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FINC 350 Chapter 2 Problem 14 Build a Model and Chapter 3 Problem 15 model

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Question;BA350 Principles of Finance: Ch02 P14 Build A Model;(Cumberland Industries)BA350 Principles of Finance: Ch03 P15 Build A Model;(Joshua & White Technologies)Ch02 P14 Build A Model (Excel Template)a. Cumberland Industries' most recent sales were $455,000,000, operating costs (excluding depreciation) were equal to 85% of sales, net fixed assets were $67,000,000, depreciation amounted to 10% of net fixed assets, interest expenses were $8,550,000, the state-plus-federal corporate tax rate was 40% and Cumberland paid 25% of its net income out in dividends. Given this information, construct Cumberland's income statement. Also calculate total dividends and the addition to retained earnings.b. Cumberland Industries' partial balance sheets are shown below. Cumberland issued $10,000,000 of new common stock in the most recent year. Using this information and the results from part a, fill in the missing values for common stock, retained earnings, total common equity, and total liabilities and equity.c. Construct the statement of cash flows for the most recent year.Chapter 3. Solution to 3-15 Joshua & White TechnologiesChapter 3. Solution to 3-15Joshua & White Technologies: December 31 Balance Sheets(Thousands of Dollars)Assets 2010 2009Cash and cash equivalents $21,000 $20,000Short-term investments 3,759 3,240Accounts Receivable 52,500 48,000Inventories 84,000 56,000Total current assets $161,259 $127,240Net fixed assets 218,400 200,000Total assets $379,659 $327,240Liabilities and equityAccounts payable $33,600 $32,000Accruals 12,600 12,000Notes payable 19,929 6,480Total current liabilities $66,129 $50,480Long-term debt 67,662 58,320Total liabilities $133,791 $108,800Common stock 183,793 178,440Retained Earnings 62,075 40,000Total common equity $245,868 $218,440Total liabilities and equity $379,659 $327,240Joshua & White Technologies December 31 Income Statements(Thousands of Dollars)2010 2009Sales $420,000 $400,000Expenses excluding depr. and amort. 327,600 320,000EBITDA $92,400 $80,000Depreciation and Amortization 19,660 18,000EBIT $72,740 $62,000Interest Expense 5,740 4,460EBT $67,000 $57,540Taxes (40%) 26,800 23,016Net Income $40,200 $34,524Common dividends $18,125 $17,262Addition to retained earnings $22,075 $17,262Other Data 2010 2009Year-end Stock Price $90.00 $96.00# of shares (Thousands) 4,052 4,000Lease payment (Thousands of Dollars) $20,000 $20,000Sinking fund payment (Thousands of Dollars) $0 $0Ratio Analysis 2010 2009 Industry AvgLiquidity RatiosCurrent Ratio 2.58Quick Ratio 1.53Asset Management RatiosInventory Turnover 7.69Days Sales Outstanding 47.45Fixed Assets Turnover 2.04Total Assets Turnover 1.23Debt Management RatiosDebt Ratio 32.1%Times-interest-earned ratio 15.33EBITDA coverage ratio 4.18Profitability RatiosProfit Margin 8.86%Basic Earning Power 19.48%Return on Assets 10.93%Return on Equity 16.10%Market Value RatiosEarnings per share NAPrice-to-earnings ratio 10.65Cash flow per share NAPrice-to-cash flow ratio 7.11Book Value per share NAMarket-to-book ratio 1.72a. Has Joshua & White's liquidity position improved or worsened? Explain.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 Multiplier20102009e. Perform a common size analysis. What has happened to the composition(that is, percentage in each category) of assets and liabilities?Common Size Balance SheetsAssets 2010 2009Cash and cash equivalentsShort-term investmentsAccounts ReceivableInventoriesTotal current assetsNet fixed assetsTotal assetsLiabilities and equity 2010 2009Accounts payableAccrualsNotes payableTotal current liabilitiesLong-term debtTotal liabilitiesCommon stockRetained EarningsTotal common equityTotal liabilities and equityCommon Size Income Statements 2010 2009SalesExpenses excluding depr. and amort.EBITDADepreciation and AmortizationEBITInterest ExpenseEBTTaxes (40%)Net Incomef. Perform a percent change analysis. What does this tell you about the change in profitabilityand asset utilization?Percent Change Balance Sheets BaseAssets 2010 2009Cash and cash equivalentsShort-term investmentsAccounts ReceivableInventoriesTotal current assetsNet fixed assetsTotal assetsBaseLiabilities and equity 2010 2009Accounts payableAccrualsNotes payableTotal current liabilitiesLong-term debtTotal liabilitiesCommon stockRetained EarningsTotal common equityTotal liabilities and equityBasePercent Change Income Statements 2010 2009SalesExpenses excluding depr. and amort.EBITDADepreciation and AmortizationEBITInterest ExpenseEBTTaxes (40%)Net Income

 

Paper#45437 | Written in 18-Jul-2015

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