Corporate finance
apt93
StudentInstructions.docx
Case Study 1: Financial Statement Analysis
Delisle Industries
Assume the role of Jolly Jeffers, CMC, and prepare a 3-page memorandum that analyzes the financial condition of Delisle Industries and makes recommendations relating to the company’s operational and financial problems and the proposed expansion.
The memo should be divided into sections entitled Liquidity, Asset Management, Long-term Debt Paying Ability, Profitability, and Recommendations. The memo should be single-spaced and use the 12-point Calibri font with 0.7-inch margins. All headings should use a 12-point Calibri font and be bolded.
The following financial exhibits for 2006 through 2010 should also be included:
· Ratio table
· Vertical analysis of income statements and balance sheets
· Horizontal analysis (index numbers) of income statements and balance sheets
· Cash flow statements (2007 through 2010)
· 5-part analysis of ROE
All ratios should be calculated based on year-end totals only – no averages should be used. The specific ratios to be used include:
|
|
2006 |
2007 |
2008 |
2009 |
2010 |
Industry Average |
|
Liquidity |
|
|
|
|
|
|
|
Current Ratio |
|
|
|
|
|
|
|
Cash Ratio |
|
|
|
|
|
|
|
Asset Management |
|
|
|
|
|
|
|
Parts Inventory Turnover in Days |
|
|
|
|
|
|
|
Work-In-Progress Turnover in Days |
|
|
|
|
|
|
|
Finished Goods Turnover in Days |
|
|
|
|
|
|
|
A/R Turnover in Days |
|
|
|
|
|
|
|
A/P Turnover in Days |
|
|
|
|
|
|
|
Cash Conversion Cycle |
|
|
|
|
|
|
|
Fixed Assets Turnover |
|
|
|
|
|
|
|
Total Asset Turnover |
|
|
|
|
|
|
|
Long-term Debt-Paying Ability |
|
|
|
|
|
|
|
LT Debt to Total Capitalization |
|
|
|
|
|
|
|
Fixed Charge Coverage |
|
|
|
|
|
|
|
Profitability |
|
|
|
|
|
|
|
Gross Margin |
|
|
|
|
|
|
|
Operating Profit Margin |
|
|
|
|
|
|
|
Net Profit Margin |
|
|
|
|
|
|
|
ROA |
|
|
|
|
|
|
|
ROE |
|
|
|
|
|
|
|
Analysis of ROE |
||||||
|
|
EBIT/Sales |
EBT/EBIT |
NI/EBT |
Total Asset Turnover |
Debt Ratio |
ROE |
|
2006 |
|
|
|
|
|
|
|
2007 |
|
|
|
|
|
|
|
2008 |
|
|
|
|
|
|
|
2009 |
|
|
|
|
|
|
|
2010 |
|
|
|
|
|
|
Case 1: Delisle Industries
Evaluation Form
Total: _________ / 100
Letter Grade: _________
Accuracy of Financial Data – 25%
|
Ratio table |
/10 |
|
Vertical/horizontal analysis |
/5 |
|
Cash flow statements |
/5 |
|
5-part analysis of ROE |
/5 |
Thoroughness of Analysis – 50%
|
Liquidity |
/8 |
|
Asset management |
/14 |
|
Long-term debt-paying ability |
/6 |
|
Profitability |
/12 |
|
Recommendations |
/10 |
Layout and Writing Quality – 25%
|
Memo layout |
/5 |
|
Grammatical and spelling errors |
/10 |
|
Writing style |
/10 |
Comments
2
