Fundamental Analysis Case 1 Jerri Money, an experienced budget analyst at Millions Manufacturing Company, has been charged with assessing the firm's financial performance during 2020 and its financial position at ycar-end 2020. To complete this assignment, she gathered the firm's 2020 financial statements, shown below. In addition, Jerri obtained the firm's ratio values for 2018 and 2019, along with the 2020 industry average ratios (also applicable to 2018 and 2019). These arc presented in the "Historical Ratios" table on the next page. Note. There were no preferred dividends in 2020. Income Statement Millions Manufacturing Company Ended December 31, 2020 $5,075,000 3,704,000 $1,371,000 S650,000) 416,000 Sales Revenue Less: Cost of Goods Sold Gross margin Less: Operating Expenses Selling expense General and administrative expenses Amortization expense Totul operating expense Operating earnings (EBIT) Less Interest expense Earnings before taxes Less: Taxes (rate 40%) 152.000 1,218,000 $ 153,000 93,000 $ 60,000 24,000 Nu inntomur my 16 000 Required a. Calculate the firm's 2020 financial ratios, and then complete the ratio table. h. For additional insight develop a commun-size analysis Tor the Income Statement and a percentage change analysis for the Balance Sheet. c. Use the DuPont model to fully analyze why ROF. changed over the three-year period and is different than the industry average. Explain. (note: may need to algebraically manipulate to get values for all years) d. Based on your analysis of all the data available, provide a detailed discussion of the firm's overall financial position. Analyze the firm's current financial position from both a trend and comparative ratio viewpoint. In your discussion, he sure to comment in the company's financial strengths and weaknesses. Provide your analysis in five sections: one for each of the four categories of raliers (liquidity, asset management, deht management and profitability), and one for an overall evaluation. e. Add a paragraph to discuss any additional factors or limitations that need to be considered in this fundamental analysis, Note: Show all calculations for full marks Balance Sheets Millions Manufacturing Company December 31 Assets 2019 2020 Current Assets Cash S 24,100 $ 25.000 Accounts Receivable 763,900 805,556 Inventorics 763,445 700,625 Total Current Assets SI.551.445 $1,531,181 Gross fixed assets at cost) $1.691.707 $2,093,819 Less: Accumulated amortization 348.OKK) 500.000 Net fixed assets $1,343,707 $1,593,819 Total asscts $2.895.152 $3.125.000 Liabilities and shareholder's equity Current liabilities Accounts payable Notes payable Accruals Total current liabilities Long-term debt Total liabilities Shareholder's equity Preferred shares Common shares Relained eumings Total shareholder's equily Total liabilities and shareholder's equity $ 400.500 370.00 100.902 S 871,402 S 700.000 S1.571.402 $ 230,000 311,000 75.000 $ 616,000 $1,165,250 $1.781,250 S 50,000 293,750 980.000 S1.323.750 S2.195.152 $ 50,000 293,750 1.000.000 $1.343,750 $3,125,000 Historical Ratios Millions Manufacturing Company Actual 2019 1.8 Actual 2020 Industry average 2020 1.5 1.2 10.3 5.0 55 days 46 days Ratio Current ratio Quick ratio Inventory turnover Days sales outstanding Talal assel turnover Total debt to assets Times-interest-earned Net profit margin Return on total assets Return un equity Actual 2018 1.7 1.0 5.2 50 days 1.6 29.5% 2.2 1.1% 1.7 3.1% 1.8 37.0% 1.9 1.0% 1.5% 3.3% 2.0 18.4% 2.5 1.2% 2.4% 3.2% Fundamental Analysis Case 1 Jerri Money, an experienced budget analyst at Millions Manufacturing Company, has been charged with assessing the firm's financial performance during 2020 and its financial position at ycar-end 2020. To complete this assignment, she gathered the firm's 2020 financial statements, shown below. In addition, Jerri obtained the firm's ratio values for 2018 and 2019, along with the 2020 industry average ratios (also applicable to 2018 and 2019). These arc presented in the "Historical Ratios" table on the next page. Note. There were no preferred dividends in 2020. Income Statement Millions Manufacturing Company Ended December 31, 2020 $5,075,000 3,704,000 $1,371,000 S650,000) 416,000 Sales Revenue Less: Cost of Goods Sold Gross margin Less: Operating Expenses Selling expense General and administrative expenses Amortization expense Totul operating expense Operating earnings (EBIT) Less Interest expense Earnings before taxes Less: Taxes (rate 40%) 152.000 1,218,000 $ 153,000 93,000 $ 60,000 24,000 Nu inntomur my 16 000 Required a. Calculate the firm's 2020 financial ratios, and then complete the ratio table. h. For additional insight develop a commun-size analysis Tor the Income Statement and a percentage change analysis for the Balance Sheet. c. Use the DuPont model to fully analyze why ROF. changed over the three-year period and is different than the industry average. Explain. (note: may need to algebraically manipulate to get values for all years) d. Based on your analysis of all the data available, provide a detailed discussion of the firm's overall financial position. Analyze the firm's current financial position from both a trend and comparative ratio viewpoint. In your discussion, he sure to comment in the company's financial strengths and weaknesses. Provide your analysis in five sections: one for each of the four categories of raliers (liquidity, asset management, deht management and profitability), and one for an overall evaluation. e. Add a paragraph to discuss any additional factors or limitations that need to be considered in this fundamental analysis, Note: Show all calculations for full marks Balance Sheets Millions Manufacturing Company December 31 Assets 2019 2020 Current Assets Cash S 24,100 $ 25.000 Accounts Receivable 763,900 805,556 Inventorics 763,445 700,625 Total Current Assets SI.551.445 $1,531,181 Gross fixed assets at cost) $1.691.707 $2,093,819 Less: Accumulated amortization 348.OKK) 500.000 Net fixed assets $1,343,707 $1,593,819 Total asscts $2.895.152 $3.125.000 Liabilities and shareholder's equity Current liabilities Accounts payable Notes payable Accruals Total current liabilities Long-term debt Total liabilities Shareholder's equity Preferred shares Common shares Relained eumings Total shareholder's equily Total liabilities and shareholder's equity $ 400.500 370.00 100.902 S 871,402 S 700.000 S1.571.402 $ 230,000 311,000 75.000 $ 616,000 $1,165,250 $1.781,250 S 50,000 293,750 980.000 S1.323.750 S2.195.152 $ 50,000 293,750 1.000.000 $1.343,750 $3,125,000 Historical Ratios Millions Manufacturing Company Actual 2019 1.8 Actual 2020 Industry average 2020 1.5 1.2 10.3 5.0 55 days 46 days Ratio Current ratio Quick ratio Inventory turnover Days sales outstanding Talal assel turnover Total debt to assets Times-interest-earned Net profit margin Return on total assets Return un equity Actual 2018 1.7 1.0 5.2 50 days 1.6 29.5% 2.2 1.1% 1.7 3.1% 1.8 37.0% 1.9 1.0% 1.5% 3.3% 2.0 18.4% 2.5 1.2% 2.4% 3.2%