Homework help please.
What corrective actions would you take to improve this company in the next two years?
FINANCE STRATEGY Yearly Dividends Payment at expected Industry Growth JF felt dividends should be paid every year at the expected industry growth; if this meant a one-year loan to do so, it might be worth the interest charged, but we worried that the interest charged would be too much, (especially since our company had 2 Ten-Year L- T loans outstanding from years 4 & 9. Year 11 Year 12 Year 13 Year 14 Target Actual Target Actual Target Actual Target Actual EPS 2.50 2.64 3.00 2.34 3.50 2.33 4.00 0.59 Stock repurchases In years 16 & 17 occurred, resulting in a positive effect on our company's EPS for year 16, but not a decrease in funds borrowed. Year 16 Year 17 Year 18 Target Actual Target Actual Target Actual EPS 5.25 6.25 6.00 5.84 7.00 4.90 Debt versus Equity by Choosing not to borrow short-terms loans initially, JF concentrated on managing and delegating profits only. We were expecting that as revenues increased, cash flow would be greater, and we could concentrate on paying off the L-term loans quickly. However, as our Net Profit decreased, the need to make additional L-T loans to continue business hurt our credit rating. Year 11 |Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 A A- B+ B- A C+BALANCE SHEET & CASH FLOW STATEMENT Year 19 (projected) BALANCE SHEET CASH FLOW STATEMENT ASSETS $000s CASH AVAILABLE IN YEAR 19 $000s Cash On Hand 20 913 Accounts Receivable (see Note 119,072 Beginning Cash Balance (carried over from prior year) Footwear Inventories 264.455 Cash Inflows - Receipts from Footwear Sales (see Note 1) 733.358 Total Current Assets 383.527 Bank Loans 1-Year Loan 5.Year Loan Net Investment in Facilities and Equipment 545.833 10-Year Loan Construction Work In Progress (for now space) Production Improvement Options On Order Stock Issue (0 shares issued) Sale of Production Equipment Total Fixed Assets (sen Note 2) 545 833 Interest Income on Y18 Cash Balance 544 Total Assets 929,360 Loan to Cover Overdraft (1-earlan @ 13.0%] 114 494 Cash Refund (awarded by instructor) LIABILITIES $000S Total Cash Available from All Sources 869.309 Accounts Payable (see Note 3) 31,710 $000S 1-Year Bank Loan Payable (see Note 4) CASH OUTLAYS IN YEAR 19 Current Portion of Long-Term Bank Loans (soo Note 5) 120,000 Cash- - Payments to Materials Suppliers (see Note 2) 127 638 Overdraft Loan Payable (see Note @) 114 494 Outlays Production Expenses jpcluding depreciation - see Note 9) 196.044 Total Current Liabilities 266 204 Distribution and Warehouse Expenses 120.307 Long Term Bank Loans Outstanding (see Note 7) 375,000 Marketing and Administrative Expenses 181 356 Capital- - Facility Expension (new space Total Liabilities 641,204 Outlays Equipment Purchases SHAREHOLDER EQUITY Baginning Change Production Imp. Options Balance In Y19 $000s Common Stock (see Note 8) 15.000 15 000 Bank Loan - Energy Efficiency Initiatives 1-Year Loan 20.000 Additional Capital (see Note 90 -399.156 Retained Earnings (see Note 10) 0 -399 156 Repayment 5 Year Loans 90.000 76 927 672,312 (see Note 4) 10-Year Loans 50.000 595 385 50 995 Total Shareholder Equity 211 229 76 927 288 156 Interest - Payments Bank Loans Y18 Overdraft Loan Return On Average Shareholder Equity (see Note 11) 30.8% Stock Repurchase (D shares repurchased) Income Tax Payments 32 969 Note 1: Of the $476 206 of wholesale and private label net revenues reported on the V19 Dividend Payments to Shareholders income statement, 75% was collected in Yib and 25:4 will be collected in Y20. Charitable Contributions OOO Nore 2: For more details on food asset Investment, see the Facilities and Equipment report ipage 1 of these Company Operating Reports) Cash Fine (assessed by instructor Nore 3: Of the 5126, 841 of materials used for footwear production in Year 19, 751% was paid for in Year 19 and 25% wil be paid for in Year 20 Total Cash Outlays 869.309 Note 4: The company's Year 19 interest rate for a 1-year bank loan was 5.6%%. Net Cash Balance (at the end of Year 19)
