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Chapter2_Case

GARNERS' PLATOON MENTAL HEALTH CARE, INC.
Balance Sheet as of December 31, 2021 (in millions of dollars)
Current assets: 2021 2020 Current liabilities: 2021 2020
Cash and marketable securities $ 421 Accrued wages and taxes $ 316 $ 242
Accounts receivable 1,109 1,020 Accounts payable 867 791
Inventory 1,760 1,581 Notes payable 872 714
Total current assets 3,290 Total current liabilities 2,055 1,747
Long-term debt 3,090 3,494
Fixed assets:
Gross plant and equipment $ 4,132 $ 4,743 Stockholders’ equity:
Less: Accumulated Depreciation 840 640 Preferred stock (25million shares) 60 60
Net plant and equipment 4,972 Common stock & paid-in surplus
(200 million shares) 637
Other long-term assets 892 790 Retained earnings 3,312 2,440
Total 5,864 4,893 Total equity 4,009 3,137
Total assets $ 9,154 $ 7,889 Total liabilities and equity $ 9,154 $ 7,889
GARNERS' PLATOON MENTAL HEALTH CARE, INC.
Income Statement for the Year Ended December 31, 2021 and 2020 (in millions of dollars)
2021 2020
Net sales revenue (all credit) $ 4,980
Less: Cost of goods sold 2,734 2,035
Gross profits 2,734 2,313
Less: Other operating expenses 125 100
Earnings before interest, taxes, depreciation,
and amortization (EBITDA) 2,609 2,213
Less: Depreciation & amortization expense 200 191
Earnings before interest and taxes (EBIT) 2,409
Less: Interest expense (21%) 315 285
Earnings before taxes (EBT) 2,094 1,737
Less: Income Tax Expense 440
Net income $ 1,654 $ 1,372
Less: Preferred stock dividends 60
Net income available to common stockholders $ 1,594 $ 1,312
Less: Common stock dividends 722 722
Addition to retained earnings $ 872
Per (common) share data:
Earnings per share (EPS) $ 7,970.000
Dividends per share (DPS) $ 3,610.000
Book value per share (BVPS) $ 19,745.000
Market value (price) per share (MVPS) $ 26.850 $ 22.500
GARNERS' PLATOON MENTAL HEALTH CARE, INC.
Statement of Cash Flows for the Year Ended December 31, 2021 (in millions of dollars)
2021
Cash flows from operating activities
Net income
Additions (sources of cash):
Depreciation expense
Increase in accrued wages and taxes
Increase in accounts payable
Subtractions (uses of cash):
Increase in accounts receivable
Increase in inventory
Net cash flow from operating activities:
Cash flows from investing activities
Subtractions:
Increase in gross fixed assets
Increase in other long-term assets
Net cash flow from investing activities:
Cash flows from financing activities
Additions:
Increase in notes payable
Increase in long-term debt
Increase in common and preferred stock
Subtractions:
Common and Preferred Dividends Paid
Net cash flow from financing activities:
Net change in cash and marketable securities 26
Beginning cash and marketable securities 395
Ending cash and marketable securities $ 421
GARNERS' PLATOON MENTAL HEALTH CARE, INC.
Statement of Retained Earnings for the Year Ended December 31, 2021 (in millions of dollars)
Retained earnings balance at December 31, 2020 $ 2,440
Plus: Net income for 2021
Less: Preferred stock dividends
Less: Common stock dividends
Total dividends
Retained earnings balance at December 31, 2021

Chapter3_Case

GARNERS' PLATOON MENTAL HEALTH CARE, INC. Balance Sheet as of December 31, 2021
SPREAD The Balance Sheet (also called Common-Size Balance Sheet)
Current assets: Current liabilities:
Cash and marketable securities Accrued wages and taxes
Accounts receivable Accounts payable
Inventory Notes payable
Total current assets Total current liabilities
Long-term debt
Fixed assets: Total liabilities
Gross plant and equipment Stockholders’ equity:
Less: Accumulated Depreciation Preferred stock
Net plant and equipment Common stock and paid-in surplus
Other long-term assets Retained earnings
Total Total equity
Total assets Total liabilities and equity
GARNERS' PLATOON MENTAL HEALTH CARE, INC. Income Statement for the Year ended December, 31, 2021
SPREAD the Income Statement (also called Common-Size Income Statement)
Net sales revenue (all credit)
Less: Cost of goods sold
Gross profits
Less: Other operating expenses
Earnings before interest, taxes, depreciation,
and amortization (EBITDA)
Less: Depreciation & amortization expense
Earnings before interest and taxes (EBIT)
Less: Interest expense
Earnings before taxes (EBT)
Less: Income Tax Expense
Net income
FINANCIAL RATIO COMPARISON (formulas provided at end of chapter 3)
GARNERS' 2021 Industry
Current ratio 2.00 times
Quick ratio 1.20times
Cash ratio 0.25 times
Inventory turnover (use net sales in numerator) 2.50 times
Days’ sales in inventory 146.00 days
Average collection period 91.00 days
Average payment period 100.00 days
Fixed asset turnover 1.25 times
Sales to working capital 4.00 times
Total asset turnover 0.50 times
Capital intensity 2.00 times
Debt ratio 50.00%
Debt-to-equity 1.00 times
Equity multiplier (common equity) 2.00 times
Times interest earned 7.25 times
Cash coverage 8.00 times
Profit margin 18.75%
Gross profit margin 49.16%
Operating profit margin 42.02%
Basic earnings power 19.90%
ROA 9.38%
ROE 18.75%
Dividend payout 48.00%
Market-to-book ratio 1.30 times
PE ratio 3.10 times
Internal Growth Rate 5.13%
Sustainable Growth Rate 10.80%
DuPont Analysis
GARNERS' Return on Assets = Profit Margin x Total asset turnover
x
Industry Average Return on Assets = Profit Margin x Total asset turnover
x
GARNERS' Return on Equity = Profit Margin x Total asset turnover x Equity Multiplier
x x
Industry Average Return on Equity = Profit Margin x Total asset turnover x Equity Multiplier
x x
Enter narrative evaluation of Garners' performance using the ratios reported and the DuPont Analysis. Address liquidity, asset management, debt management, profitability, and market value. Create or modify textbox as needed.