I.

Financial Analysis

I.I. Balance Sheet and Common-Size Balance Sheet

ARENA’s Balance Sheet

2022 2021 2020 2019

Period Ending: 31/12 31/12 31/12 31/12

Total Current Assets 6763.05 3713.69 1616.99 1154.57

Cash and Short-Term Investments 1366.44 494.69 226.58 136.73
Cash - 258.47 139.22 115.68
Cash & Equivalents 1195.14 494.69 226.58 136.73
Short Term Investments 171.3 25.82 28.5 13.98
Total Receivables, Net 3704.14 2239.92 948.6 722.29
Accounts Receivables - Trade, Net 3704.11 2239.81 727.7 722.22
Total Inventory 1459.67 901.84 400.82 264.35
Prepaid Expenses 30.32 16.05 5.33 8.23
Other Current Assets, Total 202.48 61.19 35.64 27.84
Total Assets 7055.43 3968.05 1666.47 1192.23
Property/Plant/Equipment, Total - Net 61.9 57.56 27.16 21.68
Property/Plant/Equipment, Total - Gross 303.8 205.95 106.29 80.31
Accumulated Depreciation, Total -241.9 -148.39 -79.14 -58.63
Goodwill, Net 83.68 83.68 - -
Intangibles, Net 76.2 91 3.56 2.23
Long Term Investments - 14.14 9 -
Note Receivable - Long Term 0.036 0.104 2.73 0.066
Other Long-Term Assets, Total 28.77 15.53 7.03 5.65
Other Assets, Total -1828.87 -1270.3 -502.4 -416.36
Total Current Liabilities 5891.01 2950.33 1059.21 728.15
Accounts Payable 3432.56 1817.06 569.76 506.92
Payable/Accrued - - - -
Accrued Expenses 287.46 184.24 2.3 12.66
Notes Payable/Short-Term Debt 1524.78 851.85 385.46 149.73
Current Port. of LT Debt/Capital Leases 8.82 10.12 2.8 3.72
Other Current Liabilities, Total 637.39 87.05 77.92 55.13
Total Liabilities 6071.29 3153.58 1082.72 747.58
Total Long-Term Debt 134.9 185.48 17.59 14.3
Long Term Debt 117.72 166.83 - -
Capital Lease Obligations 17.18 18.65 17.59 14.3
Deferred Income Tax 6.53 6.28 - -
Minority Interest - - - -0.8
Other Liabilities, Total -3128.43 -1859.05 -764.99 -293.52
Total Equity 984.15 814.47 583.75 444.65
Redeemable Preferred Stock, Total - - - -
 Preferred Stock - Non-Redeemable, Net - - - -
Common Stock, Total 100 100 32 32
Additional Paid-In Capital 1.04 0.72 0.41 0.33
Retained Earnings (Accumulated Deficit) 241.4 157.62 174.64 122.88
Treasury Stock - Common - - - -
ESOP Debt Guarantee - - - -
Unrealized Gain (Loss) - - - -
Other Equity, Total 641.71 556.13 376.7 289.45
Total Liabilities & Shareholders' Equity 7055.43 3968.05 1666.47 1192.23
Total Common Shares Outstanding 100 100 100 100

ARENA’s Common-Size Balance Sheet

Item 2022 (%) 2021 (%) 2020 (%) 2019 (%)
Total Assets 100.00 100.00 100.00 100.00
- Current Assets 95.82 93.39 97.66 96.84
- Cash & Short-Term Investments 19.95 12.50 13.93 11.52
- Receivables, Net 54.21 56.70 57.02 60.87
- Inventory 21.20 22.75 24.08 22.25
- Other Current Assets 2.92 1.54 2.13 2.35
- Non-Current Assets 4.18 6.61 2.34 3.16
- Property/Plant/Equipment, Net 0.88 1.45 1.63 1.82
- Intangibles, Net 01.08 2.29 0.21 0.19
- Long-Term Investments 0.00 0.36 0.54 0.00
- Other Long-Term Assets 0.41 0.39 0.42 0.47
- Other Assets -25.92 -32.03 -30.15 -34.94
Total Liabilities & Shareholders' Equity 100.00 100.00 100.00 100.00
- Current Liabilities 83.58 74.62 63.74 61.14
- Accounts Payable 48.46 46.25 34.35 42.47
- Notes Payable/Short-Term Debt 21.42 21.67 23.15 12.56
- Other Current Liabilities 09.04 2.77 4.67 4.63
- Non-Current Liabilities 1.91 4.67 01.05 1.20
- Long-Term Debt 1.67 4.22 0.00 0.00
- Other Liabilities -44.23 -47.00 -45.77 -24.64
Shareholders' Equity 16.42 20.38 34.66 37.26
- Common Stock 0.14 0.25 0.19 0.27
- Retained Earnings (Accumulated Deficit) 3.42 3.98 10.51 10.31

Current Assets: A large portion of Arena Computer's current assets consists of commercial
receivables and stocks. It is necessary to manage stocks effectively to monitor the timely
collection of receivables and to avoid cash flow problems.
Fixed Assets: The share of fixed assets within the company's total assets is low. This may be due
to the structure of the business or the effective use of assets.

Liabilities: A large portion of the company's liabilities consists of short-term debts. This is
generally seen in companies with excessive inventory and receivables. There has been an
increase in long-term debts recently, so it is important to monitor this situation.

Equity: The company's equity has been growing steadily over the years, which provides a good
buffer against debt and supports future growth.

Intangible Assets: The presence of a significant amount of intangible assets on the balance sheet
may indicate a substantial dependence of the company on intellectual property rights or brand
value. This could indicate that much of the company's value comes from patents, copyrights,
trademarks, or other intangible assets.

Property/Plant/Equipment: The share of property, plant, and equipment within the total assets
is relatively low. This may suggest that the company could have an asset-light business model.
That is, the company may have invested more in intangible assets such as services or intellectual
property, rather than heavily investing in physical assets.

 In 2019, a large portion of the company's total assets, i.e., 96.84%, consisted of current
assets. This usually indicates strong liquidity and cash flow. However, we see a slight
decrease in this ratio when we come to 2022. The share of current assets in total assets has
slipped to 95.82%. This decline suggests that the company may have started to shift more
towards long-term investments or fixed assets, or it may have reduced its current assets
slightly.
 In 2019, the share of current liabilities in the company's total debts was 61.07%. When
we come to 2022, we see that this ratio has risen to 83.51%. The company's share of
current liabilities in total debts has significantly increased. This indicates an increase in
the company's short-term obligations and thus its financial risks. The reasons for the
 increase may include the growth of the company's business volume, liquidity management
strategy, or working capital management. This situation might suggest that the company
needs to review its short-term debt management strategies.
 In 2019, the company's cash and cash equivalent assets constituted 11.46% of total
assets, while this ratio increased to 16.94% in 2022. This indicates an improvement in the
company's liquidity situation. Having sufficient cash flow increases the company's ability
to meet both short and long-term obligations and to invest in growth opportunities.
Therefore, this situation can be considered as a positive indicator of the company's
financial health and stability.
 The total receivables of the company decreased from 60.57% of total assets in 2019 to
52.51% in 2022, which shows that the company increased its collection efficiency and
reduced credit risk. However, the company's debt accounts have fallen from 42.51% of
total liabilities in 2019 to 48.67% in 2022; this means that the company has shortened its
payment times to suppliers and may lose some of its bargaining power.
 In 2019, stocks, which constituted 22.17% of the company's total assets, had dropped to
20.7% by 2022. This decrease could indicate an improvement in the company's inventory
management and efforts to reduce the risk of obsolescence.
 From 2019 to 2022, the company's total long-term debt has risen from 1.2% of total debt
to 1.91%. This indicates that the company's leverage has increased, and it is incurring
more debt to finance its long-term investments or expansion. However, the company's
long-term debt ratio is far below the industry average (26.1) and even the average of the
bottom 25% segment of the industry (3.7), according to TÜİK's annual sector balance
sheet reports. This could indicate that the company has a conservative capital structure
and carries a low financial risk. This low level may also be related to the structure of the
industry. For example, the long-term debt ratio of the manufacturing sector is 46.5%,
while that of the retail sector is 52.6%. The lower level in the IT sector generally stems
from the production of high-tech products and services. Although these products require
high investment, the profitability potential is high, and therefore IT companies may not
need to incur long-term debt.
 The company's equity ratio has dropped from 37.28% in 2019 to 13.94% in 2022. The
company's low equity ratio may increase financial risk and negatively affect the need for
borrowing as well as profit and growth potential. However, the company's low long-term
debt ratio indicates that there is probably no reason for concern. Therefore, this decrease
might be due to circumstances such as the company distributing a wider dividend to its
shareholders or buying back more shares from the market.

I.II. Income Statement and Common-Size Income Statement

Item 2022 2021 2020 2019
(%) (%) (%) (%)
Revenue 100.00 100.00 100.00 100.00
- Total Revenue 100.00 100.00 100.00 100.00
- Other Revenue 0.00 0.00 0.00 0.00
Cost of Revenue 94.60 95.44 89.94 94.70
Gross Profit 5.40 4.56 10.06 5.30
 Total Operating Expenses 96.68 97.05 81.50 97.82
- Selling/General/Admin. Expenses 2.25 2.13 1.52 2.93
- Research & Development 0.00 0.00 0.00 0.00
- Depreciation/Amortization 0.00 0.24 0.17 0.29
- Interest Expense (Income) - Net Operating -2.61 -1.47 -1.01 0.00
- Unusual Expense (Income) 0.00 0.00 0.00 0.00
- Other Operating Expenses 2.49 1.41 0.95 01.01
Operating Income 3.32 2.95 18.56 2.18
Interest Income (Expense), Net Non-Operating 0.00 -1.33 -0.87 -0.90
Gain (Loss) on Sale of Assets 0.00 0.00 0.00 0.00
Other, Net 2.37 01.01 0.85 1.34
Net Income Before Taxes 01.04 1.84 03.04 1.16
Provision for Income Taxes 0.40 0.70 0.67 0.16
Net Income After Taxes 0.64 1.10 2.37 1.00
- Minority Interest 0.00 0.00 0.00 -0.03
- Equity In Affiliates 0.00 0.00 0.00 0.00
- U.S GAAP Adjustment 0.00 0.00 0.00 0.00
Net Income Before Extraordinary Items 0.64 1.10 2.37 01.03
Total Extraordinary Items 0.00 0.00 0.00 0.00
Net Income 0.64 1.10 2.37 01.03
Total Adjustments to Net Income 0.00 0.00 0.00 0.00
Income Available to Common Excluding Extraordinary 0.64 1.10 2.37 01.03
Items
Dilution Adjustment 0.00 0.00 0.00 0.00
Diluted Net Income 0.64

I.III. Trend Analysis

I.IV. Financial Ratios

I.V. Stock Performance

I.VI. Du Pont Financial Analysis

The company has shown a serious increase in revenue and expansion in recent years, which is a
positive sign for the overall condition and success of the company. Operating expenses are on the
rise and this could be due to factors such as expansion costs, intensifying marketing activities, or
increasing administrative expenses. EBIT has shown variability over the years and it is important
to analyze the reasons for this variability. Interest expenses have a significant impact on the
company's net earnings and this brings questions about how well the company can manage its
debt burden and interest payments. Net income is low and unstable, which indicates that the
business is having problems converting profit to net income.
Item 2022 2021 2020 2019
(%) (%) (%) (%)
Revenue 100.00 100.00 100.00 100.00
- Total Revenue 100.00 100.00 100.00 100.00
- Other Revenue 0.00 0.00 0.00 0.00
Cost of Revenue 94.60 95.44 89.94 94.70
Gross Profit 5.40 4.56 10.06 5.30
Total Operating Expenses 96.68 97.05 81.50 97.82
- Selling/General/Admin. Expenses 2.25 2.13 1.52 2.93
- Research & Development 0.00 0.00 0.00 0.00
- Depreciation/Amortization 0.00 0.24 0.17 0.29
- Interest Expense (Income) - Net Operating -2.61 -1.47 -1.01 0.00
- Unusual Expense (Income) 0.00 0.00 0.00 0.00
- Other Operating Expenses 2.49 1.41 0.95 01.01
Operating Income 3.32 2.95 18.56 2.18
Interest Income (Expense), Net Non-Operating 0.00 -1.33 -0.87 -0.90
Gain (Loss) on Sale of Assets 0.00 0.00 0.00 0.00
Other, Net 2.37 01.01 0.85 1.34
Net Income Before Taxes 01.04 1.84 03.04 1.16
Provision for Income Taxes 0.40 0.70 0.67 0.16
Net Income After Taxes 0.64 1.10 2.37 1.00
- Minority Interest 0.00 0.00 0.00 -0.03
- Equity In Affiliates 0.00 0.00 0.00 0.00
- U.S GAAP Adjustment 0.00 0.00 0.00 0.00
Net Income Before Extraordinary Items 0.64 1.10 2.37 01.03
Total Extraordinary Items 0.00 0.00 0.00 0.00
Net Income 0.64 1.10 2.37 01.03
Total Adjustments to Net Income 0.00 0.00 0.00 0.00
Income Available to Common Excluding Extraordinary 0.64 1.10 2.37 01.03
Items
Dilution Adjustment 0.00 0.00 0.00 0.00
Diluted Net Income 0.64