A. You are on the Board of Directors reviewing the performance of WestCoast Ski and Boards Inc. Analyze the following financial data of WestCoast for the 2019 and 2018 years to answer the following questions.
Balance Sheets
Assets
2019
2018
Cash
13,400
$ 10,852
Short-term investments
30,000
41,000
Accounts receivable
634,800
602,026
Inventories
1,319,852
1,348,620
Total current assets
1,998,052
2,002,498
Gross fixed assets
1,486,500
1,350,950
Less: accumulated depreciation
440,080
305,280
Net fixed assets
1,046,420
1,045,670
Total assets
3,044,472
$ 3,048,168
Liabilities and Equity
2019
2018
Accounts payable
298,400
$ 330,000
Notes payable
600,000
680,000
Accruals
287,300
292,936
Total current liabilities
1,185,700
1,302,936
Long-term debt
870,000
950,000
Common stock (100,000 shares)
460,000
460,000
Retained earnings
528,772
335,232
Total equity
988,772
795,232
Total liabilities and equity
3,044,472
$ 3,048,168
Income Statements
2019
2018
Sales
6,740,600
$ 6,126,400
Cost of goods sold
5,680,100
5,096,000
Other expenses
472,000
624,000
Depreciation
134,800
115,400
Total operating costs
6,286,900
5,835,400
EBIT
453,700
291,000
Interest expense
97,800
115,000
EBT
355,900
176,000
Taxes (40%)
142,360
70,400
Net income
$213,540
$ 105,600
Dividends paid
$20,000
$ 10,000
Other Data
2019
2018
Stock price
$20
$10
WACC
10%
10%
Common Size Balance Sheets
Assets
2019
2018
Industy
Cash
.4%
0.3%
Short term investments
1.4%
0.3%
Accounts receivable
19.8%
22.4%
Inventories
44.2%
41.2%
Total current assets
65.7%
64.1%
Gross fixed assets
44.32%
53.9%
Less accumulated depreciation
10.02%
18.0%
Net fixed assets
34.3%
35.9%
Total assets
100%
100.0%
Liabilities and Equity
2019
2018
Industry.
Accounts payable
10.8%
11.9%
Notes payable
22.3%
2.4%
Accruals
9.6%
9.5%
Total current liabilities
42.7%
23.7%
Long-term debt
31.2%
26.3%
Common stock
15.1%
20.0%
Retained earnings
11%
30.0%
Total equity
26%
50.0%
Total liabilities and equity
100%
100.0%
Common Size Income Statement
2019
2018
Industry
Sales
100%
100.0%
Cost of goods sold
83.2%
84.5%
Other expenses
10.2%
4.4%
Depreciation
1.9%
4.0%
Total operating costs
95.3%
92.9%
EBIT
4.75%
7.1%
Interest expense
1.9%
1.1%
EBT
2.9%
5.9%
Taxes (40%)
1.15%
2.4%
Net Income
1.72%
3.6%
Financial Ratios
2019
2018
Industry Avg
Current
1.5X
2.7X
Quick
0.5X
1.0X
Inventory Turnover
4.5X
6.1X
Days Sales Outstanding
35.9
32
Fixed Asset Turnover
5.9X
7.0X
Total Asset Turnover
2.0X
2.5X
Debt ratio
53%
28.7%
TIE
2.53X
6.2X
Profit Margin
1.725
3.6%
Return on Assets
3.46%
9.0%
Return on Equity
13.3%
17.9%
Price/Earnings
8.5X
12.4X
Questions:
What was WestCoasts NOPAT for 2019?
What was its Free Cash Flow amount for 2019?
What does the term Free Cash Flow mean?
What can the company use Free Cash Flow for?
What was its Return on Invested Capital (ROIC) for 2019? Compared to the companys WACC, did the companys growth add value for the year?
What was the companys Economic Value Added (EVA) for 2019?
Did the company increase its Market Value Added (MVA) between 2018 and 2019?
Perform Ratio Analysis for 2019 year:
Calculate the Current and Quick ratios. Has the companys liquidity position improved or worsened?
Calculate the Inventory Turnover, Days Sales Outstanding, Fixed Asset Turnover, Total Asset Turnover ratios. How well has the company managed its assets?
Calculate the Debt ratio and Times Interest Earned ratios and compare to industry average. What can you conclude about its debt management?
Calculate the Profit Margin, Return on Assets, Return on Equity ratios. - How has the companys profitability changed?
Calculate the P/E Ratio. What can you conclude about what investors think about the company when compared to Industry?
Perform a common size analysis on the Balance Sheet for 2019 and 2018.
What has happened to the assets and liabilities between 2019 and 2018?
How does the company compare to Industry Average?
Perform a common size analysis and percent change analysis on the 2019 Income Statement.
What does the percentages tell you about the profitability of the company (i.e. how is it doing with regard to controlling its expenses)?
What are the potential problems or limitations of financial ratio analysis?
B. Time Value of Money Analysis
Whats the future value of $150 after 3 years if it earns 12%, annual compounding?
Whats the present value of $200 to be received in 3 years if the interest rate is 12%, annual compounding?
What annual interest rate would cause $200 to grow to $231.53 in 3 years?
If a companys sales are growing at a rate of 10% annually, how many years will it take for sales to double?
Whats the difference between an ordinary annuity and an annuity due?
What is the present value of a 3-year, $120 ordinary annuity if the annual interest rate is 8%?
What is its future value?
What would the present value be if it was an annuity due?
A 5-year $150 ordinary annuity has an annual interest rate of 8%. What is its present value?
What would the present value be if it was a 10-year annuity?
What would the present value be if it was a perpetuity?
You borrow $30,000 to buy a car. The bank charges an interest rate of 5% on the loan. If the loan is to be repaid in equal amounts over 5 years, how much are the annual payments?
A 25-year-old student wants to save for her retirement. At the end of each year, she invests $5,000 in a stock brokerage account with an expected annual return of 7%. If she keeps saving in this manner, how much will she have accumulated at age 65?
If the student waited until she was 40 years old to start saving in the same manner as in #10, how much would she have at age 65?
How much would she need to save each year if she started saving at age 40 to accumulate the same amount at age 65 that she would have had if she had started saving at age 25?
What is the present value of the following uneven cash flow stream? The annual interest rate is 8%.
0 1 2 3 4 Years
| | | | |
0 100 200 300 -150
A. You are on the Board of Directors reviewing the performance of WestCoast Ski and Boards Inc. Analyze the following financial data of WestCoast for the 2019 and 2018 years to answer the following questions Balance Sheets Inwone 131989 1 Tertul cu 1. fed Les med deg.-2020 1 Aaraa 200.000.000 Notes pie . 30 Tecat cu LIR.10095 Laptode 000 C. 40.000 Retained 38112 Tocality 23 Income Statements 2018 6.000 56138,00 Cost of good old 500.00 50.000 Others 42.000.000 HO Total princ. 3838.9 TIT 1 34.00 14.000 53000 500 Diddl Other Date 50 WACO CS Balance Sheet Asset 22 2018 Le Net Total assets Liamarai Acorne TON Long.com Come back Redcamp Tocal Comen Secome Statement 2019 2018 Infostry CL patti Other 10 Depreciation 19 20 191 IN 20% 50 FRT Taxes Nelle 72 Financial Ratios >> Bindestry 21 OSX SX LOX 39X 20x 32 70x 25% levyn Dags Sales ning Fixed Asset Tume Tutal Anselmo Dehati TIE Hulle Murpis Retro te Ray Pricellamies 253x 6.3% 90 17 124 85X Questions 1. What was WestCoast's NOPAT for 2019? 2. What was its Free Cash Flow amount for 2019? What does the term "Free Cash Flow" mean? What can the company use Free Cash Flow for? 3. What was its Return on invested Capital (ROIC) for 2019? Compared to the company's WACC, did the company's growth add value for the year? 4. What was the company's Economic Value Added (EVA) for 2019? s. Did the company increase its Market Value Added (MVA) between 2018 and 2019? s. Perform Ratio Analysis for 2019 year: Calculate the Current and Quick ratios. Has the company's liquidity position improved or worsened? b. Calculate the inventory Turnover, Days Sales Outstanding, Fixed Asset Turnover, Total Asset Turnover ratios. How well has the company managed its assets? Calculate the Debt ratio and Times Interest Eamed ratios and compare to industry average. What can you conclude about its debt management? 4. Calculate the Profit Margin, Return on Assets, Return on Equity ratios.. How has the company's profitability changed? Calculate the P/E Ratio. What can you conclude about what investors think about the company when compared to Industry? 7. Perform a common size analysis on the Balance Sheet for 2019 and 2018 What has happened meses ant liabilities Lacul TIC MRW Can you CUCIUC at what investors think about the company when compared to Industry? Perform a common size analysis on the Balance Sheet for 2019 and 2018 What has happened to the assets and liabilities between 2019 and 2018? . How does the company compare to Industry Average? .. Perform a common size analysis and percent change analysis on the 2019 Income Statement What does the percentages tell you about the profitability of the company (.e. how is it doing with regard to controlling its expenses? What are the potential problems or limitations of financial ratio analysis? B. Time Value of Money Analysis 1. What's the future value of S150 after 3 years if it earns 12% annual compounding? 2. What's the present value of $200 to be received in 3 years if the interest rate is 12%, annual compounding? 5. What annual interest rate would cause $200 to grow to $231.53 in 3 years? 4. If a company's sales are growing at a rate of 10% annually, bow many years will it take for sales to double? s. What's the difference between an ordinary annuity and an annuity due? What is the present value of a 3-year, 5120 ordinary annuity if the annual interest rate is 8462 What is its future value? What would the present value be if it was an annuity clue? 5. A 5-year $150 ordinary annuity has an annual interest rate of 8%. What is its present value? What would the present value be if it was a 10-year annuity? What would the present value be if it was a perpetuity? You borrow $30,000 to buy a car. The bank charges an interest rate of 5% on the loan. If the loan is to be repaid in equal amounts over 5 years, how much are the annual payments? . A 25-year-old student wants to save for her retirement. At the end of each year, she invests $5,000 in a stock brokerage account with an expected annual return of 7%. If she keeps saying in this manner, how much will she have accumulated at age 65? 10. If the student waited until she was 40 years old to start saving in the same manner as in 10. how much would she have at age 652 11. How much would she need to save cach year if she started saving at age 40 to accumulate the same amount at age 65 that she would have had if she had started saving at age 25? 12. What is the present value of the following uneven cash flow stream? The annual interest rate is 8% 0 1 2 3 4 Years 1 1 1 0 100 200 300-150 1 You are on the Board of Directors reviewing the performance of West Coast Ski and Boards Ine. Analyze the following financial data of WestCoast for the 2019 and 2018 years to answer the following questions. Balance Sheets Short-term investments Accounts receivable Inventorice Total current Gross fixed Les accumulated depreciation Net find assets Totalt 2019 1018 11.400S 10,12 30.000 41,000 634,800 602.026 1319.852 1948.620 1.998,052 2,002,498 1.486.500 1,350,950 440,00 305,280 1.046.420 1.045.670 3.044472 $3.04.16 Liabilities and will Accounts payable Notes payable Accruals Total current liabilities Long-term debit Common stock (100,000 shares) Retained earnings Total equity Total liabilities and equity 2019 2018 298.400 $ 330,000 600,000 680,000 287-100 292.936 1,185,700 1.302,936 870,000 950,000 460,000 460,000 528.272 335232 988 272 795.232 3.044.472 S 3.048.168 Income Statements 2019 2018 Sales 6,740,600 $ 6,126,400 Cost of goods sold 5.680,100 5,096,000 Other expenses 472.000 624,000 Depreciation 134.800 115.400 Total operating costs 6.286.900.5.895.400 ERIT 453,700 291.000 Interest expense 97 800 115.000 EBT 355,900 176,000 Taxes (40%) 142.360 70.400 Net income $213.840 5.105.600 Dividends paid $20,000 $ 10.000 Other Data 2019 2018 $20 SIO 10% 10% Stock price WACC Cama Slue Balance Sheets 2019 Short term investments 2018 Industy 4% 0.3% 0.39 14% F6 PA F7 F8 F9 F10 F11 F12 PrtScr Insert Delet % A & ) Review View Mailings Tell me what you want to do Help ut References Enable Editing e internet can contain Vituses. Unless you need to edit, it's safer to stay in Protected View 897 What is its future value? What would the present value be if it was an annuity due? 7. A 5-year $150 ordinary annuity has an annual interest rate of 8% What is its present value? What would the present value be if it was a 10-year annuity? What would the present value be if it was a perpetuity? 8. You borrow $30,000 to buy a car. The bank charges an interest rate of 5% on the loan. If the loan is to be repaid in equal amounts over 5 years, how much are the annual payments? 9 A 25-year-old student wants to save for her retirement. At the end of each year, she invests $5,000 in a stock brokerage account with an expected annual return of 7% If she keeps saving in this manner, how much will she have accumulated at age 657 10. If the student waited until she was 40 years old to start saving in the same manner as in #10, how much would she have at age 652 11. How much would she need to save each year if she started saving at age 40 to accumulate the same amount at age 65 that she would have had if she had started saving at age 257 12 What is the present value of the following uneven cash flow stream? The annual interest Tate is 8 0 1 3 Years 2 4 100 200 300 -150 DELL FS F6 A. You are on the Board of Directors reviewing the performance of WestCoast Ski and Boards Inc. Analyze the following financial data of WestCoast for the 2019 and 2018 years to answer the following questions Balance Sheets Inwone 131989 1 Tertul cu 1. fed Les med deg.-2020 1 Aaraa 200.000.000 Notes pie . 30 Tecat cu LIR.10095 Laptode 000 C. 40.000 Retained 38112 Tocality 23 Income Statements 2018 6.000 56138,00 Cost of good old 500.00 50.000 Others 42.000.000 HO Total princ. 3838.9 TIT 1 34.00 14.000 53000 500 Diddl Other Date 50 WACO CS Balance Sheet Asset 22 2018 Le Net Total assets Liamarai Acorne TON Long.com Come back Redcamp Tocal Comen Secome Statement 2019 2018 Infostry CL patti Other 10 Depreciation 19 20 191 IN 20% 50 FRT Taxes Nelle 72 Financial Ratios >> Bindestry 21 OSX SX LOX 39X 20x 32 70x 25% levyn Dags Sales ning Fixed Asset Tume Tutal Anselmo Dehati TIE Hulle Murpis Retro te Ray Pricellamies 253x 6.3% 90 17 124 85X Questions 1. What was WestCoast's NOPAT for 2019? 2. What was its Free Cash Flow amount for 2019? What does the term "Free Cash Flow" mean? What can the company use Free Cash Flow for? 3. What was its Return on invested Capital (ROIC) for 2019? Compared to the company's WACC, did the company's growth add value for the year? 4. What was the company's Economic Value Added (EVA) for 2019? s. Did the company increase its Market Value Added (MVA) between 2018 and 2019? s. Perform Ratio Analysis for 2019 year: Calculate the Current and Quick ratios. Has the company's liquidity position improved or worsened? b. Calculate the inventory Turnover, Days Sales Outstanding, Fixed Asset Turnover, Total Asset Turnover ratios. How well has the company managed its assets? Calculate the Debt ratio and Times Interest Eamed ratios and compare to industry average. What can you conclude about its debt management? 4. Calculate the Profit Margin, Return on Assets, Return on Equity ratios.. How has the company's profitability changed? Calculate the P/E Ratio. What can you conclude about what investors think about the company when compared to Industry? 7. Perform a common size analysis on the Balance Sheet for 2019 and 2018 What has happened meses ant liabilities Lacul TIC MRW Can you CUCIUC at what investors think about the company when compared to Industry? Perform a common size analysis on the Balance Sheet for 2019 and 2018 What has happened to the assets and liabilities between 2019 and 2018? . How does the company compare to Industry Average? .. Perform a common size analysis and percent change analysis on the 2019 Income Statement What does the percentages tell you about the profitability of the company (.e. how is it doing with regard to controlling its expenses? What are the potential problems or limitations of financial ratio analysis? B. Time Value of Money Analysis 1. What's the future value of S150 after 3 years if it earns 12% annual compounding? 2. What's the present value of $200 to be received in 3 years if the interest rate is 12%, annual compounding? 5. What annual interest rate would cause $200 to grow to $231.53 in 3 years? 4. If a company's sales are growing at a rate of 10% annually, bow many years will it take for sales to double? s. What's the difference between an ordinary annuity and an annuity due? What is the present value of a 3-year, 5120 ordinary annuity if the annual interest rate is 8462 What is its future value? What would the present value be if it was an annuity clue? 5. A 5-year $150 ordinary annuity has an annual interest rate of 8%. What is its present value? What would the present value be if it was a 10-year annuity? What would the present value be if it was a perpetuity? You borrow $30,000 to buy a car. The bank charges an interest rate of 5% on the loan. If the loan is to be repaid in equal amounts over 5 years, how much are the annual payments? . A 25-year-old student wants to save for her retirement. At the end of each year, she invests $5,000 in a stock brokerage account with an expected annual return of 7%. If she keeps saying in this manner, how much will she have accumulated at age 65? 10. If the student waited until she was 40 years old to start saving in the same manner as in 10. how much would she have at age 652 11. How much would she need to save cach year if she started saving at age 40 to accumulate the same amount at age 65 that she would have had if she had started saving at age 25? 12. What is the present value of the following uneven cash flow stream? The annual interest rate is 8% 0 1 2 3 4 Years 1 1 1 0 100 200 300-150 1 You are on the Board of Directors reviewing the performance of West Coast Ski and Boards Ine. Analyze the following financial data of WestCoast for the 2019 and 2018 years to answer the following questions. Balance Sheets Short-term investments Accounts receivable Inventorice Total current Gross fixed Les accumulated depreciation Net find assets Totalt 2019 1018 11.400S 10,12 30.000 41,000 634,800 602.026 1319.852 1948.620 1.998,052 2,002,498 1.486.500 1,350,950 440,00 305,280 1.046.420 1.045.670 3.044472 $3.04.16 Liabilities and will Accounts payable Notes payable Accruals Total current liabilities Long-term debit Common stock (100,000 shares) Retained earnings Total equity Total liabilities and equity 2019 2018 298.400 $ 330,000 600,000 680,000 287-100 292.936 1,185,700 1.302,936 870,000 950,000 460,000 460,000 528.272 335232 988 272 795.232 3.044.472 S 3.048.168 Income Statements 2019 2018 Sales 6,740,600 $ 6,126,400 Cost of goods sold 5.680,100 5,096,000 Other expenses 472.000 624,000 Depreciation 134.800 115.400 Total operating costs 6.286.900.5.895.400 ERIT 453,700 291.000 Interest expense 97 800 115.000 EBT 355,900 176,000 Taxes (40%) 142.360 70.400 Net income $213.840 5.105.600 Dividends paid $20,000 $ 10.000 Other Data 2019 2018 $20 SIO 10% 10% Stock price WACC Cama Slue Balance Sheets 2019 Short term investments 2018 Industy 4% 0.3% 0.39 14% F6 PA F7 F8 F9 F10 F11 F12 PrtScr Insert Delet % A & ) Review View Mailings Tell me what you want to do Help ut References Enable Editing e internet can contain Vituses. Unless you need to edit, it's safer to stay in Protected View 897 What is its future value? What would the present value be if it was an annuity due? 7. A 5-year $150 ordinary annuity has an annual interest rate of 8% What is its present value? What would the present value be if it was a 10-year annuity? What would the present value be if it was a perpetuity? 8. You borrow $30,000 to buy a car. The bank charges an interest rate of 5% on the loan. If the loan is to be repaid in equal amounts over 5 years, how much are the annual payments? 9 A 25-year-old student wants to save for her retirement. At the end of each year, she invests $5,000 in a stock brokerage account with an expected annual return of 7% If she keeps saving in this manner, how much will she have accumulated at age 657 10. If the student waited until she was 40 years old to start saving in the same manner as in #10, how much would she have at age 652 11. How much would she need to save each year if she started saving at age 40 to accumulate the same amount at age 65 that she would have had if she had started saving at age 257 12 What is the present value of the following uneven cash flow stream? The annual interest Tate is 8 0 1 3 Years 2 4 100 200 300 -150 DELL FS F6
