4/11/10 Chapter 12 Mini Case Figure MC-1. Financial Statements and Other Data (Millions except per share data) Balance Sheet, Hatfield, 12/31/10 Income Statement, Hatfield, 2010 Cash and securities $20 Sales $2,000 Accounts receivable 290 Total operating costs 1,900 Inventories 390 EBIT $100 Total current assets $700 Interest 60 Net fixed assets 500 EBT $40 Total assets $1,200 Taxes (40%) 16 Net income $24 Accounts pay. + accruals $100 Dividends $9 Notes payable 80 Add. to retain. earnings $15 Total current liabilities $180 Shares outstanding 10 Long-term debt 520 EPS $2.40 Total liabilities $700 DPS $0.90 Common stock 300 Year-end stock price $24.00 Retained earnings 200 Total common equity $500 Total liab. & equity $1,200 Selected Ratios and Other Data, 2010 Hatfield Industry Sales, 2010 (S0): $2,000 $2,000 Expected growth in sales: 15.0% 15.0% Profit margin (M): 1.2% 2.74% Assets/Sales (A0*/S0): 60.0% 50.0% Payout ratio (POR): 37.5% 35.0% Equity multiplier (Assets/Equity): 2.40 2.13 Total liability/Total assets 58.3% 53.0% Times interest earned (EBIT/Interest): 1.67 5.20 Increase in sales (?S = gS0): $300 $300 (Payables + Accruals)/Sales (L0*/S0): 5.0% 4.0% Operating costs/Sales: 95.0% 93.0% Cash/Sales: 1.0% 1.0% Receivables/Sales: 14.5% 11.0% Inventories/Sales: 19.5% 15.0% Fixed assets/Sales: 25.0% 23.0% Tax rate: 40.0% 40.0% Interest rate on all debt: 10.00% 9.5% Price/Earning (P/E): 10.0 12.0 ROE (Net income/Common equity): 4.80% 11.64% DuPont ROE PM x Sales/Assets x Assets/Equity = ROE Hatfield 1.20% 1.67 2.40 4.80% Industry 2.74% 2.00 2.13 11.67% AFNHatfield = Add'l Req'd Assets - Spontaneous liabilities - Add'n to RE = (A0*/S0)?S - (L0*/S0)?S - S1