Chapter 2

The following is provided for use in answering the next set of questions. You may also find table 2.5 on page 53 of your text and all questions on pages 5657.

TABLE 2.5 20092013 Financial Statement Data and Stock Price Data for Mydeco Corp.

Mydeco Corp. 20092013	(All data as of fiscal year end; in $ million)
Income Statement	2009	2010	2011	2012	2013
Revenue Cost of Goods Sold	404.3 (188.3)	363.8 (173.8)	424.6 (206.2)	510.7 (246.8)	604.1 (293.4)
Gross Profit Sales and Marketing Administration Depreciation and Amortization	216.0 (66.7) (60.6) (27.3)	190.0 (66.4) (59.1) (27.0)	218.4 (82.8) (59.4) (34.3)	263.9 (102.1) (66.4) (38.4)	310.7 (120.8) (78.5) (38.6)
EBIT Interest Income (Expense)	61.4 (33.7)	37.5 (32.9)	41.9 (32.2)	57.0 (37.4)	72.8 (39.4)
Pretax Income Income Tax	27.7 (9.7)	4.6 (1.6)	9.7 (3.4)	19.6 (6.9)	33.4 (11.7)
Net Income Shares outstanding (millions) Earnings per share	18.0 55.0 $0.33	3.0 55.0 $0.05	6.3 55.0 $0.11	12.7 55.0 $0.23	21.7 55.0 $0.39
Balance Sheet	2009	2010	2011	2012	2013
Assets Cash Accounts Receivable Inventory	48.8 88.6 33.7	68.9 69.8 30.9	86.3 69.8 28.4	77.5 76.9 31.7	85.0 86.1 35.3
Total Current Assets Net Property, Plant, and Equip. Goodwill and Intangibles	171.1 245.3 361.7	169.6 169.6 243.3	184.5 309 361.7	186.1 345.6 361.7	206.4 347.0 361.7
Total Assets Liabilities and Stockholders Equity Accounts Payable Accrued Compensation	778.1 18.7 6.7	774.6 17.9 6.4	855.2 22.0 7.0	893.4 26.8 8.1	915.1 31.7 9.7
Total Current Liabilities Long-term Debt	25.4 500.0	24.3 500.0	29.0 575.0	34.9 600.0	41.4 600.0
Total Liabilities Stockholders Equity	525.4 252.7	524.3 250.3	604.0 251.2	634.9 258.5	641.4 273.7
Total Liabilities and Stockholders Equity	778.1	774.6	855.2	893.4	915.1
Statement of Cash Flows	2009	2010	2011	2012	2013
Net Income Depreciation and Amortization Chg. in Accounts Receivable Chg. in Inventory Chg. in Payables and Accrued Comp.	18.0 27.3 3.9 (2.9) 2.2	3.0 27.0 18.8 2.8 (1.1)	6.3 34.3 (0.0) 2.5 4.7	12.7 38.4 (7.1) (3.3) 5.9	21.7 38.6 (9.2) (3.6) 6.5
Cash from Operations Capital Expenditures	48.5 (25.0)	50.5 (25.0)	47.8 (100.0)	46.6 (75.0)	54.0 (40.0)
Cash from Investing Activities Dividends Paid Sale (or purchase) of stock Debt Issuance (Pay Down)	(25.0) (5.4)	(25.0) (5.4)	(100.0) (5.4) 75.0	(75.0) (5.4) 25.0	(40.0) (6.5)
Cash from Financing Activities	(5.4)	(5.4)	69.6	19.6	(6.5)
Change in Cash	18.1	20.1	17.4	(8.8)	7.5
Mydeco Stock Price	$7.92	$3.30	$5.25	$8.71	$10.89

31. See Table 2.5 showing financial statement data and stock price data for Mydeco Corp.

a. How did Mydecos accounts receivable days change over this period?

b. How did Mydecos inventory days change over this period?

c. Based on your analysis, has Mydeco improved its management of its working capital during this time period?

32.

See Table 2.5 showing financial statement data and stock price data for Mydeco Corp.

a. Compare Mydecos accounts payable days in 2009 and 2013.

b. Did this change in accounts payable days improve or worsen Mydecos cash position in 2013?

33.

See Table 2.5 showing financial statement data and stock price data for Mydeco Corp.

• a. By how much did Mydeco increase its debt from 2009 to 2013?
• b. What was Mydecos EBITDA/Interest coverage ratio in 2009 and 2013? Did its coverage ratio ever fall below 2?
• c. Overall, did Mydecos ability to meet its interest payments improve or decline over this period?

42.

For fiscal year 2011, Starbucks Corporation (SBUX) had total revenues of $11.70 billion, net income of $1.25 billion, total assets of $7.36 billion, and total shareholders equity of $4.38 billion.

• a. Calculate the Starbucks ROE directly, and using the DuPont Identity.
• b. Comparing with the data for Peets in Problem 41, use the DuPont Identity to understand the difference between the two firms ROEs.