2/1/2012
Module 8. Student Ch08 P 8-15 Build a Model
Joshua & White Technologies: December 31 Balance Sheets
(Thousands of Dollars)
Assets			2012	2011
Cash and cash equivalents			$21,000	$20,000
Short-term investments			3,759	3,240
Accounts Receivable			52,500	48,000
Inventories			84,000	56,000
Total current assets			$161,259	$127,240
Net fixed assets			218,400	200,000
Total assets			$379,659	$327,240
Liabilities and equity
Accounts payable			$33,600	$32,000
Accruals			12,600	12,000
Notes payable			19,929	6,480
Total current liabilities			$66,129	$50,480
Long-term debt			67,662	58,320
Total liabilities			$133,791	$108,800
Common stock			183,793	178,440
Retained Earnings			62,075	40,000
Total common equity			$245,868	$218,440
Total liabilities and equity			$379,659	$327,240
Joshua & White Technologies December 31 Income Statements
(Thousands of Dollars)
			2012	2011
Sales			$420,000	$400,000
Expenses excluding depr. and amort.			327,600	320,000
EBITDA			$92,400	$80,000
Depreciation and Amortization			19,660	18,000
EBIT			$72,740	$62,000
Interest Expense			5,740	4,460
EBT			$67,000	$57,540
Taxes (40%)			26,800	23,016
Net Income			$40,200	$34,524
Common dividends			$18,125	$17,262
Addition to retained earnings			$22,075	$17,262
Other Data			2012	2011
Year-end Stock Price			$90.00	$96.00
# of shares (Thousands)			4,052	4,000
Lease payment (Thousands of Dollars)			$20,000	$20,000
Sinking fund payment (Thousands of Dollars)			$0	$0
Ratio Analysis			2012	2011	Industry Avg
Liquidity Ratios
Current Ratio			2.44	2.52	2.58
Quick Ratio			1.53	1.08	1.53
Asset Management Ratios
Inventory Turnover			5.00	7.14	7.69
Days Sales Outstanding			45.63	43.80	47.45
Fixed Assets Turnover			1.93	2.00	2.04
Total Assets Turnover			1.11	1.22	1.23
Debt Management Ratios
Debt Ratio			%		32.1%
Times-interest-earned ratio			12.67	13.90	15.33
EBITDA coverage ratio			5.62	5.00	4.18
Profitability Ratios
Profit Margin			9.57%	8.63%	8.86%
Basic Earning Power			19.16%	18.95%	19.48%
Return on Assets			10.59%	10.55%	10.93%
Return on Equity			12.82%	12.47%	16.10%
Market Value Ratios
Earnings per share			$9.92	$8.63	NA
Price-to-earnings ratio			9.07	11.12	10.65
Cash flow per share			$5.18	$5.00	NA
Price-to-cash flow ratio			17.37	19.20	7.11
Book Value per share			$60.68	$54.61	NA
Market-to-book ratio			1.48	1.76	1.72
a. Has Joshua & White's liquidity position improved or worsened? Explain.
The company has satisfactory liquidation position. Its current ratio has dropped and the quick ratio has improved. 2011: 2.520602 2012: 2.438552 Current ratio Industry averyage 2.58. Quick ratio = 2011 :1.077288 . 2012 :1.530487; industry average = 1.53
							b. Has Joshua & White's ability to manage its assets improved or worsened? Explain.
No, the assets are not being optimally utilized. Based on the asset management ratios, we are able to see that they are below industry average.
							c. How has Joshua & White's profitability changed during the last year?
Looking at the information above, I would believe that probability has improved over the last year.
d. Perform an extended Du Pont analysis for Joshua & White for 2008 and 2009.
	ROE =	PM x	TA Turnover x Equity Multiplier
2012
2011
							e. Perform a common size analysis. What has happened to the composition
(that is, percentage in each category) of assets and liabilities?
Common Size Balance Sheets
Assets			2012	2011
Cash and cash equivalents			5.5%	6.1%
Short-term investments			1.0%	1.0%
Accounts Receivable			13.8%	14.7%
Inventories			22.1%	17.1%
Total current assets			42.5%	38.9%
Net fixed assets			57.5%	61.1%
Total assets			100.0%	100.0%
Liabilities and equity			2012	2011
Accounts payable			8.9%	9.8%
Accruals			3.3%	3.7%
Notes payable			5.3%	2.0%
Total current liabilities			17.4%	15.4%
Long-term debt			17.8%	17.8%
Total liabilities			35.3%	33.2%
Common stock			48.4%	54.5%
Retained Earnings			16.4%	12.2%
Total common equity			64.8%	66.8%
Total liabilities and equity			100.0%	100.0%
Common Size Income Statements			2012	2011
Sales			100.0%	100.0%
Expenses excluding depr. and amort.			78.0%	80.0%
EBITDA			22.0%	20.0%
Depreciation and Amortization			4.7%	4.5%
EBIT			17.3%	15.5%
Interest Expense			1.4%	1.1%
EBT			16.0%	14.4%
Taxes (40%)			6.4%	5.8%
Net Income			9.6%	8.6%
							f. Perform a percent change analysis. What does this tell you about the change in profitability
and asset utilization?
Percent Change Balance Sheets				Base
Assets			2012	2011
Cash and cash equivalents
Short-term investments
Accounts Receivable
Inventories
Total current assets
Net fixed assets
Total assets
				Base
Liabilities and equity			2012	2011
Accounts payable
Accruals
Notes payable
Total current liabilities
Long-term debt
Total liabilities
Common stock
Retained Earnings
Total common equity
Total liabilities and equity
				Base
Percent Change Income Statements			2012	2011
Sales
Expenses excluding depr. and amort.
EBITDA
Depreciation and Amortization
EBIT
Interest Expense
EBT
Taxes (40%)
Net Income
In excel