Income Statements Liquidity Ratios: Fimancial Leverage: 2012 2013 Change 2012 20
ID: 2332179 • Letter: I
Question
Income Statements Liquidity Ratios: Fimancial Leverage: 2012 2013 Change 2012 2013 Chauge Industry $1,300,000 $1,500,000 $1,800,000 Total-Debt-to-Total-Assets NWC-to-Total Assets Debt-to-Equity Ratio Current-Liab-to-Total Debt Cash Conversion Cycle (in Days) 2012 2013 Change Industry Profitability Ratios: 2012 2013 Change Industry Profit Margin NOPAT Margin Cash Build Versus Cash Burn: Balance Sheets 2012 013 Change Efficiency and Return Ratios 2012 2013 Change Industry Increase in Receivables (negative effect) Operating Return on Assets Return on Assets (ROA) Return on Equity (ROE) Cost of Goods Sold $1,000,000 $1,200,000 $1,470,000 130,000 $170,000 $180,000 Cash Burn from Inc, Sn Change in Payables (negative effect) Change in Acerued Liab Increase in Fixed Assets, Net $1,000,000 $1,200,000 $1,470,000 Inc. in Gross Fixed AssetsExplanation / Answer
Cash build Vs Cash burn 2012 2013 Change Cash Build: Net sales 1500000 1800000 300000 Increase in receivables (Negative effect) -60000 -100000 -40000 (260000-200000) (360000-260000) Cash build (A) 1440000 1700000 260000 Cash Burn: Cost of goods sold -900000 -1260000 -360000 Marketing -150000 -200000 -50000 General & Admin -150000 -200000 -50000 Interest -57000 -70000 -13000 Income taxes -76000 -4000 72000 Cash burns from inc.Smt. (1) -1333000 -1734000 -401000 (Total of all the above) Increase in inventories (2) -50000 -100000 -50000 (500000-450000) (600000-500000) Change in payables (Negative effect) (3) 40000 10000 -30000 (170000-130000) (180000-170000) Change in Accrued Liab. (4) 20000 10000 -10000 (70000-50000) (80000-70000) Increase in Fixed assets Net. -100000 -100000 0 (400000-300000) (500000-400000) Depreciation -53000 -60000 -7000 Inc. in gross fixed assets (Total of above 2) (5) -153000 -160000 -7000 Cash burns (6)=(1+2+3+4+5) -1476000 -1974000 -498000 Net cash build (burn) (A)+(6) -36000 -274000 -238000 Efficiency and return ratios: Sales to total assets=Net sales/Total assets 2012 2013 Net sales 1300000 1500000 Beginning total assets (2) 1000000 1200000 Ending total assets (3) 1200000 1470000 Average total assets (4)= [(2)+(3)]/2 1100000 1335000 Net sales to total assets 1.1818 1.1236 Operating return on assets=EBIT/Average total assets Average total assets=(Beginning total assets+Ending total assets)/2 2012 2013 EBIT (1) 247000 80000 Average total assets (4)= [(2)+(3)]/2 1100000 1335000 Operating return on assets (1)/(4) 0.2245 0.0599 Return on assets (ROA)=Net income/Total assets 2012 2013 Net income 114000 6000 Average total assets 1100000 1335000 ROA 0.1036 0.0045 Return on equity (ROE)=Net income/Average shareholder's equity Average shareholder's equity=(Beginning shareholder's equity+Ending shreholder's equity)/2 Shareholder's equity=Common stock issued+Retained earnings 2011 2012 2013 Common stock issued 350000 350000 350000 Retained earnings 80000 120000 126000 Shareholder's equity 430000 470000 476000 2012 2013 Net income (1) 114000 6000 Beginning shareholder's equity (2) 430000 470000 Ending shareholder's equity (3) 470000 476000 Average shareholder's equity (4)=[(2)+(3)]/2 450000 473000 ROE (1)/(4) 0.2533 0.0127 Summary 2012 2013 Change Sales-to-total assets 1.1818 1.1236 -0.0582 Operating return on assets 0.2245 0.0599 -0.1646 ROA 0.1036 0.0045 -0.0991 ROE 0.2533 0.0127 -0.2406