Consider the following case J8H Corp. recently hired Jeffery. His immediate mandate was to analyze the company. He has to submit a report on the company's operational efficiency and estimate its potential investment in working capital. He has the income statement from last year and the following information from the company's financial reports as well as some industry Last year, J&H Corp. reported a book value of $300,000 in ament assets, of which 35% is cash, 37% is short-term investments, and the rest is accounts receivable and inventory. * The company reported $255,000 of current liabilities including accounts payable and accruals. Interestingly, the company had no notes payable outstanding, and there were no changes in the company's accounts payable during the year The company, however, invested heavily in plant and equipment to support its operations. It reported a book value of $480,000 for its long-term assets last year. Income Statement For the Year Ended on December 31 Industry Average J&H Corp. Net sales $37,000,000 $46,250,000 29,600,000 37,000,000 1,850,000 Operating costs, except depreciation and amortization Depreciation and amortization Total operating costs Operating income (or EBIT) Less: Interest expense Earnings before taxes (EBT) Less: Taxes (40%) Net income 1,480,000 31,080,00038,850,000 $5,920,000 7,40,000 1,110,000 $5,328,000 $6,290,000 2,516,000 $3,196,800 $3,774,000 592,000 2,131,200 mation given to him, Jeffery submits a report on January 1 with some important calculations for management to use, both for analysis and to devise an action plan. Complete the following statements in his report. MacBook Air esc FI So F2 F3 F4 F5 F6 uk Assignment- Accounting for Financial Management Operating costs, except depreciation and amortization 29,600,000 37,000,000 1,850,000 31,080,000 38,850,000 $7,400,000 1,110,000 $5,328,000 $6,290,000 2,131,200 2,516,000 $3,774,000 1,480,000 Depreciation and amortization Total operating costs Operating income (or EBIT) Less: Interest expense Earnings before taxes (EBT) Less: Taxes (40%) Net income $5,920,000 592,000 $3,196,800 Based on the information given to him, Jeffery submits a report on January 1 with some important calculations for management to use, both for analysis and to devise an action plan. Complete the following statements in his report. which is than the industry average Statement # 1: J&H Corp.'s NOPAT is of $4,440,000. Statement # 2: The company ts using Statement #3: J&H Corp. is generating accounting profit of Statement #4: The firm uses value is computed as the in net operating working capital (NOWC). in net cash flow from its operations and an of total net operating capital to run the business. This of J&H Corp.'s net operating working capital and its cash balance long-term assets short-term investments Continue without saving MacBook Air esc oo F F5 Fi F2 F3 F6
