MEMO

Group 4 is recommending investors to hold their stocks in Stryker Corporation. This memo focuses on measures and additional information which support the position not to buy or sell, but to hold Stryker stock. Included are certain of the company’s liquidity and solvency ratios, along with profitability, dividends history and stock ratios.
Stryker is a leading medical technology company based in Kalamazoo, MI. More than 2/3 of their sales are within the US, where most products are marketed directly to the medical community. The remaining sales are in over 100 countries through company-owned sales subsidiaries and branches, as well as through 3rd parties. Stryker sells 3 types of cutting edge, advanced technology products: Orthopaedics, Medical Surgery, and Neurotechnology and Spine1. In Stryker’s main revenue-generating product, Orthopaedics, the company is one of five leading competitors globally. Prior to the financial analysis, we highlight three major activities of the company in 2014: firstly, several mergers and acquisitions added expertise, customers and assets, the most intriguing being MAKO, which helps the company build out robotic arm assisted surgery; secondly, a major recall to its hip system occurred due to corrosion; and thirdly, the company continues to spend for patents and R&D.
Stryker’s liquidity and solvency ratios appear far from impressive (see ref 1. Liquidity/Solvency). The Current and Debt to Assets ratios point to diminishing liquidity, showing a downward trend in the past 3 years. The current ratio is also far below its closest competitor, Zimmer, and slightly below the industry average. Taking a more holistic approach, however, Inventory Turnover shows comparative stability. Stryker manages its inventory relative to its costs far better than Zimmer and slightly better than the rest of the industry. Furthermore,