See Table below showing financial statement data and stock price data for Mydeco
ID: 2568682 • Letter: S
Question
See Table below showing financial statement data and stock price data for Mydeco Corp.
a. How did Mydeco's accounts receivable days change over this period?
b. How did Mydeco's inventory days change over this period?
c. Based on your analysis, has Mydeco improved its management of its working capital during this time period? (Note: Use a 365-day year.)
a. How did Mydeco's accounts receivable days change over this period?
The accounts receivable days for 2012 is _____________days. (Round to one decimal place.)
The accounts receivable days for 2016 is __________days. (Round to one decimal place.)
b. How did Mydeco's inventory days change over this period?
Inventory days for 2012 is _____________days. (Round to one decimal place.)
Inventory days for 2016 is _____________days. (Round to one decimal place.)
c. Based on your analysis, has Mydeco improved its management of its working capital during this time period? (Select the best choice below.)
Between 2012 and 2016, Mydeco's working capital management was _____________worsened or improved by both __________reducing or increasing accounts receivable days and inventory days.
Income Statement 2012 2013 2014 2015 2016 Revenue 400.6 364.4 425.8 512.8 602.1 Cost of Goods Sold (191.3) (176.0) (201.3) (248.7) (297.4) Gross Profit 209.3 188.4 224.5 264.1 304.7 Sales and Marketing (66.3) (66.6) (82.7) (100.5) (119.3) Administration (60.4) (60.4) (60.7) (67.1) (77.1) Depreciation & Amortization (29.1) (27.4) (34.6) (39.2) (37.6) EBIT 53.5 34 46.5 57.3 70.7 Interest Income (Expense) (32.6) (32.3) (33.6) (36.4) (40.2) Pretax Income 20.9 1.7 12.9 20.9 30.5 Income Tax (7.3) (0.6) (4.5) (7.3) (10.7) Net Income 13.6 1.1 8.4 13.6 19.8 Shares outstanding (millions) 56.4 56.4 56.4 56.4 56.4 Earnings per share $0.24 $0.02 $0.15 $0.24 $0.35 Balance Sheet 2012 2013 2014 2015 2016 Assets Cash 47.4 63.9 85.8 77.3 87.6 Accounts Receivable 89.2 69.8 70.6 76.9 84.5 Inventory 32.9 32.6 27.8 33.7 35.7 Total Current Assets 169.5 166.3 184.2 187.9 207.8 Net Property, Plant & Equip. 242.9 240.3 308.4 342.1 346.1 Goodwill & Intangibles 360.7 360.7 360.7 360.7 360.7 Total Assets 773.1 767.3 853.3 890.7 914.6 Liabilities & Stockholders' Equity Accounts Payable 20.1 19.7 21.3 25.3 33.3 Accrued Compensation 6.9 6.5 6.2 8.5 10.1 Total Current Liabilities 27 26.2 27.5 33.8 43.4 Long-term Debt 503.1 503.1 579.3 604.8 604.8 Total Liabilities 530.1 529.3 606.8 638.6 648.2 Stockholders' Equity 243 238 246.5 252.1 266.4 Total Liabilities & Stockholders' Equity 773.1 767.3 853.3 890.7 914.6 Statement of Cash Flows 2012 2013 2014 2015 2016 Net Income 13.6 1.1 8.4 13.6 19.8 Depreciation & Amortization 29.1 27.4 34.6 39.2 37.6 Chg. in Accounts Receivable 3.9 19.4 -0.8 (6.3) (7.6) Chg. in Inventory (2.9) 0.3 4.8 (5.9) (2.0) Chg. in Pay. & Accrued Comp. 2.3 (0.8) 1.3 6.3 9.6 Cash from Operations 46 47.4 48.3 46.9 57.4 Capital Expenditures (26.1) (25.0) (96.7) (75.0) (41.1) Cash from Investing Activ. (26.1) (25.0) (96.7) (75.0) (41.1) Dividends Paid (5.9) (5.9) (5.9) (5.9) (6.0) Sale (or purchase) of stock - - - - - Debt Issuance (Pay Down) - - 76.2 25.5 - Cash from Financing Activ. (5.9) (5.9) 70.3 19.6 (6.0) Change in Cash 14 16.5 21.9 (8.5) 10.3 Mydeco Stock Price $8.43 $4.16 $4.73 $9.17 $11.15Explanation / Answer
a.
Accounts receivable days = 365 * Accounts receivable / Revenues
Accounts receivable days for 2012 = 365 * 89.2 / 400.6 = 81.3 days
Accounts receivable days for 2016 = 365 * 84.5 / 602.1 = 51.2 days
The accounts receivable days for 2012 is 81.3 days
The accounts receivable days for 2016 is 51.2 days.
b.
Inventory days = 365 * Inventory / Cost of goods sold
Inventory days for 2012 = 365 * 32.9 / 191.3 = 62.8 days
Inventory days for 2016 = 365 * 35.7 / 297.4 = 43.8 days
Inventory days for 2012 is 62.8 days
Inventory days for 2016 is 43.8 days.
c.
Working Capital = Current assets - Current liabilities
Working Capital for 2012 = 169.5 - 27 = 142.5
Working Capital for 2013 = 166.3 - 26.2 = 140.1
Working Capital for 2014 = 184.2 - 27.5 = 156.7
Working Capital for 2015 = 187.9 - 33.8 = 154.1
Working Capital for 2016 = 207.8 - 43.4 = 164.4
Between 2012 and 2016, Mydeco's working capital management was improved by both reducing accounts receivable days and inventory days.