BnB Caribbean Inc. (BnB) is a leading construction company founded in 2001 and is based in Jamaica. The company has within recent years been experiencing increases in revenues from its construction related services such as design, build, expansion and remodeling, and emergency services. It's main line of business is from the construction of roads and commercial buildings within Jamaica and to a lesser extent a few other Caribbean countries. Since the growth of the tourism sector in the Caribbean, BnB Caribbean has become concerned about the number of other construction companies which have entered the market to provide Similar services around the Caribbean region. Business overseas contributes to 40% of the company's revenues, while the other 60% comes mainly from works done in the domestic market. The COVID-19 pandemic has caused a slowdown in overall operations leading to prolonged delays in delivery of raw materials from abroad. The CEO of the company is optimistic that there will be a turnaround in operations in 2021, and is therefore considering contracting a loan of $500.0 Million from its local bank to help rebuild its lead position in the market and to expand its line of business to include the sales of heavy equipment. The company has over the years relied mainly on issuing long-term bonds to finance its capital projects. As of today, the firm has 500 million shares of common stock outstanding. You are hired as the Chief Financial Controller of the company to advise the CEO and board of the company of the current financial health of the company and to assist them in determining whether they would be successful with the new loan. You began by gathering the following financial statements and other data about the firm. BnB Construction Inc. Balance Sheet (Millions of Dollars) 2020 2019 Liabilities 2021 Est 2020 2019 2021 Est 115 15 10 15 Accounts payable 60 30 10 0 65 115 110 60 Assets Cash and Cash Equivalents Short-Term investments Accounts Receivable Inventories Total Current Assets Net Plant and Equipment 130 420 700 375 615 315 415 260 490 140 310 220 1,145 1,000 810 1300 754 580 1884 1,190 870 Overdrafts Accruals Total Current Liabilities Long-Term Bonds and New Loan Total Debt Preferred Stock Common Stock Retained Earnings Total Common Equity Total Liabilities and Equity 1790 1,064.00 800 40 40 130 130 1069 1199 $ 3,029 40 130 956 1086 $ 2,190 710 840 $ 1,680 Total Assets $ $ $ 3,029 2,190 1,680 Est. Estimate BnB Construction Inc. Income Statement (Millions of Dollars) 2021 Est. 2020 2019 Net Sales 4,000 3,000 2,850 Operating costs 3,100 2,300 2,100 EBITD 900.00 700 750 Depreciation 110 100 90 Amortizaton 0 0 0 Depreciation and Amortization 110 100 90 EBITD 790 600 660 Interest 100 88 60 Earnings Before Taxes 690 512 Taxes (40%) 276 204.8 240 Net Income Before preferred Dividends 414 307.2 360 Preferred Dividends 4 4 4 Net Income $ 410.0 $ 303.2 $ Common Dividends 57.5 57.5 53 Addition to retained Earnings $ 352.50 $ 245.70 $ 600 356.0 303.0 Per Share Date Common Stock Price 2021 $ 2020 28.0 $ 2019 $ 23.00 26.00 Per Share Date Common Stock Price 2021 $ 2020 $ 2019 $ 28.0 23.00 26.00 Earnings Per Share (EPS) Dividend Per Share (DPS) Book Value Per Share (BVPS) Cash Flow Per Share ??? ???? ???? ???? $ $ $ $ 6.06 1.15 21.72 $ S $ $ 7.12 1.06 16.80 8.06 8.92 Required: As the newly-appointed Chief Financial Officer of BnB Construction Inc. write a report of no more than three pages, font size 12, Times New Roman, 1.5 line spaces (excluding the reference page) to the board which discusses whether the company is likely to be successful if it approaches its bank Republic Limited for a loan to undertake the expansion project at a cost of $500.0 million. Your discussion should include a critical analysis of the current financial position and recent financial performance of the company (liquidity, profitability, leverage, asset management, market value- 2 to 3 ratios for each category). The report should comment on whether the firm has a great chance of success with the loan or whether alternative forms of financing should be sought. Give justification for your answer. Other guidance notes: No cover page or appendix is required. Introduction should be no more than 3 to 4 lines. Reference page should be no longer than 1 page. Complete BnB's estimated per share data for the year ending December 31 2021, before proceeding with the analysis of the firm's performance. (Completed Per Share Data should be placed in your report as part of your reference). You may include any other ratios in your analysis table which will assist in strengthening your position. (Remain mindful of the page limit) Present calculated ratios in a table format along with the industry ratios in this same table. Calculations of the ratios are NOT to be part of your report NOR the REFERENCE. Assumptions made should be indicated in the body of the report as part of the analysis. A brief conclusion of no more than six to ten lines should be made clearly advising the board of your position. Grading Rubric is attached. PLEASE DO NOT REPRODUCE THE QUESTIONS NOR THE TABLES ABOVE IN YOUR REPORT. . . . . . . SUGGESTED FORMAT FOR REPORT 1. Introduction (3-4 lines) 2. Analysis of Financial Data (Table with ratios) 2021 Ratio Analysis Est. Liquidity Ratios Current Ratio (times) Quick Ratio (times) Industry Average 2020 2019 4.2 2.1 9 Asset Management Ratios Average sales/day Inventory Turnover Ratio (times) Days Sales Outstanding (days) Fixed Assets Turnover Ratio (times) Total Asset Turnover Ratio 9 36 3 1.8 40 Debt Management Ratios Total Debt to Total Assets (%) Times Interest Earned (times) Debt to Equity Ratio (%) 6 1 Profitability Ratios Profit Margin on Sales (%) Earning Power (%) Return on Total Assets (%) Return on Common Equity (%) 8 17.2 12 25 12.5 Market Value Ratios Price/Earnings Ratio Price/Earnings Ratio (times) Price/Cash Flow Ratio (times) Market/Book Value Ratio (times) 6.8 1.7 3. Comments on Financial Performance and Financial Position a. Liquidity b. Profitability C. Leverage d. Asset Management e. Market Value 4. Chance of Success of Application of the Loan 5. Conclusion 6. References (1 page maximum, included calculated per share data)