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Homework answers / question archive / Analysis of Financial Statements Balance Sheets EXHIBITS: INPUT DATA (XYZ) Table 1 Balance Sheets 2013E 2012 2011 Assets Cash $ 85,632 $ 7,282 $ §7,600 Accounts receivable

Analysis of Financial Statements Balance Sheets EXHIBITS: INPUT DATA (XYZ) Table 1 Balance Sheets 2013E 2012 2011 Assets Cash $ 85,632 $ 7,282 $ §7,600 Accounts receivable

Accounting

Analysis of Financial Statements
Balance Sheets

EXHIBITS: INPUT DATA (XYZ)
Table 1 Balance Sheets

2013E 2012 2011
Assets
Cash $ 85,632 $ 7,282 $ §7,600
Accounts receivable . 878,000 632,160 351,200
Inventories 1,716,480 4,287,360 715,200
Total current assets $2,680,112 $1,926,802 $ 1,124,000
Gross fixed assets 1,197,160 1,202,950 491,000
Less: accumulated depreciation 380,120 263,160 146,200
Net fixed assets $ 817,040 $ 939,790 $344,600
Total assets $3,497,152 _ $2,866,592 $ 1,468,800
Liabilities and equity |
Accounts payable $ 436,800 $ 524,160 $ 145,600
Notes payable 300,000 636,808 200,000
Accruals 408,000 489,600 436,000
Total current liabilities $1,144,800 $1,650,568 $ 481,600
Long-term bonds 400,000 723,432 323,432
Total debt $1,544,800 $2,374,000 $ 805,032
Common stock (100,000 shares) 4,721,176 460,000 460,000
Retained earnings 231,176 32,592 203,768
Total common equity $1,952,352 $ 492,592 $ 663,768
Total liabilities and equi $3,497,152 $2,866,592 $ 1,468,800

 

Analysis of Financial Statements
Income Statements ,
Table 2 Income Statements 2013E 2012 2011
Sales $7,035,600 $6,034,000 $ 3,432,000
Cost of goods sold 5,875,992 5,528,000 2,864,000
Other expenses §50,000 §19,988 358,672
Total operating exp. exc}, depreciation and amortization $6,425,992 $6,047,988 $ 3,222,672
EBITDA $ 609,608 $ (13,988) $ 209,328
Depreciation and amortization 116,960 116,960 18,900
Earnings before interest and taxes (EBIT) $ 492,648 $ (130,948) $ 190,428
Interest expense 70,008 136,012 43,828
Earnings before taxes (EBT) $ 422,640 $ (266,960) $ 146,600
Taxes (40%) 169,056 106,784) 58,640
Net Income $ 253,584 $ (160,176) $$ ~—_—-87,960
Earnings per share (EPS) $ 1.014 $ (1.602) $ 0.880
Dividends per share (DPS) $ 0.220 $ 0.110 $ 0.220
Book value per share (BVPS) $ 7.809 $ 4.926 $ 6.638
Stock price $ 12.17 $ 2.25 $ 8.50
Shares outstanding 250,000 100,000 100,000
Tax rate 40.00% 40.00% 40.00%
Lease payments $ 40,000 $ 40,000 $ 40,000
Sinking fund payments 0 0 0

 

Analysis of Financial Statements
Ratio Analysis
Industry
2013E 2012 2011 Average
Current ratio * 1.2 2.3 2.7
Quick ratio * 0.4 0.8 1.0
Inventory turnover * 4.7 4.8 6.1
Days sales outstanding (DSO) * 38.2 37.4 32.0
Fixed assets turnover * 6.4 10.0 7.0
Total assets turnover * 2.1 2.3 2.6
Debt-to-assets ratio * 82.8% 54.8% 50.0%
Times interest earned (TIE) * -1.0 4.3 6.2
Operating margin . +2.2% 5.6% 7.3%
Profit margin . -2.7% 2.6% 3.5%
Basic earning power (BEP) * -4.6% 13.0% 19.4%
Return on assets (ROA) * -5.6% 6.0% 9.1%
Return on equity (ROE) * -32.5% 13.3% 18.2%
Price/earnings (P/E) * -1.4 9.7 14.2
Market/book (M/B) . 0.5 1.3 2.4
Book value per share (BVPS * $4.93 $6.64 n.a.
*The calculations from your module 2 assignment would complete column 2013E. You are not required to complete the ratio analysis chart as
part of your assignment, you will submit the calculations with rationale in a word document.

 

Southern New Hampshire University

MBA 520 Module Two Financial Statement Analysis Worksheet
The main goal of financial statement analysis is to use past and current performance to identify changes
and trends that will affect a company. Financial ratios are a widely used form of financial analysis in
which the relationship between two or more line items is analyzed to evaluate a company’s
performance. The calculations you practice in this assignment will be applicable in completing Milestone
One, specifically determining recent financial performance and current financial health.
Prompt
Reference the information found in the Module TwoFinancial Statements Analysis Data PDF located in
the Assignment Guidelines and Rubrics folder to complete the foliowing.Once you have calculated the
ratios asked for using the data in the PDF, provide a brief summary of how the ratios are used and why
they are important.Once you have completed the calculations, provide a brief, two- to four-sentence
rationale for how these calculations can be used in analyzing the financial position of a company and
why they are important. Your rationale should explain what information the ratio provides to the reader
and how the reader may use that information.Use the Shapiro Library, your text, and the non-graded
discussion forum in this module to ask questions of your peers to inform your responses to the
questions below.
Before beginning this assignment, you will need to download and/or print the Module TwoFinancial
Statements Analysis Data PDF in order to complete the assignment. :
1. Calculate XY2’s 2013 current and quick ratios based on the projected balance sheet and income
statement data.
2. Calculate the 2013 inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total
assets turnover.
3. Calculate the 2013 debt-to-assets and times-interest-earned ratios.
4. Calculate the 2013 operating margin, profit margin, basic earning power (BEP), return on assets
(ROA), and return on equity (ROE).
9. Calculate the 2013 price/earnings ratio, and market/book ratio.
Worksheet adapted from Brigham, E., & Houston, J. F. (2016). Fundamentals of financial management (14th ed,),
Boston, MA: Cengage Learning.

 

Southern New Hampshire University

6. Use the extended DuPont equation to provide a summa ry and overview ofXY2’s financial condition as
projected for 2013.
7.Use the following simplified 2013 balance sheet to show, in general terms, how an improvement in the
DSO would tend to affect the stock price.For example, if the company could improve its collection
procedures and thereby lower its DSO from 45.6 days to the 32-day industry average without affecting
sales, how would that change “ripple through” the financial statements (shown in thousands below) and
influence the stock price?

Accounts receivable $878 Debt $1,545

Other current assets 1,802

Net fixed assets 817 Equity 1,952

Total assets $3,497 Liabilities plus equity $3,497
First, we need to calculate XYZ’s daily sales.

Daily sales= — Sales / 365

Daily sales= $7,035,600 / 365

Daily sales= $19,275.62

TargetA/R= Daily sales x Target DSO

TargetA/R= $19,276 x 32

| TargetA/R= $616,820

Freed-up cash =old A/R - new A/R

Freed-up cash =$878,000 _ $616,820

Freed-up cash =$261,180
Worksheet adapted from Brigham, E., & Houston, J. F. (2016). Fundamentals of financial management (14th ed.),
Boston, MA: Cengage Learning.

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