April 30, 2003 to April 30, 2013 All numbers in Thousands Expand All?? ? ? ?? 04
ID: 2703181 • Letter: A
Question
All numbers in Thousands
Expand All?? ? ? ??
04-2013 (Q4) 01-2013 (Q3) 10-2012 (Q2) 07-2012 (Q1) Total Revenue
114,187,000 127,919,000 113,929,000 114,296,000
-
- - - - Adjustments to Revenue
Excise Taxes
- - - - +
86,027,000 96,128,000 85,517,000 85,657,000 Cost of Revenue
Gross Profit
28,160,000 31,791,000 28,412,000 28,639,000 -
21,704,000 23,191,000 22,296,000 21,941,000 Operating Expenses
Selling, General & Administrative Expenses 21,704,000 23,191,000 22,296,000 21,941,000 Research and Development Expenses - - - - Amortization Expense - - - - Amortization of Intangibles - - - - Other Operating Expenses 0 0 0 0 Operating Income
6,456,000 8,600,000 6,116,000 6,698,000 Interest Expense
574,000 533,000 590,000 555,000 Other Income/Loss 44,000 56,000 43,000 50,000 Pre-Tax Income
5,926,000 8,123,000 5,569,000 6,193,000 Income Tax Expense 1,981,000 2,247,000 1,744,000 2,032,000 Net Income from Continuing Operations 3,945,000 5,876,000 3,825,000 4,161,000 +
0 0 0 0 Non-Recurring Gains or Losses
Minority Interest
161,000 270,000 190,000 145,000 Total Net Income
3,784,000 5,606,000 3,635,000 4,016,000 Preferred Dividends - - - - Net Income Available to Common 3,784,000 5,606,000 3,635,000 4,016,000
Explanation / Answer
You have provided us with the profit/loss account statement of the public traded company
Debt and Assets valuation are shown in the balance sheet (Not Provided)
(A) Cash Flow to Revenue Ratio = ( Operating Income / Net Revenue ) *100 %
In Q3, C.F/Revenue = (6,456,000/114,187,000) = 0.05653 = 5.65%
In Q4, C.F/Revenue = 8,600,000/127,919,000 = 0.0672 = 6.72%
In Q2, C.F/Revenue = 6,116,000/113,929,000 = 0.05368 = 5.36%
In Q1, C.F/Revenue = 6,698,000/114,296,000 = 0.0586 = 5.86%
(B) Cash Return on Assets = (Operating Income / Total Assets)
(C) Debt Coverage ratio = (Operating Income / Total Debt)
Assets and Debt Information is Not provided.
Information about these will be available in the Balance Sheet,
(D) Interest Coverage Ratio = Pre Income tax / Interest Expense
In Q3, Pre Income tax / Interest Expense = 5,926,000 /574,000 = 10.32
In Q3, Pre Income tax / Interest Expense = 8,123,000/533,000 = 15.24
In Q3, Pre Income tax / Interest Expense = 5,569,000/ 590,000= 9.43
In Q3, Pre Income tax / Interest Expense = 6,193,000/ 555,000 = 11.15
(2) When we see the Interest Coverage Ratio, If it is less than 1.5(or 1 ) , then the company is having problems generating enough cash flow to pay its interest expenses.
But here they are far greater than 1.5 , Company Financial Strength is good in terms of Interest payments .
The higher this ratio of Cash flow to Revenue, the better it is for the company. Greater amounts of operating cash flows are always desirable.