Answer to Part 3. Analysis of Profitability

wwwwwwwwww It is easiest to print the data below out. "For problems that typically use "average total assets" or "average inventory. just use the numbers given for the year instead of the average to save time. "your company means the company whose financial statements are given on the test. Express ROE as a %. Pound to two decimal places. Income statement Anthem Inc (ANTM US) - Adjusted In Millions of USD except Per Share 12 Months Ending Revenue + Sales & Services Revenue + Other Revenue Cost of Revenue Gross Profit - Operating Expenses + Selling, General & Admin + Other Operating Expense Operating Income (Loss) - Non-Operating (Income) Loss + Interest Expense, Net Pretax Income (Loss), GAAP - Income Tax Expense (Benefit) Net Income, GAAP FY 2018 12/31/2018 92,311.0 5,920.0 86,391.0 71,895.0 20,416.0 14,356.0 14,020.0 336.0 6,060.0 753.0 753.0 5,068.0 1,318,0 3,750.0 FY 2019 12/31/2019 104,146.0 8,968.0 95,178.0 83,778.0 20,368.0 13,636.0 13,3640 272.0 6,732.0 746.0 7460 5,985.0 1,178,0 4,807.0 Anthem Inc (ANTM US) - Standardized Balance Anthem Inc (ANTM US) - Standardized Balance sheet FY 2018 12/31/2018 FY 2019 12/31/2019 In Millions of USD except Per Share 12 Months Ending Total Assets + Cash, Cash Equivalents & STI + Cash & Cash Equivalents + ST Investments + Accounts Receiv + Inventories + Other ST Assets + Taxes Receivable + Misc ST Assets Total Current Assets + Property, Plant & Equip, Net + LT Investments & Receivables + Intangible Assests Total Noncurrent Assets Total Assets 22, 140.0 3,934.0 18,206.0 6,743.0 0.0 5,438.0 10.0 5,428.0 34,321.0 2,735.0 4,246.0 30,269.0 37,250.0 71,571.0 25,635.0 4,937.0 20,698.0 7,584.0 0.0 5,814.0 335.0 5,479.0 39,033.0 3,708.0 4,763.0 29,949.0 38,420.0 77,453.0 Liabilities & Shareholders' Equity + Payables & Accruals + Accounts Payable + Other Accruals STL Debt 12,413.0 7,454.0 4,959.0 1994.0 13,040.0 8,842.0 4,198.0 2.456.0 Total Current Assets + Property, Plant & Equip, Net + LT Investments & Receivables + Intangible Assests Total Noncurrent Assets Total Assets 34,321.0 2,735.0 4,246.0 30,269.0 37,250.0 71,571.0 39,033.0 3,708.0 4,763.0 29,949.0 38,420.0 77,453.0 Liabilities & Shareholders' Equity + Payables & Accruals + Accounts Payable + Other Accruals + ST Debt + Deferred Revenue Total Current Liabilities + LT Debt + Other LT Liabilities Total Noncurrent Liabilities Total Liabilities + Common Stock +Retained Earnings + Other Equity Total Equity Total Liabilities & Equity 12,413.0 7,454.0 4,959.0 1,994.0 7,558.0 21,965.0 17,217.0 3,848.0 21,065.0 43,030.0 9,539.0 19,988.0 -986.0 28,541.0 71,571.0 13,040.0 8,842.0 4,198.0 2,456.0 8,121.0 23,617.0 18,269.0 3,839.0 22,108.0 45,725.0 9,451.0 22,573.0 -296.0 31,728.0 77,453.0 a 3.5 c Part 1. Calculate the ratios below for your company. You are given the data for the average ratios for 3 benchmal your benchmark company average 2018 2019 2018 2019 cash to current liabilities 0.3 1.53 b current ratio 2.4 interest coverage ratio 9.26 3.8 inventory d turnover 10 15 Days payables outstanding 45 42 Days inventory 1 outstanding 0 0 Days sales 9 outstanding 30 30 cash conversion h cycle -15 -12 ROE (total equity) 28% 22% do not do for Tax Burden benchmarks b 2.4 3.5 9.26 3.8 d 10 15 e 45 42 current ratio Interest coverage ratio inventory turnover Days payables outstanding Days inventory outstanding Days sales outstanding cash conversion cycle ROE (total equity) 1 0 0 9 30 30 h -15 -12 1 22% Tax Burden Interest Burden Operating Margin 28% do not do for benchmarks do not do for benchmarks do not do for benchmarks do not do for benchmarks 1 m Asset Turnover Equity Multiplier (total equity) n do not do for benchmarks Part 2. Analysis of liquidity, efficiency, and solvency. Very briefly, generally interpret the categories of performance in the most recent year relative to the benchmarks. (what ratios measure this per category, your company is doing better or worse than the benchmarks). a. Liquidity b. Efficiency C. Solvency d. Leverage Part 3. Analysis of Profitability Conduct the five factor Dupont Analysis for your company ONLY for the two years given. a. Calculate each of the five components for the 2 year period as well as the ROE b. Explain what factors made the ROE change over the two years. c. What recommendations would you make to the company you have the data to improve its profitability? wwwwwwwwww It is easiest to print the data below out. "For problems that typically use "average total assets" or "average inventory. just use the numbers given for the year instead of the average to save time. "your company means the company whose financial statements are given on the test. Express ROE as a %. Pound to two decimal places. Income statement Anthem Inc (ANTM US) - Adjusted In Millions of USD except Per Share 12 Months Ending Revenue + Sales & Services Revenue + Other Revenue Cost of Revenue Gross Profit - Operating Expenses + Selling, General & Admin + Other Operating Expense Operating Income (Loss) - Non-Operating (Income) Loss + Interest Expense, Net Pretax Income (Loss), GAAP - Income Tax Expense (Benefit) Net Income, GAAP FY 2018 12/31/2018 92,311.0 5,920.0 86,391.0 71,895.0 20,416.0 14,356.0 14,020.0 336.0 6,060.0 753.0 753.0 5,068.0 1,318,0 3,750.0 FY 2019 12/31/2019 104,146.0 8,968.0 95,178.0 83,778.0 20,368.0 13,636.0 13,3640 272.0 6,732.0 746.0 7460 5,985.0 1,178,0 4,807.0 Anthem Inc (ANTM US) - Standardized Balance Anthem Inc (ANTM US) - Standardized Balance sheet FY 2018 12/31/2018 FY 2019 12/31/2019 In Millions of USD except Per Share 12 Months Ending Total Assets + Cash, Cash Equivalents & STI + Cash & Cash Equivalents + ST Investments + Accounts Receiv + Inventories + Other ST Assets + Taxes Receivable + Misc ST Assets Total Current Assets + Property, Plant & Equip, Net + LT Investments & Receivables + Intangible Assests Total Noncurrent Assets Total Assets 22, 140.0 3,934.0 18,206.0 6,743.0 0.0 5,438.0 10.0 5,428.0 34,321.0 2,735.0 4,246.0 30,269.0 37,250.0 71,571.0 25,635.0 4,937.0 20,698.0 7,584.0 0.0 5,814.0 335.0 5,479.0 39,033.0 3,708.0 4,763.0 29,949.0 38,420.0 77,453.0 Liabilities & Shareholders' Equity + Payables & Accruals + Accounts Payable + Other Accruals STL Debt 12,413.0 7,454.0 4,959.0 1994.0 13,040.0 8,842.0 4,198.0 2.456.0 Total Current Assets + Property, Plant & Equip, Net + LT Investments & Receivables + Intangible Assests Total Noncurrent Assets Total Assets 34,321.0 2,735.0 4,246.0 30,269.0 37,250.0 71,571.0 39,033.0 3,708.0 4,763.0 29,949.0 38,420.0 77,453.0 Liabilities & Shareholders' Equity + Payables & Accruals + Accounts Payable + Other Accruals + ST Debt + Deferred Revenue Total Current Liabilities + LT Debt + Other LT Liabilities Total Noncurrent Liabilities Total Liabilities + Common Stock +Retained Earnings + Other Equity Total Equity Total Liabilities & Equity 12,413.0 7,454.0 4,959.0 1,994.0 7,558.0 21,965.0 17,217.0 3,848.0 21,065.0 43,030.0 9,539.0 19,988.0 -986.0 28,541.0 71,571.0 13,040.0 8,842.0 4,198.0 2,456.0 8,121.0 23,617.0 18,269.0 3,839.0 22,108.0 45,725.0 9,451.0 22,573.0 -296.0 31,728.0 77,453.0 a 3.5 c Part 1. Calculate the ratios below for your company. You are given the data for the average ratios for 3 benchmal your benchmark company average 2018 2019 2018 2019 cash to current liabilities 0.3 1.53 b current ratio 2.4 interest coverage ratio 9.26 3.8 inventory d turnover 10 15 Days payables outstanding 45 42 Days inventory 1 outstanding 0 0 Days sales 9 outstanding 30 30 cash conversion h cycle -15 -12 ROE (total equity) 28% 22% do not do for Tax Burden benchmarks b 2.4 3.5 9.26 3.8 d 10 15 e 45 42 current ratio Interest coverage ratio inventory turnover Days payables outstanding Days inventory outstanding Days sales outstanding cash conversion cycle ROE (total equity) 1 0 0 9 30 30 h -15 -12 1 22% Tax Burden Interest Burden Operating Margin 28% do not do for benchmarks do not do for benchmarks do not do for benchmarks do not do for benchmarks 1 m Asset Turnover Equity Multiplier (total equity) n do not do for benchmarks Part 2. Analysis of liquidity, efficiency, and solvency. Very briefly, generally interpret the categories of performance in the most recent year relative to the benchmarks. (what ratios measure this per category, your company is doing better or worse than the benchmarks). a. Liquidity b. Efficiency C. Solvency d. Leverage Part 3. Analysis of Profitability Conduct the five factor Dupont Analysis for your company ONLY for the two years given. a. Calculate each of the five components for the 2 year period as well as the ROE b. Explain what factors made the ROE change over the two years. c. What recommendations would you make to the company you have the data to improve its profitability