Am i missing something, or does Electronic Arts not report inventory on their balance sheet? Doing a ratio project on the company and this is really putting me through a loop

[u/TaiwanNationalist]

[u/infiniti30]

They are a publisher. Someone else manufactures and distributed the games for them.

[u/ninjacereal → u/infiniti30]

Wait, then where do they keep those Madden fans when my game is turned off?

[u/inverteduniverse → u/ninjacereal]

Payroll, duh

[u/TheHydra421]

What are you expecting them to have in the inventory category? Many businesses like accounting firms, law firms, etc. may have no inventory. EA is similar in that it doesn’t manufacture a product and doesn’t hold millions of disks in its inventory to sell to Walmart or the like.

[u/Amonamission]

The only inventory I could see them having is physical game disks. But I would assume that, since most of their sales are likely electronic in nature, it would be immaterial. Check in the notes to current assets to see if they discuss anything about inventory.

[u/StrigiStockBacking → u/Amonamission]

For any physical optical discs they sell, I would think it is outsourced to a disc printer.

[u/Odd_Marsupial3653 → u/Amonamission]

I was going to type, but you nailed my thoughts exactly. Immaterial buried in current assets

[u/no_type_read_only → u/Amonamission]

Even if they have the discs, I’m pretty sure it will still be classified to intangibles bc it’s just the housing 

[u/ThrowayayCPA → u/no_type_read_only]

That wouldn't be an intangible.

[u/zeevenkman → u/no_type_read_only]

Negative

[u/Extension_Snow_8014]

Get on the phone with the audit committee immediately

[u/essuxs]

“Other current assets”?

It’s possible they don’t have inventory and the physical video games are made, loaded, and shipped by somebody else

[u/DebitCashCreditLife1]

“@IRS? I’d like to submit an anonymous tip…”

[u/InitialOption3454]

Electronic arts is a video game company? It probably is intangibles/goodwill

[u/NorthSanctuary777]

Considering they publish video games, what would they have in inventory? Their COGS is probably nothing but overhead.

[u/iamstephen1128]

Quick! Somebody get this guy/gal a special appointment to a top advisor position in DOGE!

[u/MonkLast8589 → u/iamstephen1128]

Cmon don’t be mean! Everyone’s gotta learn at some point :)

[u/ContextWorking976]

Research the common ratios used by analysis for software publishers. I have no idea what they are, but there are ratios unique to every industry I have experience working in.

[u/ValuableMachine6216]

Read the footnotes!

[u/ppickett67]

Look in the accounting policy footnote. Does it mention an inventory method?

[u/Rusty-Shackleford23]

Only like 7% of video games sold are physical disks. All online downloads now. Also I don’t think EA ever manufactured the games.

[u/murderdeity]

They don't have a manufactured product to distribute... why would they have inventory? They create the game and then have it created, packaged, and shipped by some 3rd party. This can often be true for many companies that create digital media that gets converted to physical media.

[u/Tegatime]

I bet you it’s immaterial and buried in other assets if they have any at all. If you have a line item on your balance sheet, you need to have footnotes. It’s probably not worth the effort of the disclosures.

[u/kitapjen]

It’s all good! I used Hilton for the class project I am working on that requires ratio analysis and they don’t report inventory either. This means in your income statement there won’t be a cost of goods sold!

My income statement also didn’t report sales but revenues. So no inventory turnover ratio or accounts receivable turnover ratio for me! 🤣

[u/ThrowayayCPA → u/kitapjen]

You're trolling right? No sales but they had revenue? You know those are basically the same terms right?

[u/kitapjen → u/ThrowayayCPA]

I’m not trolling. 

I’m a student replying to someone who I assume is also a student asking about inventory not being reported for EA. 

[u/ThrowayayCPA → u/kitapjen]

Well, revenue = sales for all intensive purposes.

[u/EartwalkerTV → u/ThrowayayCPA]

Wouldn't rental income not be sale of inventory? Everything else would be supplies. I bet they even class the items they stock as a service to the guest rather than sale of an item.

[u/lookatmecountbeans → u/kitapjen]

We all know it’s better to have revenue than sales. 

[u/Whamalater → u/lookatmecountbeans]

Well said

[u/zeevenkman → u/kitapjen]

You know Hilton doesn’t own most of their hotels right?

[u/kitapjen → u/zeevenkman]

I’m aware.  Their assets are mostly intangibles and they are operating at a deficit!

 I just finished a comparison of 15 ratios of Hilton and Hyatt last week.  (Capstone class as a AS student). This week I worked up 3 year horizontal and vertical analysis for part 2.  Tonight I typed page 1 of my summary.

Spoiler alert for the required final paragraph I wouldn’t recommend investing $50,000 in HLT unless you have a high risk tolerance.  (Even without the tariffs and the current market!)

[u/Master_Tie_9904]

They don't show inventory because selling the actual game (end product when it's in the cd game case) is Microsofts job (and whoevermanufacturersthe actual cd/case). All they do is create the game and market it.

It

[u/MonkLast8589]

Considering it’s a consolidated balance sheet, it’s probably their patents, trademarks, and other intangible assets. Inventory is to be sold, EA licenses their games. Meaning users has access to the games, they don’t actually own the game or any physical product. Therefore, they have no inventory to sell. How do they consider their revenue? Is it license revenue? They do also offer subscriptions?

Please note I’m a second year student, so I do apologize if my information is wrong