FIN 401 Study Guide - Midterm Guide: Asset Turnover, Dividend Discount Model, Capital Structure

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bronzescorpion97

24 Jan 2016

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Investing activities= net spending fixed assets = purchases of fixed assets - sales of fixed assets. Financing activities= net new cash in from bondholders and shareholders = net new borrowing + net new equity dividends. Cf assets = operating cash flow (ocf) net capital spending additions to net. Ocf = net income + dep"n + interest paid. Net capital spending = net fixed assets end net fixed assets beg + dep"n. Addition to nwc= nwc end nwc beg. Addition to nwc= operating cash flow net capital spending cash flow from. Cf creditors = interest paid net new borrowing (difference in long term debt within two terms) Cf shareholders = dividends paid net new equity raised (only common shares, Common-size balance sheet expresses each item as a percentage of total assets. Common-size income statement expresses each item as a percentage of sales. Common-base-year statement is a statement presents all items to a certain base- year amount.

Related Questions

Dennis Co. shows the following information on its 2016 incomestatement: sales = $157,000; costs = $81,100; other expenses =$4,400; depreciation expense = $10,100; interest expense = $7,600;taxes = $18,830; dividends = $7,600. In addition, you're told thatthe firm issued $3,400 in new equity during 2016 and redeemed$5,500 in outstanding long-term debt.

a. What is the 2016 operating cash flow?(Do not round intermediate calculations and round youranswer to the nearest whole number, e.g., 32.)

Operating cash flow $

b. What is the 2016 cash flow to creditors?(Do not round intermediate calculations and round youranswer to the nearest whole number, e.g., 32.)

Cash flow to creditors $

c. What is the 2016 cash flow to stockholders?(Do not round intermediate calculations and round youranswer to the nearest whole number, e.g., 32.)

Cash flow to stockholders $

d. If net fixed assets increased by $20,650 duringthe year, what was the addition to NWC? (Do not roundintermediate calculations and round your answer to the nearestwhole number, e.g., 32.)

Addition to net working capital $

oliveotter780

Just need the last two questions answered A and B at the bottom of the document

Youâre the chief financial officer (CFO) of Worldwide
Widget Manufacturing, Inc. The company manufactures and
sells widgets at factories in the United States and internationally.
Listed below are partial financial statements for Worldwide
Widget Manufacturing, Inc. Fill in the missing information in
each of the following financial statements. Answer spaces are
given below.

Worldwide Widget Manufacturing, Inc.
Balance Sheet as of December 31, 2015 and 2014
(in millions of dollars)

	2015	2016		2015	2016
Assets Current Assets:			Liabilities and Equity Current Liabilities:
Cash and markatable securities	$427	$322	Accured wages and taxes	$309	$257
Accounts Receivable	a.?	259	Accounts payable	381	b.?
Inventory	815	797	Notes Payable	$492	$421
Total	$1,542	$1,378	Total	$1,182	$997
Fixed Assets:			Long-term debt:	$1,934	c.?
Gross plant and equipment	d.?	$2,817	Total	3,116	2,956
Less:depreciation	368	254	Stockholder's equity:
Net plant and equipment	$2,872	$2,563	Preferred stock ( 30 million shares)	$30	$30
Other long term assets	521	487	Common stock and paid in surplus (250 million shares)	300	e.?
			Retained earnings	1,489	1,142
Total FA	f.?	$3,050	Total Equity	$1,819	$1,472
Total Assets	$4,935	$4,428	Total liabilities and equity	$4,935	$4,428

A. Accounts receivable for 2015_______300

B. Accounts payable for 2014_______319

C. Gross plant and equipment for 2015_______1959

D. Long-term debt for 2014_______3240

E. Common stock and paid-in surplus (250 million shares) for 2014_______300

F. Total FA for 2015_______3393

Worldwide Widget Manufacturing, Inc. Income Statement for Years Ending December 31, 2015 and 2014(in millions of dollars)

	2015	2014
Net Sales	g.	$2018
Less: Cost of Goods Sold	753	h.?
Gross Profits	$1,623	$1,189
Less: Other Operating Expense	423	167
Earnings before interest, taxes, depreciation, and amortization (EBITDA)	$1,200	$1,022
Less: Depreciation	114	114
Earning before interest and taxes (EBIT)	$1,086	$908
Less: Interest	i.?	128
Earnings:before Taxes (EBT)	$949	$780
Less:Taxes	j.?	23
Net Income	$664	$546
Less:Preferred stock dividends	98	98
Net income available to common stock holders	$566	$448
Less:Common stock dividends	219	199
Addition to retained earnings Per common share data:	$347	$249
Earnings per share (EPS)	k.?	$1.79
Dividends per share (DPS)	$0.88	l. ?
Book Value per share (BVPS)	m.?	$5.77
Market Value per share (MVPS)	$23.97	$22.47

g. Net sales for 2015_______2376
h. Less: Cost of goods sold for 2014_______829
i. Less: Interest for 2015_______137
j. Less: Taxes for 2015_______285
k. Earnings per share (EPS) for 2015_______1.88
l. Dividends per share (DPS) for 2014_______.73
m. Book value per share (BVPS) for 2015_______7.16

Worldwide Widget Manufacturing, Inc.
Statement of Cash Flows for Year Ending December 31, 2015
(in millions of dollars)â

Section A: Cash Flows from operating activities
Net Income	n.?
Additions (source of cash): Depreciation	114
Increase in accrued wages and taxes	o.?
Increase in accounts payable	62
Subtractions (use of cash): Increase in accounts receivable	-41
Increase in inventory	p.?
Net Cash flow from operating activities	q.?
Section B: Cash Flows from investing activities subtractions: Increase in fixed assets	-$343
Increase in other long-term assests	r.?
Net Cash flow from investing activities	s.?
Section C. Cash flows from financing activities Additions: Increase in notes payable	t.?
Increase in common and preferred stock	0
Subtractions: Decrease in long-term debt	-25
Pay dividends	u.?
Net Cash flow from financing activities Section D. Net Change in cash and marketable securities	v.? $105

n. Net income_______664
o. Increase in accrued wages and taxes_______52
p. Increase in inventory_______18
q. Net cash flow from operating activities_______833
r. Increase in other long-term assets_______34
s. Net cash flow from investing activities_______-377
t. Increase in notes payable_______71
u. Pay dividends_______317
v. Net cash flow from financing activities_______-271

Worldwide Widget Manufacturing, Inc.
Statement of Retained Earnings as of December 31, 2015
(in millions of dollars)

Balance of retained earnings, December 31,2014		$1,142
Plus: Net income for 2015		w.?
Less: Cash dividends paid	0	0
Preferred stock	x.?
Common Stock	219
Total cash dividends paid		317
Balance of retained earnings, December 31,2015		$1,489

w. Plus: Net income for 2015 _______664
x. Preferred stock _______98

2. Youâll need to compare your companyâs ratios with the industryâs standards.

Worldwide Widget Manufacturing, Inc.

	Company	Industy	Comparison
Current Ratio		2.2 times
Quick Ratio		1.1 times
Cash Ratio		0.35 times
Inventory turnover		2 times or 1 time
Days' sales in inventory		135 days or 335 days
Average payment period		110 days
Sales to working capital		3 times
Total asset turnover		0.6 times
Debt-to equity		1.1 times
Profit margin		16.5%
Gross profit margin		48.13%
ROA		8.78%
ROE		19.45%
Divident payout		32%

A. Use the information found in Worldwide Widget Manufacturingâs financial statements
to calculate all of the listed financial ratios in the above table for your
company. Then, for each ratio, provide a comparison of the companyâs result
with the industry standards, indicating if your companyâs results are lower than,
higher than, slower than, or faster than the industry standards.
B. Calculate your companyâs internal and sustainable growth rates.

amaranthkangaroo292

NIKE:

Need the following ratios to be calculated using the financial sheets copied at the bottom. Each ratio needs to be calculated using the information from 2016. Each ratio also needs to be broken down and illustrated by the step by step process. Finally, please include any and all observations for each ratio and analysis.

1) Common Size analysis

2) Common size vertical analysis & graph

3) Current Ratio

4) Quick Ratio

5) Cash Ratio

6) Inventory Turnover

7) Receivables Turnover

8) Total Asset Turnover

9) Fixed Asset Turnover

10) Gross profit margin

11) Operating Profit margin

12) Net profit margin

13) Return on total assets

14) return on equity

15) basic earning power

16) Deb/net worth ratio

17) debt ratio

18) DuPont System

19) Times-interest-earned

Balance Sheet:

Consolidated Balance Sheets - USD ($) $ in Millions	May 31, 2017	May 31, 2016
Current assets:
Cash and equivalents	$ 3,808	$ 3,138
Short-term investments	2,371	2,319
Accounts receivable, net	3,677	3,241
Inventories	5,055	4,838
Prepaid expenses and other current assets	1,150	1,489
Total current assets	16,061	15,025
Property, plant and equipment, net	3,989	3,520
Identifiable intangible assets, net	283	281
Goodwill	139	131
Deferred income taxes and other assets	2,787	2,422
TOTAL ASSETS	23,259	21,379
Current liabilities:
Current portion of long-term debt	6	44
Notes payable	325	1
Accounts payable	2,048	2,191
Accrued liabilities	3,011	3,037
Income taxes payable	84	85
Total current liabilities	5,474	5,358
Long-term debt	3,471	1,993
Deferred income taxes and other liabilities	1,907	1,770
Commitments and contingencies
Redeemable preferred stock	0	0
Shareholdersâ equity:
Capital in excess of stated value	8,638	7,786
Accumulated other comprehensive (loss) income	(213)	318
Retained earnings	3,979	4,151
Total shareholdersâ equity	12,407	12,258
TOTAL LIABILITIES AND SHAREHOLDERSâ EQUITY	23,259	21,379
Class A Convertible Common Stock
Shareholdersâ equity:
Common stock at stated value	0	0
Class B Common Stock
Shareholdersâ equity:
Common stock at stated value	$ 3	$ 3

Income Statement:

Consolidated Statements of Income - USD ($) $ in Millions	12 Months Ended
Consolidated Statements of Income - USD ($) $ in Millions	May 31, 2017	May 31, 2016	May 31, 2015
Income Statement [Abstract]
Revenues	$ 34,350	$ 32,376	$ 30,601
Cost of sales	19,038	17,405	16,534
Gross profit	15,312	14,971	14,067
Demand creation expense	3,341	3,278	3,213
Operating overhead expense	7,222	7,191	6,679
Total selling and administrative expense	10,563	10,469	9,892
Interest expense (income), net	59	19	28
Other (income) expense, net	(196)	(140)	(58)
Income before income taxes	4,886	4,623	4,205
Income tax expense	646	863	932
NET INCOME	$ 4,240	$ 3,760	$ 3,273
Earnings per common share:
Basic (in dollars per share)	$ 2.56	$ 2.21	$ 1.90
Diluted (in dollars per share)	2.51	2.16	1.85
Dividends declared per common share (in dollars per share)	$ 0.70	$ 0.62	$ 0.54

Cash Flow Sheet

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	May 31, 2017	May 31, 2016	May 31, 2015
Cash provided by operations:
Net income	$ 4,240	$ 3,760	$ 3,273
Income charges (credits) not affecting cash:
Depreciation	706	649	606
Deferred income taxes	(273)	(80)	(113)
Stock-based compensation	215	236	191
Amortization and other	10	13	43
Net foreign currency adjustments	(117)	98	424
Changes in certain working capital components and other assets and liabilities:
(Increase) decrease in accounts receivable	(426)	60	(216)
(Increase) in inventories	(231)	(590)	(621)
(Increase) in prepaid expenses and other current assets	(120)	(161)	(144)
(Decrease) increase in accounts payable, accrued liabilities and income taxes payable	(364)	(889)	1,237
Cash provided by operations	3,640	3,096	4,680
Cash used by investing activities:
Purchases of short-term investments	(5,928)	(5,367)	(4,936)
Maturities of short-term investments	3,623	2,924	3,655
Sales of short-term investments	2,423	2,386	2,216
Investments in reverse repurchase agreements	0	150	(150)
Additions to property, plant and equipment	(1,105)	(1,143)	(963)
Disposals of property, plant and equipment	13	10	3
Other investing activities	(34)	6	0
Cash used by investing activities	(1,008)	(1,034)	(175)
Cash used by financing activities:
Net proceeds from long-term debt issuance	1,482	981	0
Long-term debt payments, including current portion	(44)	(106)	(7)
Increase (decrease) in notes payable	327	(67)	(63)
Payments on capital lease and other financing obligations	(17)	(7)	(19)
Proceeds from exercise of stock options and other stock issuances	489	507	514
Excess tax benefits from share-based payment arrangements	177	281	218
Repurchase of common stock	(3,223)	(3,238)	(2,534)
Dividends â common and preferred	(1,133)	(1,022)	(899)
Cash used by financing activities	(1,942)	(2,671)	(2,790)
Effect of exchange rate changes on cash and equivalents	(20)	(105)	(83)
Net increase (decrease) in cash and equivalents	670	(714)	1,632
Cash and equivalents, beginning of year	3,138	3,852	2,220
CASH AND EQUIVALENTS, END OF YEAR	3,808	3,138	3,852
Cash paid during the year for:
Interest, net of capitalized interest	98	70	53
Income taxes	703	748	1,262
Non-cash additions to property, plant and equipment	266	252	206
Dividends declared and not paid	$ 300	$ 271	$ 240

FIN 401 Study Guide - Midterm Guide: Asset Turnover, Dividend Discount Model, Capital Structure

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