Griffin and Lasky, Inc. (G&L), supplies industrial automation equipment and machine tools to the automotive industry. G&L
Question:
Griffin and Lasky, Inc. (G&L), supplies industrial automation equipment and machine tools to the automotive industry. G&L recognizes revenue on its long-term contracts over time. Customer orders have long lead times because they involve multiyear capital investment programs. Sometimes orders are canceled. Selected items from the company’s financial statements follow.
Required:
1. Compute earnings before interest, taxes, depreciation, and amortization (EBITDA) and adjusted EBITDA—after excluding the plant write-down—for each year in the schedule.
2. Are profits at G&L keeping pace with sales?
3. Compute the days receivables outstanding using year-end receivables for each year in the schedule.
4. Why might analysts be concerned about earnings quality at G&L?
($ in millions) 20X1 20X2 20X3 Sales $571.5 $619.5 $730.6 Accounts receivable-billed 141.6 94.5 147.9 Accounts receivable-unbilled 104.5 249.4 202.7 Total accounts receivable 246.1 343.9 350.6 Inventory 57.4 74.8 102.3 75.8 38.1 Earnings before interest and taxes (EBIT) Depreciation and amortization Plant write-down 74.8 14.8 -0- 15.4 19.3 -0- 30.3
Step by Step Answer:
Requirement 1 in millions 20X1 20X2 20X3 Earnings before interest and taxes 748 758 381 Depreciation and amortization 148 154 193 EBITDA 896 912 574 P...View the full answer
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
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