See Table showing financial statement data and stock price data for Mydeco Corp.
ID: 2799738 • Letter: S
Question
See Table
showing financial statement data and stock price data for Mydeco Corp.
a. How did Mydeco's accounts receivable days change over this period?
The accounts receivable days for The accounts receivable days for 2012 is _____ days
The accounts receivable for 2016 is __________ days
b. How did Mydeco's inventory days change over this period?
Inventory days for 2012 is ____________ days
Inventory days for 2016 is _____________ days
c. Based on your analysis, has Mydeco improved its management of its working capital during this time period? (Note: Use a 365-day year.)
Between 2012 and 2016 Mydeco's working capital management was (Improved or Worsened)
by both (reducing or increasing) accounts receivable days and inventory days.
Income Statement 2012 2013 2014 2015 2016 Revenue 398.1 365.2 425.2 508.8 600.7 Cost of Goods Sold (187.0) (174.4) (208.0) (250.9) (296.0) Gross Profit 211.1 190.8 217.2 257.9 304.7 Sales and Marketing (65.5) (66.9) (84.7) (102.9) (118.1) Administration (60.0) (58.5) (57.7) (65.9) (77.5) Depreciation & Amortization (28.6) (25.5) (34.3) (38.5) (40.0) EBIT 57 39.9 40.5 50.6 69.1 Interest Income (Expense) (32.4) (31.6) (30.3) (38.0) (38.9) Pretax Income 24.6 8.3 10.2 12.6 30.2 Income Tax (8.6) (2.9) (3.6) (4.4) (10.6) Net Income 16 5.4 6.6 8.2 19.6 Shares outstanding (millions) 56.4 56.4 56.4 56.4 56.4 Earnings per share $0.28 $0.10 $0.12 $0.15 $0.35 Balance Sheet 2012 2013 2014 2015 2016 Assets Cash 47.4 64.9 84.1 75.4 83.7 Accounts Receivable 87.3 70.6 70.3 75.4 84.4 Inventory 32.7 31.1 28.6 29.7 33.9 Total Current Assets 167.4 166.6 183 180.5 202 Net Property, Plant & Equip. 242.4 244.1 305.5 343.8 345.4 Goodwill & Intangibles 364.7 364.7 364.7 364.7 364.7 Total Assets 774.5 775.4 853.2 889 912.1 Liabilities & Stockholders' Equity Accounts Payable 17.6 17.8 20.1 25.5 31.4 Accrued Compensation 6.5 5.5 7.3 7.8 9.2 Total Current Liabilities 24.1 23.3 27.4 33.3 40.6 Long-term Debt 503.2 503.2 577.7 602.9 602.9 Total Liabilities 527.3 526.5 605.1 636.2 643.5 Stockholders' Equity 247.2 248.9 248.1 252.8 268.6 Total Liabilities & Stockholders' Equity 774.5 775.4 853.2 889 912.1 Statement of Cash Flows 2012 2013 2014 2015 2016 Net Income 16 5.4 6.6 8.2 19.6 Depreciation & Amortization 28.6 25.5 34.3 38.5 40 Chg. in Accounts Receivable 3.9 16.7 0.3 (5.1) (9.0) Chg. in Inventory (2.9) 1.6 2.5 (1.1) (4.2) Chg. in Pay. & Accrued Comp. 1.3 (0.8) 4.1 5.9 7.3 Cash from Operations 46.9 48.4 47.8 46.4 53.7 Capital Expenditures (26.7) (26.4) (98.6) (75.8) (38.5) Cash from Investing Activ. (26.7) (26.4) (98.6) (75.8) (38.5) Dividends Paid (4.5) (4.5) (4.5) (4.5) (6.9) Sale (or purchase) of stock - - - - - Debt Issuance (Pay Down) - - 74.5 25.2 - Cash from Financing Activ. (4.5) (4.5) 70 20.7 (6.9) Change in Cash 15.7 17.5 19.2 (8.7) 8.3 Mydeco Stock Price $8.08 $3.12 $4.68 $9.32 $9.73Explanation / Answer
Point a Income Statement 2012 2013 2014 2015 2016 Revenue 398.1 365.2 425.2 508.8 600.7 Accounts Receivable 87.3 70.6 70.3 75.4 84.4 Chg. in Accounts Receivable 3.9 16.7 0.3 -5.1 -9 Accounts receivable days = Accounts Receivable / Turnover X No. of Days in present case 87.3/398.1*365 70.6/365.2*365 70.3/425.2*365 75.4/508.8*365 84.4/600.7*365 No of Receivable days 80.04 70.56 60.35 54.09 51.28 so the number of Receivable days in 2012 was 80.04 and in 2016 is 51.28, it shows that average collection time is increased and amount of working capital reduced. Point b Income Statement 2012 2013 2014 2015 2016 Cost of Goods Sold (COGS) -187 -174.4 -208 -250.9 -296 Inventory 32.7 31.1 28.6 29.7 33.9 Chg. in Inventory -2.9 1.6 2.5 -1.1 -4.2 Inventory days = Inventory / COGS X No. of Days in present case =32.7/187*365 =31.2/174.4*365 =28.6/208*365 =29.7/250.9*365 =33.9/296*365 No of Inventory days 63.83 65.09 50.19 43.21 41.80 so the number of Inventory days in 2012 was 63.83 and in 2016 is 41.80, it shows in what time inventory is sold or replaced, as the number of days reduced, it lead to reduction in working capital. Point c So based on above analysis, it is clear that mydeco has improved its management of working capital both in receivable and inventory.