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ACC - JD Campbell and Associates




Question;JD Campbell and Associates is considering an investment in the common stock of a chain of retail department stores. He has narrowed his choice to two retail companies, Heckle Corporation and Jeckle Corporation, whose income statements and balance sheets follow.HECKLE CO.INCOME STATMENTFOR THE PERIOD ENDING DEC. 31, 2013NET SALE: $12,560,000COSTS and Expenses: 6,142,000Selling Expenses: 4,822,600ADMIN EXPENSES: 986,000TOTAL COsts and Expenses: 11,950,600Income Before income taxes: 415,400Income taxes expense: 200,000Net income: 215,400Earnings per Share:?JECKEL CO.INCOME STATEMENTFOR THE PERIOD ENDING DEC. 31, 2013NET SALE: $25,210,000COSTS and Expenses: 14,834,000Selling Expenses: 7,108,200ADMIN EXPENSES: 2,434,000TOTAL COsts and Expenses: 24,376,200Income Before income taxes: 605,800Income taxes expense: 300,000Net income: 305,800Earnings per Share:?BALANCE SHEET/DEC. 31, 2013FOR: HECKLE CO.ASSETSCASH: $80,000MArketable Securities at cost: 203,400Accounts Receivable, Net: 552,800Inventory: 629800Prepaid Expenses: 54, 400Pro, plant, & equipment, Net: 2,913, 600Intangibles and other assets: 553, 200Total Assets: $4,987,200Liabilities and Stockholder's EquityAccounts payable: $344,000Notes Payable: 150,000Income Taxes Payable: 50,200Bonds Payable: 2,000,000Common Stock $20 par: 1,000,000Paid in Capital: 609,800Retained Earnings: 833,200Total Liabilities and SE: $4,987,200BALANCE SHEETFOR: JECKEL CO.ASSETSCASH: $192,400MArketable Securities at cost: 84,600Accounts Receivable, Net: 985,400Inventory: 1,253,400Prepaid Expenses: 114,000Pro, plant, & equipment, Net: 6,552,000Intangibles and other assets: 144,800Total Assets: 9,326,600LIABILITIES AND STOCKHOLDER'S EQUITYAccounts payable: $572,600Notes Payable: 400,000Income Taxes Payable: 73,400Bonds Payable: 2,000,000Common Stock $20 par: 600,000Paid in Capital: 3,568,600Retained Earnings: 2,112,000Total Liabilities and SE: 9,326,600During the year, HECKEL paid a total of $50,000 in dividends. The market price per share of it's stock is currently $60. In comparison, JECKEL paid a totalt of $114,000 in dividends, and the current market price of it's tock is $76 per share. HECKEL had net cash flow from operations of $271,500 and net capital expenditures of $625,000. JECKEL had net cash flow from operations of $492,500 and net capital expenditures of $1,050,000. Information for prior years is not readily available. Assume that all notes payable are current liabilities and all bonds payable are long term liabiliies and that there is no change in inventory.Conduct a comprehensive ratio analysis of each company, using all available information. Compare the results. Round to one decimal place and consider changes of 0.1 or less to be indeterminate.1) Prepare an Operating Asset Management Analysis by calculating for each company the:a) current ratio d) day?s sales uncollected g) payables turnoverb) quick ratio e) inventory turnover h) days? payablec) receivables turnover f) days? inventory on hand i) financing period2) Prepare a Profitability And Total Asset Management Analysis by calculating for each company the:a) profit margin b) asset turnover c) return on assets3) Prepare a Financial Risk Analysis by calculating for each company the:a)debt to equity ratio b) return on equity c) investing coverage ratio4) Prepare a Liquidity Analysis by calculating for each company the cash flow yielda) Cash flows to sales b) Cash flows to assets c) Free cash flows5) Prepare An Analysis Of Market Strength by calculating for each company the:a) price/earnings ratio b) dividend yield


Paper#42694 | Written in 18-Jul-2015

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