(38 points) Jane is working for an investment bank as an equity analyst. Her manager gave her the financial statements of The Box of Chocolate Inc. Jane has to determine if the company is financially healthy or not. Unfortunately, both the balance sheet and the income statement of the company are not in the correct format. Furthermore, Jane spilled over coffee on some numbers, and she cannot read them now. Fortunately, she has some ratios that she can use to prepare the balance sheet and the income statement for 2021. The Box of Chocolate Inc. has 5 million shares outstanding and paid $1.54 as dividends to its shareholders at the end of 2021. The retained earnings at the beginning of 2021 was $12.9 million. Debt ratio = 0.4 TIE = 10 Current ratio = 1.4 Quick ratio = 10 Cash ratio = 0.2 ROA = 0.12 Inventory turnover = 5.0 Days' Sales in Receivables = 73 days She listed the numbers she can read from financial statements of the company in the table below in alphabetical order: 20 20 Accounts payable Accounts receivable Cash Common Stock Cost of Goods Sold Depreciation Equity Fixed assets, net Inventories Long-term Debt Notes Payable Retained Earnings Sales Selling, general, and administrative expenses Total assets 10 115 1 (14 points) By using the information provided above, prepare the correctly formatted balance sheet and income statement of the company for 2021. Please note that the list given above does not include all the items in the income statement. You should find these items and prepare the income statement for the company in the correct format. (15 points) Her manager asks Jane to analyze the profitability and market value of the company Jane realized that she needs some additional information, and she finds out that the dividend yield for 2021 is 5%. She also gets the industry averages for a set of ratios listed in the table below. Identify the ratios she needs to look at to analyze the profitability and market value of the company. Calculate these ratios for The Box of Chocolates Inc. Analyze the profitability and market value of the company relative to the Industry Average. Conduct the Du Pont Analysis for both the company and the industry. Current Ratio Quick Ratio ROA Profit Margin Debt Ratio Total Asset Turnover Inventory turnover Accounts Receivable Turnover P/E M/B Industry Average (2021) 1.6 1.2 0.15 0.125 0.325 1.20 5.5 6 13.50 3.15 (5 points) Jane also calculated how fast The Chocolate Box Inc. can grow by using only its internal sources. However, her manager does not like the number she sees. She wants Jane to calculate the dividend payout ratio that will allow the company to grow at 8% next year by using internal sources only. Calculate the dividend payout ratio required to achieve this growth rate. (4 points) By using the dividend payout ratio you solved for in part (c) of this question, calculate the maximum growth rate the company can have next year by using internal sources and borrowing while keeping a constant debt ratio. (38 points) Jane is working for an investment bank as an equity analyst. Her manager gave her the financial statements of The Box of Chocolate Inc. Jane has to determine if the company is financially healthy or not. Unfortunately, both the balance sheet and the income statement of the company are not in the correct format. Furthermore, Jane spilled over coffee on some numbers, and she cannot read them now. Fortunately, she has some ratios that she can use to prepare the balance sheet and the income statement for 2021. The Box of Chocolate Inc. has 5 million shares outstanding and paid $1.54 as dividends to its shareholders at the end of 2021. The retained earnings at the beginning of 2021 was $12.9 million. Debt ratio = 0.4 TIE = 10 Current ratio = 1.4 Quick ratio = 10 Cash ratio = 0.2 ROA = 0.12 Inventory turnover = 5.0 Days' Sales in Receivables = 73 days She listed the numbers she can read from financial statements of the company in the table below in alphabetical order: 20 20 Accounts payable Accounts receivable Cash Common Stock Cost of Goods Sold Depreciation Equity Fixed assets, net Inventories Long-term Debt Notes Payable Retained Earnings Sales Selling, general, and administrative expenses Total assets 10 115 1 (14 points) By using the information provided above, prepare the correctly formatted balance sheet and income statement of the company for 2021. Please note that the list given above does not include all the items in the income statement. You should find these items and prepare the income statement for the company in the correct format. (15 points) Her manager asks Jane to analyze the profitability and market value of the company Jane realized that she needs some additional information, and she finds out that the dividend yield for 2021 is 5%. She also gets the industry averages for a set of ratios listed in the table below. Identify the ratios she needs to look at to analyze the profitability and market value of the company. Calculate these ratios for The Box of Chocolates Inc. Analyze the profitability and market value of the company relative to the Industry Average. Conduct the Du Pont Analysis for both the company and the industry. Current Ratio Quick Ratio ROA Profit Margin Debt Ratio Total Asset Turnover Inventory turnover Accounts Receivable Turnover P/E M/B Industry Average (2021) 1.6 1.2 0.15 0.125 0.325 1.20 5.5 6 13.50 3.15 (5 points) Jane also calculated how fast The Chocolate Box Inc. can grow by using only its internal sources. However, her manager does not like the number she sees. She wants Jane to calculate the dividend payout ratio that will allow the company to grow at 8% next year by using internal sources only. Calculate the dividend payout ratio required to achieve this growth rate. (4 points) By using the dividend payout ratio you solved for in part (c) of this question, calculate the maximum growth rate the company can have next year by using internal sources and borrowing while keeping a constant debt ratio