inventory Turnover

· Days’ Sales in Inventory

· Receivables Turnover

· Days’ Sales in Receivables

· Profitability

· Profit Margin

· EBITDA Margin

· Return on Assets

· Return on Equity

· Market Value

· Price-Earnings Ratio

· Market Capitalization

Peer Group Explanation

Provide a brief explanation [for each company] as to your reasoning for choosing the three comparable companies in the previous section – Peer Group Analysis.

Common Size Financials

Convert the consolidated Income Statement and Balance Sheet into common size financials for the most recent fiscal year in comparison to the same companies in the peer group ratio analysis. Analyze the statements and provide an explanation of your analysis.

Stock Valuation

Calculate and chart the company’s current stock price under various scenarios.

· Zero Dividend Growth

· Constant Dividend Growth (dividends are expected to grow at 3% per year)

· Free Cash Flows

· Assume revenues are expected to grow at 10 percent per year for two years, then 8 percent per year for the following two years, then at 6 percent per year after that.

· Assume all expenses are proportional to revenues based on the most recent fiscal year.

· Assume analysts are expecting dividends to grow 5% per year, indefinitely.

· Assume standard corporate tax rate of 35%.

If your company does not have a current dividend, assume they will be paying a dividend of 1% of their current stock price next year. Stock price and dividend information can be referenced in the company’s most recent 10-K filing (Item 5, Part 2).

Percentage Returns

Calculate and chart the following returns for the previous three fiscal years.

· Dividend Yield

· Capital Gain

· Total Return

· Arithmetic Average Return of Total Return

· Geometric Average Return of Total Return

Company Overview

Provide a brief synopsis of the company referring back to your research, reported information and analysis.

Grading Breakdown

Below is a detailed breakdown of the grading structure for this project. The grading for this project is very simplified and analyzes completeness of each section along with accuracy by cross-referencing the 10-K filings of the company.

The data put in appendix

Section

Completeness

Accuracy

Total

Company Introduction

5

5

10

Company Risks

5

5

10

Time Trend Analysis

5

10

15

Peer Group Analysis

5

10

15

Peer Group Explanation

5

5

10

Common Size Financials

5

5

10

Stock Valuation

5

5

10

Percentage Returns

5

5

10

Company Overview

5

5

10

Total

45

55

100

TAKE TWO INTERACTIVE SOFTWARE INC

-Company Introduction

Item 1. Business

General

We are a leading developer, publisher and marketer of interactive entertainment for consumers around the globe. We develop and publish products principally through Rockstar Games, 2K, Private Division, Social Point, and Playdots. Our products are currently designed for console gaming systems, including, but not limited to, the Sony Computer Entertainment, Inc. (“Sony”) PlayStation®4 (“PS4”) and PlayStation5 (“PS5”), Microsoft Corporation (“Microsoft”) Xbox One® (“Xbox One”) and Xbox Series X|S (“Xbox Series X|S”), and Nintendo’s SwitchTM (“Switch”), as well as personal computers (“PC”), including smartphones and tablets. We deliver our products through physical retail, digital download, online platforms, and cloud streaming services.

Our website address is www.take2games.com. We make all of our filings with the Securities and Exchange Commission (“SEC”) available free of charge on our website under the caption “Financial Information—SEC Filings.” Included in these filings are our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, which are available as soon as reasonably practicable after we electronically file or furnish such materials with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. Our website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K. The SEC maintains a website that contains annual, quarterly and current reports, proxy and information statements and other information that issuers (including the Company) file electronically with the SEC. The SEC’s website is www.sec.gov.

Strategy

Overview. We endeavor to be the most creative, innovative and efficient company in our industry. Our core strategy is to capitalize on the popularity of video games by developing and publishing high-quality interactive entertainment experiences across a range of genres. We focus on building compelling entertainment franchises by publishing a select number of titles for which we can create sequels and incremental revenue opportunities through virtual currency, add-on content, and in-game purchases. Most of our intellectual property is internally owned and developed, which we believe best positions us financially and competitively. We have established a portfolio of proprietary software content for the major hardware platforms in a wide range of genres, including action, adventure, family/casual, role-playing, shooter, sports and strategy, which we distribute worldwide. We believe that our commitment to creativity and innovation is a distinguishing strength, enabling us to differentiate our products in the marketplace by combining advanced technology with compelling storylines and characters that provide unique gameplay experiences for consumers. We have created, acquired, or licensed a group of highly recognizable brands to match the broad consumer demographics that we serve, ranging from adults to children and game enthusiasts to casual gamers. Another cornerstone of our strategy is to support the success of our products in the marketplace through innovative marketing programs and global distribution on platforms and through channels that are relevant to our target audience.

Support World-Class Creative Teams. Creativity and innovation remain the core tenets of our organization and are the lifeblood of our ongoing success. We have 5,079 employees working in game development in studios around the world, including some of the most well-known names in the business. The creative teams at Rockstar Games and 2K are renowned for their consistent ability to deliver games that set new benchmarks for excellence. In addition, Private Division is dedicated to bringing titles from top independent developers to market, and Social Point and Playdots further enhance our development capabilities with a track record of producing multiple hits in the free-to-play mobile sector. Whether expanding our portfolio of franchises, launching new intellectual property, or providing innovative ways for audiences to remain captivated and engaged, we prioritize producing the highest quality entertainment experiences. We support our teams by focusing on talent retention and acquisition, and our label structure enables us to target distinct market segments and opportunities.

Focus on Core Strength of Producing High Quality Titles. We focus on publishing a select number of high-quality titles based on internally owned and developed intellectual properties. We currently own the intellectual property rights to 27 proprietary brands. In addition, we selectively develop titles based on licensed properties, including sports leagues, and also publish externally developed titles.

We use a product investment review process to evaluate potential titles for investment, to review existing titles in development, and to assess titles after release by measuring their performance in the market and the return on our investment. We apply this process to all of our products, whether internally or externally developed. The product investment review process includes reviews of each project at various stages of development by our executive management team and the senior management of our publishing labels and also includes coordination between our sales and marketing personnel before the launch of titles. This disciplined approach to product investment is expected to enhance the competitiveness and profitability of our titles.

We develop our products using a combination of our internal development teams and external development resources acting under contract with us. We typically select external developers based on their track record and expertise in developing products in the same category or genre. One developer will generally produce the same game for multiple platforms and will also produce sequels to the original game. We believe that selecting and using development resources in this manner allows us to leverage the particular expertise of our internal and external development resources, which is designed to maintain our quality standards for our products.

Leverage Emerging Technologies, Platforms, and Distribution Channels, Including Digitally Delivered Content. Interactive entertainment played online and on mobile platforms, such as tablets and smartphones, presents opportunities to enhance our growth and profitability. In addition, the interactive entertainment software industry is delivering a growing amount of content for traditional platforms through digital download. We provide a variety of digitally delivered products and offerings, which typically have a higher gross margin than physically delivered products. Virtually all of our titles that are available through retailers as packaged goods products are also available through direct digital download (from websites we own or third-party websites). We also publish an expanding variety of titles for tablets and smartphones, which are delivered to consumers through digital download. We will continue to invest in emerging opportunities in mobile and online gameplay, particularly for our wholly-owned franchises, as well as downloadable content and microtransactions that enable gamers to pay to download additional content to enhance their game playing experience. We aim to drive ongoing engagement and incremental revenue from recurrent consumer spending on our titles through virtual currency, add-on content, and in-game purchases.

Expand International Business. The global market for interactive entertainment continues to grow, and we seek to increase our presence internationally, particularly in Asia, the Middle East, and Latin America. We are continuing to execute on our growth initiatives in Asia, where our strategy is to broaden the distribution of our existing products and expand our online gaming presence, especially in China and South Korea. We are a direct publisher in Japan and South Korea. While we retain title to all intellectual property, in some regions, local publishers, under license agreements, are responsible for localization of software content, distribution, and marketing of the products in their respective local markets. We intend to continue to build on our licensing relationships and also continue to expand on distribution strategies to grow our international business.

Our Businesses

Our revenue is primarily derived from the sale of internally developed software titles and software titles developed by third parties. Operating margins are dependent in part upon our ability to release new, commercially successful software products and to manage effectively their development and marketing costs. We have internal development studios located in Australia, Canada, China, Czech Republic, Hungary, India, South Korea, Spain, the United Kingdom (U.K.), and the United States (U.S.). As of March 31, 2021, we had a research and development staff of 5,079 employees with the technical capabilities to develop software titles for all major consoles, PCs, and mobile platforms in multiple languages and territories.

Agreements with third-party developers generally give us exclusive publishing and marketing rights and require us to make development payments, pay royalties based on product sales, and satisfy other conditions. Development payments for software titles are typically recoupable against royalties otherwise due to developers based on software sales. Our agreements with third-party developers generally provide us with the right to monitor development efforts and to cease making development payments if specified development milestones are not satisfied. We also regularly monitor the level of development payments in light of the expected sales for the related titles.

We continue to engage in evolving business models such as online gaming, virtual currency, add-on content, and in-game purchases, and we expect to continue to generate incremental revenue from these opportunities.

Rockstar Games. Software titles published by our Rockstar Games label are primarily internally developed. We expect Rockstar Games, our wholly-owned publisher of the Grand Theft Auto, Max Payne, Midnight Club, Red Dead Redemption, and other popular franchises, to continue to be a leader in the action/adventure product category and to create groundbreaking entertainment. We believe that Rockstar Games has established a uniquely original, popular cultural phenomenon with its Grand Theft Auto series, which is the interactive entertainment industry’s most iconic and critically acclaimed brand and has sold-in over 335 million units worldwide. The latest installment, Grand Theft Auto V, has sold-in over 145 million units worldwide and includes access to Grand Theft Auto Online. Red Dead Redemption 2, which has been a critical and commercial success that set numerous entertainment industry records, has sold-in more than 35 million units worldwide to date. Rockstar Games is also well known for developing brands in other genres, including the LA Noire, Bully, and Manhunt franchises. Rockstar Games continues to expand on our established franchises by developing sequels, offering downloadable episodes, and additional content.

-Company Risks from 10-k

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential loss arising from fluctuations in market rates and prices. Our market risk exposures primarily include fluctuations in interest rates and foreign currency exchange rates.

Interest Rate Risk

Our exposure to fluctuations in interest rates relates primarily to our short-term investment portfolio and variable rate debt under the Credit Agreement.

We seek to manage our interest rate risk by maintaining a short-term investment portfolio that includes corporate bonds with high credit quality and maturities less than two years. Since short-term investments mature relatively quickly and can be reinvested at the then current market rates, interest income on a portfolio consisting of short-term securities is more subject to market fluctuations than a portfolio of longer-term maturities. However, the fair value of a short-term portfolio is less sensitive to market fluctuations than a portfolio of longer-term securities. We do not currently use derivative financial instruments in our short-term investment portfolio. Our investments are held for purposes other than trading.

As of March 31, 2021, we had $1,308.7 million of short-term investments, which included $729.9 million of available-for-sale securities. The available-for-sale securities were recorded at fair market value with unrealized gains or losses resulting from changes in fair value reported as a separate component of accumulated other comprehensive income (loss), net of tax, in stockholders’ equity. We also had $1,422.9 million of cash and cash equivalents that are comprised primarily of money market funds and bank-time deposits. We determined that, based on the composition of our investment portfolio, there was no material interest rate risk exposure to our Consolidated Financial Statements or liquidity as of March 31, 2021.

Historically, fluctuations in interest rates have not had a significant effect on our operating results. Under our Credit Agreement, loans will bear interest at a rate of (a) 0.250% to 0.750% above a certain base rate (3.25% at March 31, 2021) or (b) 1.125% to 1.750% above LIBOR (approximately 1.10% at March 31, 2021), which rates are determined by reference to our consolidated total net leverage ratio. Changes in market rates may affect our future interest expense if there is an outstanding balance on our line of credit. At March 31, 2021, there were no outstanding borrowings under our Credit Agreement.

Foreign Currency Exchange Rate Risk

We transact business in foreign currencies and are exposed to risks resulting from fluctuations in foreign currency exchange rates. Accounts relating to foreign operations are translated into United States dollars using prevailing exchange rates at the relevant period end. Translation adjustments are included as a separate component of stockholders’ equity on our Consolidated Balance Sheets. For the fiscal years ended March 31, 2021 and 2020, our foreign currency translation adjustment was a gain of $51.3 million and a loss of $27.4 million, respectively. We recognized a foreign currency exchange transaction gain of $0.7 million, a loss of $3.6 million, and a loss of $0.5 million for the fiscal years ended March 31, 2021, 2020, and 2019, respectively, in Interest and other, net in our Consolidated Statements of Operations.

-Time Trend Analysis

TTWO 2020-2019-2018 ratios

-Peer Group Analysis




-Common Size Financials

EA



Activation Blizzard

TTWO

-Stock Valuation

The company does not have a current dividend, assume they will be paying a dividend of 1% of their current stock price next year.