A. You are on the Board of Directors reviewing the performance of West Coast 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 2018 Income Statements Cash 2019 13.400$ 30,000 634,800 Short-term investments Accounts receivable Inventories 10,852 41,000 602,026 1 348,620 2,002,498 1,350,950 305 280 1.045670 1.319.852 1.998,052 1.486,500 440,080 1046,420 3.044.472 Total current assets Gross fixed assets Less: accumulated depreciation Net fixed assets Total assets $ 3.048.168 2019 2018 $ 330,000 680,000 Liabilities and Equity Accounts payable Notes payable Accruals Total current liabilities Long-term debt 298,400 600,000 287,300 1.185,700 292.936 1,302,936 950.000 870,000 Common Inn annan 16 16 W DOLL 2019 2018 Liabilities and Equity Accounts payable Notes payable Accruals Total current liabilities Long-term debt Common stock (100,000 shares) Retained earings Total equity Total liabilities and equity 298,400 600.000 287,300 1.185,700 870,000 460,000 528,772 988,772 3044.472 $ 330,000 680,000 292.936 1,302,936 950,000 460,000 335 232 795, 232 $ 3.048.168 2019 2018 DELL FZ F8 F9 F10 F11 F12 Priscs S6,126,400 5,096,000 Sales 6,740,600) Cost of goods sold 5,680,100 Other expenses 472,XX Depreciation 134 800 Total operating costs 6,286. XX EBIT 453,700 Interest expense EBT 355.900 Taxes (40%) 142360 Net income $213.540 Dividends paid $20,000 Other Data 2019 624.000 115.400 5,835,400 291,000 115.000 176,000 70.400 S105.600 97 800 $ 10,000 2018 $20 Stock price WACC $10 10% 10% DELL Common Site Balance Sheets Asset 2019 Cash Short term investments Accounts receivable Inventores Total current assets Gross fixed assets Less accumulated depreciation Net fixed assets Total assets 2018 496 1.4% 19.8% 44.296 65.7% 44.32% 10.02% 34.39 100% Industy 0.3% 0.3% 22.4% 41.2% 64.1% 53.9% 18.0% 35 9% 100.0% Liabilities and Equity 2019 Accounts payable Notes payable Accruals Total current liabilities Long-term debt Common stock Retained eamings Total equity Total liabilities and equity 2018 Industry 10.8% 11.99 22.3% 2.4% 9.6% 9.5% 42.79 23.7% 31.2% 26 39 15.196 20.0% 1196 30.0% 26% 50.0% 100% 100.0% Common Size Income Statement 2019 2018 DELL Sales Cost of goods sold Other expenses Depreciation Total operating costs EBIT Interest expense EBT Taxes (40%) Net Income 100% 83.2% 10.2% 1.9% 95.3% 4.75% 19% 2.9% 1.15% 1.72% 100.0% 84.5% 4.4% 4.0% 92.9% 7.1% 1.1% 5.9% 2.4% 3.6% Financial Ratios 2019 Current Quick Inventory Tumover Days Sales Outstanding Fixed Asset Turnover Total Asset Turnover 2018 Industry Avg 1.5X 2.7X 0.5X 1.0X 4.5X 6.1X 35.9 32 5.9X 7.0X 2.0X 2.5X Debt ratio 53% 28.7% TIE 2.53X 6.2X 3.6% Profit Margin Return on Assets 1.725 3.46% 9.096 DLL Financial Ratios 2019 2018 Industry Avg 1.5X 2.7X 0.5X 1.0X 6.1X Curent Quick Inventory Tumover Days Sales Outstanding Fixed Asset Turnover Total Asset Tumover 45X 35 9 32 5.9X 7.0X 25X Debt ratio 28.7% 2.0X 53% 2.53x 1.725 TIE 6.2X 3.6% 3.46% 9.0% Profit Margin Return on Assets Return on Equity Price/Earnings 13.3% 8.5X 17.9% 12.4% DOLL Questions: 1. What was WestCoast's NOPAT for 2019? 2 What was its Free Cash Flow amorint 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 20192 5. Did the company increase its Market Value Added (MVA) between 2018 and 2019? 6. Perform Ratio Analysis for 2019 year: a. 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 Tomover ratios. How well has the company managed its assets? c. Calculate the Debt ratio and Times Interest Earned ratios and compare to industry average. What can you conclude about its debt management? d. Calculate the Profit Margin. Return on Assets, Return on Equity ratios. - How has the company's profitability changed? c. 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, DLL the company when compared to Industry? 7 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? b. How does the company compare to Industry Average? 8 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)? 9. What are the potential problems or limitations of financial ratio analysis? a B. Time Value of Money Analysis 1. What's the future value of $150 after 3 years if it earns 12%, annual compounding? DELL halom B. Time Value of Money Analysis 5 1. What's the future value of $150 after 3 years if it cams 12% annual compounding? 2. What's the present value of $200 to be recerved in 3 years if the interest rate is 12%. anmal compounding? 3. What annual interest rate would couse $200 to grow to $23153 in 3 years? 4. If a company's sales are growing at a rate of 10% annually, how many years will it take for sales to double? What's the difference between an ordinary annuity and an annuity due? 6. What is the present value of a 3 year, $120 ordinary muunity if the annual interest rate is 8962 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 DELL What would the present Value beat it was an annuly 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 anmuity? 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 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 65? 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 2 3 Years 4 0 100 200 300 -150 DELL