ANAGEME https://lackboard.acg.edu/bbcswebap Facebook difference between fasts and total I Section A' (80%) Information for Mylonopoulos Company can be found hereunder. MYLONOPOULOS COMPANY Balance Sheet December 31, 2019 Assets Liabilities and Stockholders' Equity Cash ......... $ 50,000 Accounts payable $2,200,000 Marketable securities... 80,000 Accrued expenses 150,000 Accounts receivable 3,000,000 Notes payable (current) 400,000 Inventory ..... 1,000,000 Bonds (10%) 2,500,000 Gross plant and equipment 6,000,00 Common stock (1.7 million 1,700,000 Less............. shares, par value $1) Accumulated depreciation | 2,000,000 Retained earnings 1,180,000 Total liabilities and Total assets $8,130,000 stockholders' equity $8,130,000 ****** Income Statement-2019 Sates (credit) Fixed costs Variable costs (0.60).......... Earnings before interest and taxes Less: Interest. $7,000,000 2,100,000 4,200,000 700,000 250.000 ... Income Statement-2019 Sates (credit) Fixed costs* Variable costs (0.60)........ Earnings before interest and taxes, Less: Interest ...... Earnings before taxes... Less: Taxes @ 35%... Earnings after taxes.......... Dividends (40% payout). Increased retained earnings... $7,000,000 2,100,000 4,200,000 700,000 250,000 450,000 157,500 $ 292,500 117,000 $ 175,500 *Fixed costs include (a) lease expense of $200,000 and (b) depreciation of $500,000 Note: Mylonopoulos also has $65,000 per year in sinking fund obligations associated with its bond issue. The sinking fund represents an annual repayment of the principal amount of the bond. It is not tax-deductible. Case Study (Continued) Ratios Mylonopoulos (to be filled in) I Profit margin Return on assets Return on equity .............. Receivables turnover.. Inventory turnover Fixed-asset turnover.. Total-asset turnover.. Current ratio ......... Quick ratio .......... Debt to total assets Interest coverage Fixed charge coverage Industry 5.75% 6.90% 9.20% 4.35X 6.50X 1.85% 1.20X 1.45X 1.10X 25 05% 5.35X 4.62X Instructions: llare .. Quick ratio Debt to total assets Interest coverage Fixed charge coverage 1.10X 25 05% 5.35% 4.62X ****** HORROR I Instructions: a. In your analysis, calculate the overall break-even point in sales dollars. Also compute the degree of operating leverage. (10 points) b. Analyze Mylonopoulos Company, using ratio analysis. Compute the ratios in the table above (show computations). (20 points) c. (Turnitin submission necessary) Compare your answers from item (b) to the industry data that is given. Discuss the weak points, strong points, and what you think should be done to improve the company's performance. Use the information in parts (a) and (b) to discuss the risk associated with this company. Given the risk, decide whether a bank should loan funds to Mylonopoulos. (30 points) Mylonopoulos Company is trying to plan the funds needed for 2020. The management anticipates an increase in sales of 20 percent, which can absorbed without increasing fixed costs. data that is given. Discuss the weak points, strong points, and what you think should be done to improve the company's performance. Use the information in parts (a) and (b) to discuss the risk associated with this company. Given the risk, decide whether a bank should loan funds to Myionopoulos. (30 points) Mylonopoulos Company is trying to plan the funds needed for 2020. The management anticipates an increase in sales of 20 percent, which can absorbed without increasing fixed costs. d. (Turnitin submission necessary) Do not calculate, only comment on these questions. How would the company's solvency change if the company: (1) Were at full capacity? (2) Raised the dividend payout ratio? (3) Suffered a decreased growth in sales? (4) Faced an accelerated inflation rate? (20 points) w RON A GO 4
