Problems Q1, Q2, Q3
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Ch03P15BuildaModel.xlsxBuild a Model
| Solution | 7/16/15 | |||||
| Chapter: | 3 | |||||
| Problem: | 15 | |||||
| Joshua & White Technologies: December 31 Balance Sheets | ||||||
| (Thousands of Dollars) | ||||||
| Assets | 2016 | 2015 | ||||
| Cash and cash equivalents | $21,000 | $20,000 | ||||
| Short-term investments | 3,759 | 3,240 | ||||
| Accounts Receivable | 52,500 | 48,000 | ||||
| Inventories | 84,000 | 56,000 | ||||
| Total current assets | $161,259 | $127,240 | ||||
| Net fixed assets | 218,400 | 200,000 | ||||
| Total assets | $379,659 | $327,240 | ||||
| Liabilities and equity | ||||||
| Accounts payable | $33,600 | $32,000 | ||||
| Accruals | 12,600 | 12,000 | ||||
| Notes payable | 19,929 | 6,480 | ||||
| Total current liabilities | $66,129 | $50,480 | ||||
| Long-term debt | 67,662 | 58,320 | ||||
| Total liabilities | $133,791 | $108,800 | ||||
| Common stock | 183,793 | 178,440 | ||||
| Retained Earnings | 62,075 | 40,000 | ||||
| Total common equity | $245,868 | $218,440 | ||||
| Total liabilities and equity | $379,659 | $327,240 | ||||
| Joshua & White Technologies December 31 Income Statements | ||||||
| (Thousands of Dollars) | ||||||
| 2016 | 2015 | |||||
| Sales | $420,000 | $400,000 | ||||
| COGS except excluding depr. and amort. | 300,000 | 298,000 | ||||
| Depreciation and Amortization | 19,660 | 18,000 | ||||
| Other operating expenses | 27,600 | 22,000 | ||||
| EBIT | $72,740 | $62,000 | ||||
| Interest Expense | 5,740 | 4,460 | ||||
| EBT | $67,000 | $57,540 | ||||
| Taxes (40%) | 26,800 | 23,016 | ||||
| Net Income Michael C. Ehrhardt: Due to rounding, the numbers calculated in the Chapter 2 problem may differ slightly from these. | $40,200 | $34,524 | ||||
| Common dividends | $18,125 | $17,262 | ||||
| Addition to retained earnings | $22,075 | $17,262 | ||||
| Other Data | 2016 | 2015 | ||||
| Year-end Stock Price | $90.00 | $96.00 | ||||
| # of shares (Thousands) | 4,052 | 4,000 | ||||
| Lease payment (Thousands of Dollars) | $20,000 | $20,000 | ||||
| Sinking fund payment (Thousands of Dollars) | $5,000 | $5,000 | ||||
| Ratio Analysis | 2016 | 2015 | Industry Avg | |||
| Liquidity Ratios | ||||||
| Current Ratio | 2.58 | |||||
| Quick Ratio | 1.53 | |||||
| Asset Management Ratios | ||||||
| Inventory Turnover (Total COGS/Inventories) | 7.69 | |||||
| Days Sales Outstanding | 47.45 | |||||
| Fixed Assets Turnover | 2.04 | |||||
| Total Assets Turnover | 1.23 | |||||
| Debt Management Ratios | ||||||
| Debt Ratio (Total debt-to-assets) | 20.0% | |||||
| Liabilities-to-assets ratio | 32.1% | |||||
| Times-interest-earned ratio | 15.33 | |||||
| EBITDA coverage ratio | 4.18 | |||||
| Profitability Ratios | ||||||
| Profit Margin | 8.86% | |||||
| Basic Earning Power | 19.48% | |||||
| Return on Assets | 10.93% | |||||
| Return on Equity | 16.10% | |||||
| Market Value Ratios | ||||||
| Earnings per share | NA | |||||
| Price-to-earnings ratio | 10.65 | |||||
| Cash flow per share | NA | |||||
| Price-to-cash flow ratio | 7.11 | |||||
| Book Value per share | NA | |||||
| Market-to-book ratio | 1.72 | |||||
| a. Has Joshua & White's liquidity position improved or worsened? Explain. | ||||||
| b. Has Joshua & White's ability to manage its assets improved or worsened? Explain. | ||||||
| c. How has Joshua & White's profitability changed during the last year? | ||||||
| d. Perform an extended Du Pont analysis for Joshua & White for 2008 and 2009. | ||||||
| ROE = | PM x | TA Turnover x Equity Multiplier | ||||
| 2016 | ||||||
| 2015 | ||||||
| e. Perform a common size analysis. What has happened to the composition | ||||||
| (that is, percentage in each category) of assets and liabilities? | ||||||
| Common Size Balance Sheets | ||||||
| Assets | 2016 | 2015 | ||||
| Cash and cash equivalents | ||||||
| Short-term investments | ||||||
| Accounts Receivable | ||||||
| Inventories | ||||||
| Total current assets | ||||||
| Net fixed assets | ||||||
| Total assets | ||||||
| Liabilities and equity | 2016 | 2015 | ||||
| Accounts payable | ||||||
| Accruals | ||||||
| Notes payable | ||||||
| Total current liabilities | ||||||
| Long-term debt | ||||||
| Total liabilities | ||||||
| Common stock | ||||||
| Retained Earnings | ||||||
| Total common equity | ||||||
| Total liabilities and equity | ||||||
| Common Size Income Statements | 2016 | 2015 | ||||
| Sales | ||||||
| COGS except excluding depr. and amort. | ||||||
| Depreciation and Amortization | ||||||
| Other operating expenses | ||||||
| EBIT | ||||||
| Interest Expense | ||||||
| EBT | ||||||
| Taxes (40%) | ||||||
| Net Income | ||||||
| f. Perform a percent change analysis. What does this tell you about the change in profitability | ||||||
| and asset utilization? | ||||||
| Percent Change Balance Sheets | Base | |||||
| Assets | 2016 | 2015 | ||||
| Cash and cash equivalents | ||||||
| Short-term investments | ||||||
| Accounts Receivable | ||||||
| Inventories | ||||||
| Total current assets | ||||||
| Net fixed assets | ||||||
| Total assets | ||||||
| Base | ||||||
| Liabilities and equity | 2016 | 2015 | ||||
| Accounts payable | ||||||
| Accruals | ||||||
| Notes payable | ||||||
| Total current liabilities | ||||||
| Long-term debt | ||||||
| Total liabilities | ||||||
| Common stock | ||||||
| Retained Earnings | ||||||
| Total common equity | ||||||
| Total liabilities and equity | ||||||
| Base | ||||||
| Percent Change Income Statements | 2016 | 2015 | ||||
| Sales | ||||||
| COGS except excluding depr. and amort. | ||||||
| Depreciation and Amortization | ||||||
| Other operating expenses | ||||||
| EBIT | ||||||
| Interest Expense | ||||||
| EBT | ||||||
| Taxes (40%) | ||||||
| Net Income | ||||||
