Build a Model: Ratio Analysis Start with the partial model in the file Ch03 P15 Build a Model.xls from the textbooks Web site. Joshua & White (J&W) Technologiess financial statements are also shown below. Answer the following questions. (Note: Industry average ratios are provided in Ch03 P15 Build a Model.xls.) 1. Has J&Ws liquidity position improved or worsened? Explain. 2. Has J&Ws ability to manage its assets improved or worsened? Explain. 3. How has J&Ws profitability changed during the last year? 4. Perform an extended DuPont analysis for J&W for 2012 and 2013. What do these results tell you? 5. Perform a common size analysis. What has happened to the composition (that is, percentage in each category) of assets and liabilities? 6. Perform a percentage change analysis. What does this tell you about the change in profitability and asset utilization? Joshua & White Technologies: December 31 Balance Sheets (Thousands of Dollars) Joshua & White Technologies December 31 Income Statements (Thousands of Dollars)
Build a Model: Ratio Analysis Start with the partial model in the file Ch03 P15 Build a Model.xls from the textbook's Web site. Joshua & White (J&W) Technologies's financial statements are also shown below. Answer the following questions. (Note: Industry average ratios are provided in Ch03 P15 Build a Model.xls.) 1. 2. 3. 4. Has J&W's liquidity position improved or worsened? Explain. Has J&W's ability to manage its assets improved or worsened? Explain. How has J&W's profitability changed during the last year? Perform an extended DuPont analysis for J&W for 2012 and 2013. What do these results tell you? 5. Perform a common size analysis. What has happened to the composition (that is, percentage in each category) of assets and liabilities? 6. Perform a percentage change analysis. What does this tell you about the change in profitability and asset utilization? Joshua & White Technologies: December 31 Balance Sheets (Thousands of Dollars) Joshua & White Technologies December 31 Income Statements (Thousands of Dollars) 12/7/2012 Chapter: Problem: 3 15 Joshua & White Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets Cash and cash equivalents Shortterm investments Accounts Receivable Inventories Total current assets Net fixed assets Total assets 2013 $21,000 3,759 52,500 84,000 $161,259 218,400 $379,659 2012 $20,000 3,240 48,000 56,000 $127,240 200,000 $327,240 Liabilities and equity Accounts payable Accruals Notes payable Total current liabilities Longterm debt Total liabilities Common stock Retained Earnings Total common equity Total liabilities and equity $33,600 12,600 19,929 $66,129 67,662 $133,791 183,793 62,075 $245,868 $379,659 $32,000 12,000 6,480 $50,480 58,320 $108,800 178,440 40,000 $218,440 $327,240 Joshua & White Technologies December 31 Income Statements (Thousands of Dollars) 2013 2012 Sales $420,000 $400,000 COGS except excluding depr. and amort. 300,000 298,000 Depreciation and Amortization 19,660 18,000 Other operating expenses 27,600 22,000 EBIT $72,740 $62,000 Interest Expense 5,740 4,460 EBT $67,000 $57,540 Taxes (40%) 26,800 23,016 Net Income $40,200 $34,524 Common dividends Addition to retained earnings $18,125 $22,075 $17,262 $17,262 Other Data Yearend Stock Price # of shares (Thousands) Lease payment (Thousands of Dollars) Sinking fund payment (Thousands of Dollars) 2013 $90.00 4,052 $20,000 $5,000 2012 $96.00 4,000 $20,000 $5,000 Ratio Analysis Liquidity Ratios Current Ratio Quick Ratio Asset Management Ratios Inventory Turnover (Total COGS/Inventories) Days Sales Outstanding Fixed Assets Turnover Total Assets Turnover Debt Management Ratios Debt Ratio (Total debttoassets) Liabilitiestoassets ratio Timesinterestearned ratio EBITDA coverage ratio Profitability Ratios Profit Margin Basic Earning Power Return on Assets Return on Equity Market Value Ratios Earnings per share Pricetoearnings ratio Cash flow per share Pricetocash flow ratio Book Value per share Markettobook ratio 2013 2012 Industry Avg 2.58 1.53 7.69 47.45 2.04 1.23 20.0% 32.1% 15.33 4.18 8.86% 19.48% 10.93% 16.10% NA 10.65 NA 7.11 NA 1.72 a. Has Joshua & White's liquidity position improved or worsened? Explain. b. Has Joshua & White's ability to manage its assets improved or worsened? Explain. c. How has Joshua & White's profitability changed during the last year? d. Perform an extended Du Pont analysis for Joshua & White for 2008 and 2009. ROE = PM x TA Turnover x Equity Multiplier 2013 2012 e. Perform a common size analysis. What has happened to the composition
