Adams Corporation manufactures fasteners. The company's income statements for three years are indicated in Eribit 1. The balance Sheets for the same period are shown in Exhibit 2. Exhibit 1 ADAMS CORPORATION Inoome Statement 2017 2018 2018 Sales (al on cred)... $1,500,000 $1,800,000 52,160 000 Cost of pood 950.000 1.130 000 1.300.000 Gross pront. 550.000 630,000 B60.000 Beling and administrative expense 1800 4900 59.A Operating profit 170.000 190,000 270,000 Interest expense 30.000 40,000 85,000 Net Income before taxes. 140.000 150,000 185,000 Taxes. 46.120 54,830 Net Income. $93.880 5101,280 $120.150 Share: 40.000 40,000 46.0001 Exhibit 2 ADAMS CORPORATION Balance Sheet Accott 2017 Cash 520,000 Marketable securities. 30 000 Accounts receivable. 150,000 Inventor Total Current Assets 450.000 Net Plant and couiment Sinn Total Assets... 51.000.000 Liabilities & Equity Accounts payable.. $100,000 Notes payable bank). 100,000 Tots Current labites.. 200,000 Long-temilabilties 29 Totallisbildes 450,000 Common stock 810 par 400,000 50.000 Capital paid hexcess of par. Retained carings. 100.000 Total stockholders equty. 560 Total bites and stockholders' equity 51.00.AR 2018 2018 330.000 520.000 35,000 50,000 230,000 320,000 285,000 325.000 580.000 725.000 ZAL. A 1.15ann 51,300,000 51.094.000 $225,000 $200,000 100.000 300.000 325,000 500,000 22112 55074 555120 1,050.740 400,000 460,000 50,000 80,000 193.880 303,260 542.9A 3421.29 51.300.51.824.00 (a) Using the Du Pont System, describe the changes in the return on assets from year to year and analyze the factors affecting the ROA. 8 marka) b) Construct the common size Balance Sheet for Adams Corporation for 2017 through 2019. Is there any observable trend in the firm's use of debt? (6 marks) 1) Prepare Indexed Balance Sheet for Adams Corporation with 2017 as the base year. Is there any observable trend in the firm's eficiency? 6 marks) Question 3 (Total marka=10) The Hedge Corporation manufactures only one product: planks. The single raw material used in making planks is the dnt For each plank manufactured, 12 dints are required. Assume that the company manufactures 150,000 planks per year, mat demand for planks is perfectly steady throughout the year, that it costs $200 each time dints are ordered, and that carrying costs are ss per ant per year. a). Determine the economic order quantity of dints. (4 marks) bj. What are total Inventory costs for Hedge total carrying costs plus total ordering costs)? (4 marks) C). How often would inventory be ordered? (2 marks) Adams Corporation manufactures fasteners. The company's income statements for three years are indicated in Eribit 1. The balance Sheets for the same period are shown in Exhibit 2. Exhibit 1 ADAMS CORPORATION Inoome Statement 2017 2018 2018 Sales (al on cred)... $1,500,000 $1,800,000 52,160 000 Cost of pood 950.000 1.130 000 1.300.000 Gross pront. 550.000 630,000 B60.000 Beling and administrative expense 1800 4900 59.A Operating profit 170.000 190,000 270,000 Interest expense 30.000 40,000 85,000 Net Income before taxes. 140.000 150,000 185,000 Taxes. 46.120 54,830 Net Income. $93.880 5101,280 $120.150 Share: 40.000 40,000 46.0001 Exhibit 2 ADAMS CORPORATION Balance Sheet Accott 2017 Cash 520,000 Marketable securities. 30 000 Accounts receivable. 150,000 Inventor Total Current Assets 450.000 Net Plant and couiment Sinn Total Assets... 51.000.000 Liabilities & Equity Accounts payable.. $100,000 Notes payable bank). 100,000 Tots Current labites.. 200,000 Long-temilabilties 29 Totallisbildes 450,000 Common stock 810 par 400,000 50.000 Capital paid hexcess of par. Retained carings. 100.000 Total stockholders equty. 560 Total bites and stockholders' equity 51.00.AR 2018 2018 330.000 520.000 35,000 50,000 230,000 320,000 285,000 325.000 580.000 725.000 ZAL. A 1.15ann 51,300,000 51.094.000 $225,000 $200,000 100.000 300.000 325,000 500,000 22112 55074 555120 1,050.740 400,000 460,000 50,000 80,000 193.880 303,260 542.9A 3421.29 51.300.51.824.00 (a) Using the Du Pont System, describe the changes in the return on assets from year to year and analyze the factors affecting the ROA. 8 marka) b) Construct the common size Balance Sheet for Adams Corporation for 2017 through 2019. Is there any observable trend in the firm's use of debt? (6 marks) 1) Prepare Indexed Balance Sheet for Adams Corporation with 2017 as the base year. Is there any observable trend in the firm's eficiency? 6 marks) Question 3 (Total marka=10) The Hedge Corporation manufactures only one product: planks. The single raw material used in making planks is the dnt For each plank manufactured, 12 dints are required. Assume that the company manufactures 150,000 planks per year, mat demand for planks is perfectly steady throughout the year, that it costs $200 each time dints are ordered, and that carrying costs are ss per ant per year. a). Determine the economic order quantity of dints. (4 marks) bj. What are total Inventory costs for Hedge total carrying costs plus total ordering costs)? (4 marks) C). How often would inventory be ordered? (2 marks)
