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FSA analysis
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Student Name: ID:
BUS635.5: Managerial Finance Due by: 07/04/2016 (Print copy at NAC770 by 11.59PM)
FSA Assignment, Spring 2016 Complete the following and write down comment/observation: Company XYZ
INCOME STATEMENT 2008 2007 2006 Net Sales $1,640,000 $1,574,000 $1,400,000 Less: Cost of Goods Sold $ 800,000 $ 725,000 $ 600,000 Gross Profit $ 840,000 $ 849,000 $ 800,000 Less: Operating Expenses (General, Selling, and Administrative) $ 440,000 $ 430,000 $ 410,000 Operating Income (EBIT) $ 400,000 $ 419,000 $ 390,000 Less: Interest Expense $ 40,000 $ 38,000 $ 39,000 Income before Taxes (EBT) $ 360,000 $ 381,000 $ 340,000 Less:Taxes (35%) $ 126,000 $ 133,350 $ 119,000 Net Income (Loss) $ 234,000 $ 247,650 $ 221,000
BALANCE SHEET 2008 2007 2006 ASSETS
Current Assets: Cash $ 62,000 $ 50,000 $ 60,000
Accounts Receivables $ 190,000 $ 180,000 $ 150,000 Inventories $ 448,000 $ 490,000 $ 300,000
Total Current Assets $ 700,000 $ 720,000 $ 510,000 Long-Term Assets:
Property, plant, and equipment $1,200,000 $1,000,000 $ 950,000 Less: Accumulated Depreciation $ 280,000 $ 240,000 $ 220,000
Total Long-Term Assets $ 920,000 $ 760,000 $ 730,000 Total Assets $ 1,620,000 $ 1,480,000 $ 1,240,000
LIABILITIES AND EQUITY Current Liabilities: Accounts Payable $ 140,000 $ 120,000 $ 110,000
Short Term Loans $ 40,000 $ 20,000 $ 10,000 Total Current Liabilities $ 180,000 $ 140,000 $ 120,000
Long-Term Liabilities: Long-term Debt $ 250,000 $ 250,000 $ 250,000
Other Long-term Liabilities $ 10,000 $ 10,000 $ 10,000 Total Long-term Liabilities $ 260,000 $ 260,000 $ 260,000
Total Liabilities $ 440,000 $ 400,000 $ 380,000 Shareholders' Equity:
Common Equity $ 900,000 $ 900,000 $ 900,000 Retained Earning $ 280,000 $ 180,000 $ 60,000
Total Equity $ 1,180,000 $ 1,080,000 $ 960,000 Total Liabilities and Equity $ 1,620,000 $ 1,480,000 $ 1,340,000
Vertical Common size Analysis:
Company XYZ INCOME STATEMENT 2008 2007 2006
Net Sales 100% 100% 100% Less: Cost of Goods Sold
Gross Profit Less: Operating Expenses (General, Selling, and Administrative) Operating Income (EBIT) Less: Interest Expense Income before Taxes (EBT) Less:Taxes (35%) Net Income (Loss)
BALANCE SHEET 2008 2007 2006 ASSETS
Current Assets: Cash Accounts Receivables Inventories Total Current Assets Long-Term Assets: Property, plant, and equipment Less: Accumulated Depreciation Total Long-Term Assets Total Assets 100% 100% 100%
LIABILITIES AND EQUITY Current Liabilities: Accounts Payable Short Term Loans Total Current Liabilities Long-Term Liabilities: Long-term Debt Other Long-term Liabilities Total Long-term Liabilities Total Liabilities Shareholders' Equity: Common Equity Retained Earning Total Equity Total Liabilities and Equity 100% 100% 100%
Horizontal Common size Analysis:
Company XYZ
INCOME STATEMENT 2008 2007 2006 Net Sales
100%
Less: Cost of Goods Sold
100% Gross Profit
100%
Less: Operating Expenses (General, Selling, and Administrative)
100%
Operating Income (EBIT)
100% Less: Interest Expense
100%
Income before Taxes (EBT)
100% Less:Taxes (35%)
100%
Net Income (Loss)
100%
BALANCE SHEET 2008 2007 2006 ASSETS
Current Assets: Cash
100% Accounts Receivables
100%
Inventories
100% Total Current Assets
100%
Long-Term Assets: Property, plant, and equipment
100% Less: Accumulated Depreciation
100%
Total Long-Term Assets
100% Total Assets
100%
LIABILITIES AND EQUITY Current Liabilities: Accounts Payable
100% Short Term Loans
100%
Total Current Liabilities
100% Long-Term Liabilities:
Long-term Debt
100% Other Long-term Liabilities
100%
Total Long-term Liabilities
100% Total Liabilities
100%
Shareholders' Equity: Common Equity
100% Retained Earning
100%
Total Equity
100% Total Liabilities and Equity
100%
DuPont Analysis (2008):
Return on Asset 0.038
Return on Asset = Net Profit Margin X Total Asset Turnover
Return on Asset =
Operating Profit Margin X
Effect of NonOperating Items X
Tax Effect X
Total Asset Turnover
Return on Equity 0.052
Return on Equity = Return on Asset X Financial leverage
Return on Equity =
Operating Profit Margin X
Effect of NonOperating Items X
Tax Effect X
Total Asset Turnover X
Financial leverage
DuPont Analysis (2007):
Return on Asset 0.046
Return on Asset = Net Profit Margin X Total Asset Turnover
Return on Asset =
Operating Profit Margin X
Effect of NonOperating Items X
Tax Effect X
Total Asset Turnover
Return on Equity 0.061
Return on Equity = Return on Asset X Financial leverage
Return on Equity =
Operating Profit Margin X
Effect of NonOperating Items X
Tax Effect X
Total Asset Turnover X
Financial leverage
Ratio Analysis:
Value Interpretation/observation/comment on trend/change LIQUIDITY Accounts
Receivable
Turnover
Net Sales --------------------------------------
Average Accounts Receivable
2008:
2006:
A/R
Turnover in
Days
365 --------------------------------------
Accounts Receivable Turnover
2008:
2006:
Inventory
Turnover
Cost of Goods Sold ---------------------------------
Average Inventories
2008:
2006:
Inventory
Turnover in
Days
365 --------------------------------------
Inventory Turnover
2008:
2006:
Operating
Cycle A/R Turnover in Days +
Inventory Turnover in Days
2008:
2006:
Working
Capital Total Current Assets - Total
Current Liabilities
2008:
2006:
Current
Ratio Total Current Assets
---------------------------------- Total Current Liabilities
2008:
2006:
SOLVENCY Times
Interest
Earned
Income before Taxes + Interest Expense
-------------------------------------- Interest Expense
2008:
2006:
Debt Ratio Total Liabilities --------------------------------
Total Assets
2008:
2006:
Debt/Equity Total Liabilities ------------------------
Total Equity
2008:
2006:
PROFITABILITY
Net Profit
Margin
N.I. ---------------------------------
Net Sales
2008:
2006:
Total Asset
Turnover
Net Sales ---------------------------------
Average Total Assets
2008:
2006:
Return on
Assets
N.I. ----------------------------- Average Total Assets
2008:
2006:
Operating
Income
Margin
Operating Income -------------------------
Net Sales
2008:
2006:
Return on
Total Equity N.I.
-------------------------------------- Average Total Equity
2008:
2006:
Gross Profit
Margin
Gross Profit --------------------
Net Sales
2008:
2006:
MISC. ANALYSIS Degree of
Financial
Leverage
Income before Taxes + Interest Expense
-------------------------------------- Income before Taxes
2008:
2006:
Simple Proforma Statement and analysis: Assumptions (hypothetical, NOT based on historical record analysis):
Sales 8% growth COGS 50% of sales SG&A 25% of sales Current Assets 40% of sales Net PPE 60% of sales Current Liabilities 10% growth Interest stable
Long term interest stable Retention rate 50% of net income
Company: XYZ INCOME STATEMENT 2008 2009 (estimated)
Net Sales $1,640,000
Less: Cost of Goods Sold $ 800,000 Gross Profit $ 840,000 Less: Operating Expenses (General, Selling, and Administrative) $ 440,000 Operating Income (EBIT) $ 400,000 Less: Interest Expense $ 40,000 Other Income (Expenses) $ - Income before Taxes (EBT) $ 360,000 Less: Taxes (35%) $ 126,000 Net Income (Loss) $ 234,000 $ 261,820
BALANCE SHEET 2008 2009 (estimated) ASSETS
Current Assets: Total Current Assets $ 700,000
Long-Term Assets: Net Property, plant, and equipment $ 920,000
Total Assets $ 1,620,000
$ 1,771,200
LIABILITIES AND EQUITY Current Liabilities:
Difference = ? Total Current Liabilities $ 180,000
How we can reconcile? Write in brief below …
Long-Term Liabilities: Long-term Debt $ 250,000
Other Long-term Liabilities $ 10,000 $ 10,000 Total Long-term Liabilities $ 260,000
Total Liabilities $ 440,000 Shareholders' Equity:
Common Equity $ 900,000 Retained Earning $ 280,000 $ 397,000
Total Equity $ 1,180,000 Total Liabilities and Equity $ 1,620,000 $ 1,755,000
