Case 1: John Martin is the director of VIVO Ltd. The company has been performing very well for the past 20 years, however, recently, the company failed to produce new products and its protability is shrinking from time to time. Suppose that you are the Business development consultant of the company and VIVO is one of your clients. In a meeting with the director, the director has informed you that he wanted to introduce a system that enhances efcient resource utilization and tight management control. The following past years' information is provided to you. 4' 1. Summary 01' prot statement ItemI 2015 2016 2017 in mlllhns in millions In millions Sales 590 645 685 Cost of goods sold 417 480 530 Operating prot before tax and interest 143 135 125 Prot aer m 89.45 82.0 75.30 2. Summary of balance sheet Items 2015 2016 2017 in millions in millions in millions Inventory 49 65 86 Total current assa 276 318 347 Total xed assets 320 374 386 Current liabilities 173 165 189 Long-term liabilities 246 268 22069 Total shareholders' equity 177 259 323.31 3. 2017 Industry avenge ratios Ratios 2017 ratio Return on Equity (ROE) 26.0% Return on Asset (ROA) 14.9% Operating prot Margin 31% Current ratio 1.51 Quick ratio 1.03 Debt to asset ratio 35.0% Fixed asset turnova ratio 2.11 times Total asset tin-nover ratio 1.79 times Inventory turnover ratio 13.1 times Required? A. Calculate all the ratios given in table 3 for VIVO ltd. For 2016 and 2017. 4 points B. Analyze the company's ratios compared to the industry. 3 points Required? A. Calculate all the ratios given in table 3 for VIVO ltd. For 2016 and 2017. 4 points B. Analyze the company's ratios compared to the industry. 3 points Case 2: Mameo Corporation Suppose that you are a nancial analyst and one of your client, Mr. Jamal presented a proposal to buy 30% of Mamco Company. Mamco prodqu small electric motors and spare parts. Mr. Jamal was excited about the recent increase in sales that has taken place over the last three years as indicated in the income statement, where, the annual growth rate is 25%. Note that the industry growth rate in sales is only 10 to 12 percent per year. The balance sheet, income statement and industry ratios are presented in the following tables Although Mr. Jamal has a primary interest in protability ratios, he will take a close look at all ratios. His investment strategy is to grow his wealth over a long period and he is not concerned about short-term returns or dividend payments. Therefore, he wishes to analyze the overall nancial condition of the rm. Mamco does not currently pay a cash dividend, and return to the investor must come from selling the stock in the future. Mr. Jamal has asked you to perform a thorough analysis of Mamco and prepare a report with comments and recommendations. Income statement Items 2014 2015 2016 Sales (all in credit) 1,200,000 1,500,000 1,875,000 Cost ofGoods sold 800.000 1.040.000 1,310.000 Gross profit 400,000 460,000 565,000 Selling & Admin. Expl 239,900 274,000 304,700 Operating profit (EBIT) 160,100 186,000 260,300 Interest expenses 35,000 45,000 35,000 Net income before taxes 125,100 141,000 175,300 Income taxes 36,900 49,200 55,600 Net income 88.200 91.800 119,700 Shares outstanding 30.000 30.000 30,000 Earnings per share (EPS) $2.94 $3.06 $3.99 Balance sheet Items 2014 2015 2016 Assets Cash 30,000 40,000 30,000 Marketable securities (T-bills) 20,000 25,000 30,000 Account receivables 170,000 259,000 360,000 Inventory 230,000 261,000 290,000 Total Current Assets 450,000 $115,000 710,000 Net Plant and equipment 650,000 765,000 1,390,000 Total Assets 1,100,000 1,350,000 2,100,000 Liabilities and Equity Account payable 200,000 310.000 505.000 Accrued expenses 20,400 30,000 35,000 Total current liabilities 220,400 340,000 540,000 Long-term liabilities 325,000 363.600 703,900 Total liabilities 545,400 703,600 1,243,900 Total shareholders' equity 554,600 646,400 856,100 Total liabilities and equity 1,100,000 1,350,000 2,100,000 Industry avenge ratios Items 2016 Net prot margin 7.95% Return on assets 8.95% Inventory turnover 5. 1 1 Total asset tin-never l. 12 Current ratio 2.4 Quick ratio 1.38 Debt to asset ratio 44.10% Growth in net earnings 13% Growth in shareholders' equity 15% Required?| A. Calculate the liquidity, inventory turnover, total asset turnover, debt to asset ratio, net prot margin and return on asset ratios, and growth rates for net earnings and shareholders' equity for 2015 and 20164 points B. Analyze what the ratios indicate about the performance of the company over the last three years and compare them to the industry averages. Based on your analysis what are the strengths and wealmesses of Marnco Company? What recommendation would you give to Mrr Jamal? 4 points