FI 393 Lecture Notes - Lecture 22: Reserve Requirement, Current Liability, Profit Margin
8 views4 pages
Get access
Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers
Related Documents
Related Questions
Joshua & White Technologies: December 31 Balance Sheets | ||||||
(Thousands of Dollars) | ||||||
Assets | 2010 | 2009 | ||||
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) | ||||||
2010 | 2009 | |||||
Sales | $420,000 | $400,000 | ||||
Expenses excluding depr. and amort. | 327,600 | 320,000 | ||||
EBITDA | $92,400 | $80,000 | ||||
Depreciation and Amortization | 19,660 | 18,000 | ||||
EBIT | $72,740 | $62,000 | ||||
Interest Expense | 5,740 | 4,460 | ||||
EBT | $67,000 | $57,540 | ||||
Taxes (40%) | 26,800 | 23,016 | ||||
Net Income | $40,200 | $34,524 | ||||
Common dividends | $18,125 | $17,262 | ||||
Addition to retained earnings | $22,075 | $17,262 | ||||
Other Data | 2010 | 2009 | ||||
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) | $0 | $0 | ||||
Ratio Analysis | 2010 | 2009 | Industry Avg | |||
Liquidity Ratios | ||||||
Current Ratio | 2.38 | 2.52 | 2.58 | |||
Quick Ratio | 1.17 | 1.41 | 1.53 | |||
Asset Management Ratios | ||||||
Inventory Turnover | 1.11 | 1.22 | 7.69 | |||
Days Sales Outstanding | 45.63 | 43.80 | 47.45 | |||
Fixed Assets Turnover | 1.92 | 2.00 | 2.04 | |||
Total Assets Turnover | 3.81 | 5.64 | 1.23 | |||
Debt Management Ratios | ||||||
Debt Ratio | 32.1% | |||||
Times-interest-earned ratio | 15.33 | |||||
EBITDA coverage ratio | 4.18 | |||||
Profitability Ratios | ||||||
Profit Margin | 9.57% | 8.63% | 8.86% | |||
Basic Earning Power | 19.16% | 18.95% | 19.48% | |||
Return on Assets | 10.59% | 10.55% | 10.93% | |||
Return on Equity | 21.87% | 19.35% | 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. | ||||||
The position of JW has worsend because there ration has fallen from 1.41 to 1.17 | ||||||
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 | ||||
2010 | ||||||
2009 | ||||||
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 | 2010 | 2009 | ||||
Cash and cash equivalents | ||||||
Short-term investments | ||||||
Accounts Receivable | ||||||
Inventories | ||||||
Total current assets | ||||||
Net fixed assets | ||||||
Total assets | ||||||
Liabilities and equity | 2010 | 2009 | ||||
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 | 2010 | 2009 | ||||
Sales | ||||||
Expenses excluding depr. and amort. | ||||||
EBITDA | ||||||
Depreciation and Amortization | ||||||
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 | 2010 | 2009 | ||||
Cash and cash equivalents | ||||||
Short-term investments | ||||||
Accounts Receivable | ||||||
Inventories | ||||||
Total current assets | ||||||
Net fixed assets | ||||||
Total assets | ||||||
Base | ||||||
Liabilities and equity | 2010 | 2009 | ||||
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 | 2010 | 2009 | ||||
Sales | ||||||
Expenses excluding depr. and amort. | ||||||
EBITDA | ||||||
Depreciation and Amortization | ||||||
EBIT | ||||||
Interest Expense | ||||||
EBT | ||||||
Taxes (40%) | ||||||
Net Income | ||||||
Joshua & White Technologies: December 31 Balance Sheets | ||||||
(Thousands of Dollars) | ||||||
Assets | 2010 | 2009 | ||||
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) | ||||||
2010 | 2009 | |||||
Sales | $420,000 | $400,000 | ||||
Expenses excluding depr. and amort. | 327,600 | 320,000 | ||||
EBITDA | $92,400 | $80,000 | ||||
Depreciation and Amortization | 19,660 | 18,000 | ||||
EBIT | $72,740 | $62,000 | ||||
Interest Expense | 5,740 | 4,460 | ||||
EBT | $67,000 | $57,540 | ||||
Taxes (40%) | 26,800 | 23,016 | ||||
Net Income | $40,200 | $34,524 | ||||
Common dividends | $18,125 | $17,262 | ||||
Addition to retained earnings | $22,075 | $17,262 | ||||
Other Data | 2010 | 2009 | ||||
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) | $0 | $0 | ||||
Ratio Analysis | 2010 | 2009 | Industry Avg | |||
Liquidity Ratios | ||||||
Current Ratio | 2.38 | 2.52 | 2.58 | |||
Quick Ratio | 1.17 | 1.41 | 1.53 | |||
Asset Management Ratios | ||||||
Inventory Turnover | 1.11 | 1.22 | 7.69 | |||
Days Sales Outstanding | 45.63 | 43.80 | 47.45 | |||
Fixed Assets Turnover | 1.92 | 2.00 | 2.04 | |||
Total Assets Turnover | 3.81 | 5.64 | 1.23 | |||
Debt Management Ratios | ||||||
Debt Ratio | 32.1% | |||||
Times-interest-earned ratio | 15.33 | |||||
EBITDA coverage ratio | 4.18 | |||||
Profitability Ratios | ||||||
Profit Margin | 9.57% | 8.63% | 8.86% | |||
Basic Earning Power | 19.16% | 18.95% | 19.48% | |||
Return on Assets | 10.59% | 10.55% | 10.93% | |||
Return on Equity | 21.87% | 19.35% | 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. | ||||||
The position of JW has worsend because there ration has fallen from 1.41 to 1.17 | ||||||
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 | ||||
2010 | ||||||
2009 | ||||||
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 | 2010 | 2009 | ||||
Cash and cash equivalents | ||||||
Short-term investments | ||||||
Accounts Receivable | ||||||
Inventories | ||||||
Total current assets | ||||||
Net fixed assets | ||||||
Total assets | ||||||
Liabilities and equity | 2010 | 2009 | ||||
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 | 2010 | 2009 | ||||
Sales | ||||||
Expenses excluding depr. and amort. | ||||||
EBITDA | ||||||
Depreciation and Amortization | ||||||
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 | 2010 | 2009 | ||||
Cash and cash equivalents | ||||||
Short-term investments | ||||||
Accounts Receivable | ||||||
Inventories | ||||||
Total current assets | ||||||
Net fixed assets | ||||||
Total assets | ||||||
Base | ||||||
Liabilities and equity | 2010 | 2009 | ||||
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 | 2010 | 2009 | ||||
Sales | ||||||
Expenses excluding depr. and amort. | ||||||
EBITDA | ||||||
Depreciation and Amortization | ||||||
EBIT | ||||||
Interest Expense | ||||||
EBT | ||||||
Taxes (40%) | ||||||
Net Income | ||||||
Millions of USD (except for per share items) | 2015 | 2014 | |
Sales | $ 114,826 | $ 114,960 | |
Cost of Goods Sold | 86,483 | 86,714 | |
Gross Profit | 28,343 | 28,246 | |
Selling/General/Admin. Expenses, Total | 22,663 | 22,053 | |
Operating Income | 5,680 | 6,193 | |
Interrest and Taxes | 2,336 | 2,600 | |
Net Income | $ 3,344 | $ 3,593 | |
Market Price/Share | $ 65.68 | $ 84.26 | |
Shares Outstanding | 3,210 | 3,210 |
Millions of USD (except for per share items) | As of 2015 | As of 2014 |
Cash & Equivalents | $ 7,759 | $ 6,012 |
Total Receivables, Net | 5,813 | 6,096 |
Total Inventory | 46,310 | 45,315 |
Prepaid Expenses | 2,251 | 1,811 |
Total Current Assets | 62,133 | 59,687 |
Property/Plant/Equipment, Total - Gross | 138,614 | 142,830 |
Total Assets | $ 200,747 | $ 202,517 |
Accounts Payable | 37,224 | 36,347 |
Accrued Expenses | 18,685 | 17,807 |
Notes Payable/Short Term Debt | 799 | 3,517 |
Current Port. of LT Debt/Capital Leases | 6,468 | 3,566 |
Other Current liabilities, Total | 6,448 | 6,684 |
Total Current Liabilities | 69,624 | 67,921 |
Total Long Term Debt | 42,964 | 48,233 |
Deferred Income Tax | 8,169 | 8,164 |
Minority Interest | 3,416 | 5,111 |
Total Liabilities | 124,173 | 129,429 |
Total Equity | 76,574 | 73,088 |
Total Liabilities & Shareholders' Equity | 200,747 | 202,517 |
- | - | |
Total # Common Shares Outstanding | $ 3,227 | $ 3,230 |
Category | Two Ratios from Each Category | Ratio | Formula | 2015 | 2014 | |
Liquidity | Current and Quick Ratio | Current | Current Assests/Current Liabilites | |||
Quick | (CA - Inventories)/Current Liabilites | |||||
Asset Management | Total Assets Turnover, Total Fixed Asset Turnover | Total Assets Turnover, | Sales/Total Assets | |||
Total Fixed Asset Turnover | Sales/Total Fixed Assets | |||||
Debt Management | Debt to Assets and Debt to Equity | Debt to Assets | Total Liabilities / Total Assests | |||
Debt to Equity | Total Liabilities / Common Stockholders Equity | |||||
Profitability Ratio | Return on Assets and Return on Equity | Return on Assets | Net Income/Total Assets | |||
Return on Equity | Net Income/Common Equity | |||||
Market Ratio | Earnings Per Share and Price to Earnings Ratio | Earnings Per Share | Net Income / Common Shares Outstanding | |||
Price to Earnings Ratio | Market Price of Shares/Earning Per Share |