Financial Accounting: Plush Carpet Mills Case Study

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G . J Dec. 31, 2005 $ % of TA Industry Average % of TA 1,097 15,919 12,570 6% 20% 31% 5% 6.840 9080 G167 X fx B D E F 1 Financial Performance Spreadsheet 2 Company Name: Plush Carpet Mill, Inc. Dec. 31, 2003 Dec. 31, 2004 5 Balance Sheet ($000). $ % of TA % of TA 6 Assets Current Assets Cash & marketable securities 1,512 1,176 9 Accounts receivable 6,237 10,271 10 Inventories 4,536 7,838 44 11 Prepaid expenses 3,780 5,140 19 12 current assets 16,065 24.425 13 Gross fixed assets 6,300 14 Less: Accumulated depreciation 2,050 2.958 15 Net Fixed assets 4.250 6,122 16 Intangible assets 567 588 17 All other noncurrent assets 1,323 1,790 18 Total assets 22,205 10 19 20 Liabilities and Stockholders' Equity 24 Liabilities 30 22 Notes payable 1,205 3,243 23 Current maturities--L.T.D 1,008 1,460 24 Accounts payable 3,570 5,958 25 Income taxes payable 84 336 26 Accruals and other current liabilities 1,995 3,360 27 Total current liabilities 7,862 14,357 no con Total 36.426 62% 12,918 4.250 8.668 605 28% 4% 6% 100% 1,985 47,684 32.925 21 Current 6,323 2,246 9,955 336 5,016 8% 5% 16% 0% 8% 36% 23,876 C19 : x fc B D E F G H J K 8% 5% 1,205 1,008 3,570 84 1,995 7,862 2,940 3,243 1,460 5,958 336 3,360 14,357 6,100 6.323 2.246 9.955 336 5,016 23,876 9,350 16% 0% 8% 36% 13% 11% 61% 10,802 20,457 33,226 . 19 20 Liabilities and Stockholders' Equity 21 Current Liabilities 22 Notes payable 23 Current maturities--L.T.D. 24 Accounts payable 25 Income taxes payable 26 Accruals and other current liabilities 27 Total current liabilities 28 Long-term debt 29 All other noncurrent liabilities 30 Total liabilities 31 Stockholders' equity 32 Common stock 33 Paid-in capital 34 Retained earnings 35 Total stockholders' equity 36 Total liabilities & equity 37 38 39 40 Income Statement ($000) 41 Sales revenue 42 Less: Cost of goods sold 43 Gross profit 44 Less: Operating expenses 45 Gen. & Adm. and Selling 3,360 2,100 5,943 11,403 22 205 3,360 2,100 7,008 12,468 32.925 3.360 2,100 8,998 14.458 47,684 39% 100% 2003 $ % of Sales 50,400 35,431 14,969 2004 $ % of Sales 65,100 45,872 19,228 Industry 2005 Average % of Sale % of Sales 81,312 100.0% 57,098 71.5% 24,214 28.5% 12,331 15,099 17,296 19.6% C66 1 X fix m K C 2003 $ % of Sales 50,400 35,431 14,969 E F 2004 $ % of Sales 65,100 45,872 19,228 H 2005 Average % of Sale % of Sales 81,312 100.0% 57,098 71.5% 24.214 28.5% A 39 40 Income Statement ($000). 41 Sales revenue 42 Less: Cost of goods sold 43 Gross profit 44 Less: Operating expenses 45 Gen. & Adm. and Selling 46 Depreciation expense 47 Total operating expenses 48 Operating income (EBIT) 49 Less: Interest expense 50 Earnings before taxes (EBT) 51 Less: Income Taxes (34%). 52 Net income 53 54 Common stock dividends (000). 55 Number shares common stock (000) 56 Earnings per common share (EPS). 57 Price per common share 58 59 60 61 62 Financial Ratios 63 Liquidity 64 Current ratio (times) 65 Quick or Acid-test ratio (times) 12,331 630 12,961 2,008 335 1,673 569 1,104 15,099 908 16,007 3,221 756 2,465 838 1,627 17,296 1,292 18,588 5,626 1,343 4,283 1,456 2.827 19.6% 3.4% 23.0% 5.4% 1.1% 4.4% 314 1,120 562 1,120 837 1,120 17.25 17.71 18.43 Industry Average Evaluation Time Cross- series sectional 2003-05 2005 2003 2004 2005 1.6 0.81 Evaluation Time Cross- series sectional 2003-05 2005 Industry Average 2003 2004 2005 1.61 0.8 9.4 3.8 6.4 1.81 58 59 60 61 62 Financial Ratios 63 Liquidity 64 Current ratio (times 65 Quick or Acid-test ratio (times) 66 Asset Management 67 Accounts receivable turnover (times) 68 Inventory turnover (times) 69 Fixed asset turnover (times) 70 Total assets turnover 71 72 73 74 75 Financial Ratios 76 Solvency 77 Debt ratio (%) 78 Times interest earned (times) 79 Profitability 80 Operating profit margin (%) 81 Net profit margin (%) [before tax] 82 Return on assets (%) [before tax) 83 Return on equity (%) [before tax.. 84 Market Value Evaluation Trend Industry Analysis Analysis 2003-05 2005 Industry Average 2003 2004 2005 66.7% 3.41 5.4% 4.4% 8.0% 17.1% Evaluation Trend Industry. Analysis Analysis 2003-05 2005 Industry Average 2003 2004 2005 66.7% 3.4 5.4% 4.4% 8.0% 17.1% 72 73 74 75 Financial Ratios 76 Solvency 77 Debt ratio (%) 78 Times interest earned (times) 79 Profitability 80 Operating profit margin (%) 81 Net profit margin (%) [before tax] 82 Return on assets (%) [before tax] 83 Return on equity (%) [before tax] 84 Market Value Price-earnings ratio (times) 86 Price-to-book ratio (times) 87 88 89 Cash Flow Statement 90 Cash, beginning of year 91 92 Operating activities 93 Net income 94 Plus Depreciation 95 Change in accounts receivable 96 Change in inventory 2004 2005 B D E F 2004 2005 C116 1 X fx 88 89 Cash Flow Statement 90 Cash, beginning of year 91 92 Operating activities 93 Net income 94 Plus Depreciation 95 Change in accounts receivable 96 Change in inventory 97 Change in prepaid expenses 98 Change in accounts payable 99 Change in income taxes payable 100 Change in accruals & other cur. Liab. 101 Net cash from operating activities 102 103 Investment activities 104 Fixed asset acquisitions 105 Change in intangible assets 106 Change in all other noncurrent assets 107 Net cash from investment activities 108 C103 B D E F G A 103 Investment activities 104 Fixed asset acquisitions 105 Change in intangible assets 106 Change in all other noncurrent assets 107 Net cash from investment activities 108 109 Financing activities 110 Change in notes payable 111 Change current maturities--L.T.D. 112 Change in long-term debt 113 Change in all other noncurrent liab. 114 Change in common stock & paid-in cap. 115 Dividends paid 116 Net cash from financing activities 117 118 Net change in cash 119 120 Cash, end of year 121 122 123 124 125 126 127 G . J Dec. 31, 2005 $ % of TA Industry Average % of TA 1,097 15,919 12,570 6% 20% 31% 5% 6.840 9080 G167 X fx B D E F 1 Financial Performance Spreadsheet 2 Company Name: Plush Carpet Mill, Inc. Dec. 31, 2003 Dec. 31, 2004 5 Balance Sheet ($000). $ % of TA % of TA 6 Assets Current Assets Cash & marketable securities 1,512 1,176 9 Accounts receivable 6,237 10,271 10 Inventories 4,536 7,838 44 11 Prepaid expenses 3,780 5,140 19 12 current assets 16,065 24.425 13 Gross fixed assets 6,300 14 Less: Accumulated depreciation 2,050 2.958 15 Net Fixed assets 4.250 6,122 16 Intangible assets 567 588 17 All other noncurrent assets 1,323 1,790 18 Total assets 22,205 10 19 20 Liabilities and Stockholders' Equity 24 Liabilities 30 22 Notes payable 1,205 3,243 23 Current maturities--L.T.D 1,008 1,460 24 Accounts payable 3,570 5,958 25 Income taxes payable 84 336 26 Accruals and other current liabilities 1,995 3,360 27 Total current liabilities 7,862 14,357 no con Total 36.426 62% 12,918 4.250 8.668 605 28% 4% 6% 100% 1,985 47,684 32.925 21 Current 6,323 2,246 9,955 336 5,016 8% 5% 16% 0% 8% 36% 23,876 C19 : x fc B D E F G H J K 8% 5% 1,205 1,008 3,570 84 1,995 7,862 2,940 3,243 1,460 5,958 336 3,360 14,357 6,100 6.323 2.246 9.955 336 5,016 23,876 9,350 16% 0% 8% 36% 13% 11% 61% 10,802 20,457 33,226 . 19 20 Liabilities and Stockholders' Equity 21 Current Liabilities 22 Notes payable 23 Current maturities--L.T.D. 24 Accounts payable 25 Income taxes payable 26 Accruals and other current liabilities 27 Total current liabilities 28 Long-term debt 29 All other noncurrent liabilities 30 Total liabilities 31 Stockholders' equity 32 Common stock 33 Paid-in capital 34 Retained earnings 35 Total stockholders' equity 36 Total liabilities & equity 37 38 39 40 Income Statement ($000) 41 Sales revenue 42 Less: Cost of goods sold 43 Gross profit 44 Less: Operating expenses 45 Gen. & Adm. and Selling 3,360 2,100 5,943 11,403 22 205 3,360 2,100 7,008 12,468 32.925 3.360 2,100 8,998 14.458 47,684 39% 100% 2003 $ % of Sales 50,400 35,431 14,969 2004 $ % of Sales 65,100 45,872 19,228 Industry 2005 Average % of Sale % of Sales 81,312 100.0% 57,098 71.5% 24,214 28.5% 12,331 15,099 17,296 19.6% C66 1 X fix m K C 2003 $ % of Sales 50,400 35,431 14,969 E F 2004 $ % of Sales 65,100 45,872 19,228 H 2005 Average % of Sale % of Sales 81,312 100.0% 57,098 71.5% 24.214 28.5% A 39 40 Income Statement ($000). 41 Sales revenue 42 Less: Cost of goods sold 43 Gross profit 44 Less: Operating expenses 45 Gen. & Adm. and Selling 46 Depreciation expense 47 Total operating expenses 48 Operating income (EBIT) 49 Less: Interest expense 50 Earnings before taxes (EBT) 51 Less: Income Taxes (34%). 52 Net income 53 54 Common stock dividends (000). 55 Number shares common stock (000) 56 Earnings per common share (EPS). 57 Price per common share 58 59 60 61 62 Financial Ratios 63 Liquidity 64 Current ratio (times) 65 Quick or Acid-test ratio (times) 12,331 630 12,961 2,008 335 1,673 569 1,104 15,099 908 16,007 3,221 756 2,465 838 1,627 17,296 1,292 18,588 5,626 1,343 4,283 1,456 2.827 19.6% 3.4% 23.0% 5.4% 1.1% 4.4% 314 1,120 562 1,120 837 1,120 17.25 17.71 18.43 Industry Average Evaluation Time Cross- series sectional 2003-05 2005 2003 2004 2005 1.6 0.81 Evaluation Time Cross- series sectional 2003-05 2005 Industry Average 2003 2004 2005 1.61 0.8 9.4 3.8 6.4 1.81 58 59 60 61 62 Financial Ratios 63 Liquidity 64 Current ratio (times 65 Quick or Acid-test ratio (times) 66 Asset Management 67 Accounts receivable turnover (times) 68 Inventory turnover (times) 69 Fixed asset turnover (times) 70 Total assets turnover 71 72 73 74 75 Financial Ratios 76 Solvency 77 Debt ratio (%) 78 Times interest earned (times) 79 Profitability 80 Operating profit margin (%) 81 Net profit margin (%) [before tax] 82 Return on assets (%) [before tax) 83 Return on equity (%) [before tax.. 84 Market Value Evaluation Trend Industry Analysis Analysis 2003-05 2005 Industry Average 2003 2004 2005 66.7% 3.41 5.4% 4.4% 8.0% 17.1% Evaluation Trend Industry. Analysis Analysis 2003-05 2005 Industry Average 2003 2004 2005 66.7% 3.4 5.4% 4.4% 8.0% 17.1% 72 73 74 75 Financial Ratios 76 Solvency 77 Debt ratio (%) 78 Times interest earned (times) 79 Profitability 80 Operating profit margin (%) 81 Net profit margin (%) [before tax] 82 Return on assets (%) [before tax] 83 Return on equity (%) [before tax] 84 Market Value Price-earnings ratio (times) 86 Price-to-book ratio (times) 87 88 89 Cash Flow Statement 90 Cash, beginning of year 91 92 Operating activities 93 Net income 94 Plus Depreciation 95 Change in accounts receivable 96 Change in inventory 2004 2005 B D E F 2004 2005 C116 1 X fx 88 89 Cash Flow Statement 90 Cash, beginning of year 91 92 Operating activities 93 Net income 94 Plus Depreciation 95 Change in accounts receivable 96 Change in inventory 97 Change in prepaid expenses 98 Change in accounts payable 99 Change in income taxes payable 100 Change in accruals & other cur. Liab. 101 Net cash from operating activities 102 103 Investment activities 104 Fixed asset acquisitions 105 Change in intangible assets 106 Change in all other noncurrent assets 107 Net cash from investment activities 108 C103 B D E F G A 103 Investment activities 104 Fixed asset acquisitions 105 Change in intangible assets 106 Change in all other noncurrent assets 107 Net cash from investment activities 108 109 Financing activities 110 Change in notes payable 111 Change current maturities--L.T.D. 112 Change in long-term debt 113 Change in all other noncurrent liab. 114 Change in common stock & paid-in cap. 115 Dividends paid 116 Net cash from financing activities 117 118 Net change in cash 119 120 Cash, end of year 121 122 123 124 125 126 127