| Computron's Balance Sheets (Millions of Dollars) | Projection |
| 2018 | 2019 | 2020E |
| Assets |
| Cash and equivalents | $ 10,000 | $ 7,782 | $ 15,500 |
| Short-term investments | 52,600 | 25,000 | 72,632 |
| Accounts receivable | 250,600 | 542,460 | 85,700 |
| Inventories | 837,982 | 1,546,252 | 1,779,572 |
| Total current assets | $ 1,151,182 | $ 2,121,494 | $ 1,953,404 |
| Net Fixed Assets | 882,982 | 1,164,085 | 1,785,600 |
| Total Assets | $ 2,034,164 | $ 3,285,579 | $ 3,739,004 |
| Liabilities and equity |
| Accounts payable | $ 154,600 | $ 382,500 | $ 452,300 |
| Notes payable | 250,000 | 620,000 | 450,000 |
| Accruals | 142,000 | 254,700 | 352,000 |
| Total current liabilities | $ 546,600 | $ 1,257,200 | $ 1,254,300 |
| Long-term bonds | 245,000 | 800,000 | 700,000 |
| Total liabilities | $ 791,600 | $ 2,057,200 | $ 1,954,300 |
| Common stock (100,000 shares) | 1,000,000 | 1,000,000 | 1,000,000 |
| Retained earnings | 242,564 | 228,379 | 784,704 |
| Total common equity | $ 1,242,564 | $ 1,228,379 | $ 1,784,704 |
| Total liabilities and equity | $ 2,034,164 | $ 3,285,579 | $ 3,739,004 |
| Income Statements (Millions of Dollars) | Projection |
| 2018 | 2019 | 2020E |
| Net sales | $ 3,532,000 | $ 5,648,500 | $ 7,453,600 |
| Cost of goods sold (Excluding depr.) | $ 2,547,000 | $ 4,687,500 | $ 5,750,000 |
| Depreciationa | $ 16,500 | $ 187,500 | $ 150,000 |
| Other operating expenses | $ 385,000 | $ 625,000 | $ 723,500 |
| Earnings before interest and taxes (EBIT) | $ 583,500 | $ 148,500 | $ 830,100 |
| Less interest | $ 65,200 | $ 156,000 | $ 75,000 |
| Pre-tax earnings | $ 518,300 | $ (7,500) | $ 755,100 |
| Taxes (25%) | $ 129,575 | $ (1,875) | $ 188,775 |
| Net Income | $ 388,725 | $ (5,625) | $ 566,325 |
| Notes: |
| a Computron has no amortization charges. |
| Additional Information | Projection |
| 2018 | 2019 | 2020E |
| Year-end common stock price | $8.50 | $7.50 | $11.15 |
| Shares outstanding (millions) | 100,000 | 100,000 | 100,000 |
| Common dividends (millions) | $9,500 | $8,560 | $10,000 |
| Tax rate | 25% | 25% | 25% |
| Additions to retained earnings (millions) | $379,225 | -$14,185 | $556,325 |
| Lease payments (millions) | $35,000 | $35,000 | $35,000 |
| Per Share Information | Projection |
| 2018 | 2019 | 2020E |
| EPS | $3.89 | -$0.06 | $5.66 |
| DPS | $0.10 | $0.09 | $0.10 |
| Book Value Per Share | $12.43 | $12.28 | $17.85 |
| Ratio Analysis | 2018 | 2019 | 2020E | Industry
Average |
| Profit margin | 11.0% | -0.1% | 7.2% |
| Operating profit margin | 16.5% | 2.6% | 10.4% |
| Basic earning power | 28.7% | 4.5% | 15.6% |
| ROA | 19.1% | -0.2% | 10.8% |
| ROE | 31.3% | -0.5% | 15.4% |
| Inventory turnover | 3.1 | 3.2 | 9.0 |
| Days sales outstanding | 25.9 | 35.1 | 28.0 |
| Fixed assets turnover | 4.0 | 4.9 | 3.0 |
| Total assets turnover | 1.736 | 1.719 | 1.5 |
| Current | 2.1 | 1.7 | 2.5 |
| Quick | 0.6 | 0.5 | 1.9 |
| Debt ratio | 24.3% | 43.2% | 15.0% |
| Debt-to-equity ratio | 0.40 | 1.16 | 0.22 |
| Liabilities-to-assets ratio | 38.9% | 62.6% | 32.0% |
| TIE | 8.9 | 1.0 | 13.0 |
| EBITDA coverage | 6.3 | 1.9 | 17.2 |
| Price/earnings (P/E) | 2.2 | -133.3 | 16.8 |
| Market/book | 0.7 | 0.6 | 2.7 |
| *Note "E" denotes "estimated" |
Yasaswini
Question2-AnalysisofFinancialStatements.xlsx
