Im not sure how to do 15-18 questions using proforma Thanks

Miller Herman (MLHR) Common Size Analysis Project General Guidelines: Each individual should gather data from Edgar.com to create the common size analysis. You can discuss your answers with the group prior to turning in the assignment. Complete the ratio page (see tab below). Respond to the questions listed on the Instruction Tab. Rename the Excel file to include your last name and MLHR in the title. Submit the Excel file to the Drop box A. Obtain the most recent annual financial report (10-K) for Miller Herman using EDGAR.gov at: http://www.sec.gov/edgar/searchedgar/companysearch.html Under Company Ticker enter MLHR for Miller Herman Locate the most recent 10-K report and click the Interactive Data link on the web page then click Financial Statements. B. Use MLHR's 10-K annual report from Edgar.com to find Financial Information for Common Size analysis 1. Click on the Income Statement tab below and fill in the information from Consolidated Statements of Operations in Edgar.gov to fill in the highlighted area of the spreadsheet. Note use the previous year's information to guide you. Notice the footnote on the bottom of the Income Statement regarding Depreciation Expense. 2. Click on the Balance Sheet tab below and fill in the information from Consolidated Balance Sheet from Edgar.gov. C. Answer the following questions regarding Miller Herman. (Hint: Click the Ratios tab below to fill in the appropriate ratios to compare MLHR to the industry. ROE PM TAT EM MLH -5.7% -1.18% 1.90 2.66 Industry 25.9% 4.50% 2.30 2.50 2. What component(s) is(are) improving MLHR's ROE relative to the industry average? (highlight your answer(s)) Profit Margin (PM) Asset Efficiency (TAT) Financial Leverage (EM) None 3. Based on this DuPont analysis which of the following areas are strengths for MLHR? (could be more than one) a. Profit Margin (PM) b. Asset Efficiency (TAT) c. Financial Leverage (EM) d. None 4. Based on this DuPont analysis which of the following areas are weaknesses for MLHR? (could be more than one) a. Profit Margin (PM) b. Asset Efficiency (TAT) c. Financial Leverage (EM) d. None 5. How long is the operating cycle for MLHR for the most recent year ending financial information? (See Ratio Page) Operating Cycle in Days = 62.5 6. How long is the cash cycle for MLHR for the most recent year ending financial information? (See Ratio Page) Cash Cycle in Days = 22.6 7. Is the length of the operating cycle a strength or weakness for MLHR compared to the industry? Why? better because mlhr doesn't use as much time to collect accounts recievable and turnover is quicker 8. If MLHR's cash cycle increases significantly it would need to: a. issue more equity in the form of common stock b. issue more corporate bonds c. increase notes payable (line of credit with bank) d. decrease the amount of credit it issues to customers e. increase payments to trade creditors 9. Look at the trends over the past 5 years for the following ratio categories. Identify whether the trend is improving, deteriorating, or neither. (For ratios that fluctuate over time compare 5 years ago with the most recent year.) a. Liquidity Impr Det Neither b. Inventory Turnover Impr Det Neither c. Total Asset Turnover d. Days Sales Outstanding e. Asset Management f. Leverage g. Profitability Impr Impr Impr Impr Impr Det Det Det Det Det Neither Neither Neither Neither Neither 10. What account causes the current ratio to be smaller than the industry and the quick ratio to be similar to the industry? a. Accounts Receivable b. Inventory c. Accounts Payable d. all of the above 11. Does the amount of time it takes Herman Miller to pay it's suppliers appear to be a problem? (Hint: compare their ratios to the industry) a. Yes b. No 12. When comparing the assets on the balance sheet to industry averages, what account should the analyst question? inventory 13. What was MLHR's Net Working Capital for the last two years (omit 000's)? Last Year = 95.7 Previous Year = 109.3 14. How big a factor would you say market conditions played on the performance of MLHR over the past 10 years? a. Very important factor b. Somewhat import factor c. Not relevant at all 15. Suppose MLHR doubled the amount of time to pay trade creditors. Use the proforma sheet to indicate the impact on the financial statements. (Note start with the identical parameters indicated on Ratio page for previous year and then double Days Payable.) What are the new plug figure to make the balance sheet balance? State answer omitting the last 000,000's consistent with proforma. (Note one plug is always zero for cells D28 and D41 on the Proforma Spreadsheet) a. Cash & Marketable Securities = $ 101.5 b. Notes Payable Bank = 16. Suppose MLHR Days Payable is at the same level as the prior year. Use the proforma sheet to indicate the impact on the financial statements assuming Days Sales Outstanding and Days in Inventory both double, causing the operating cycle to double in length. What are the new plug figure to make the balance sheet balance? State answer omitting the last 000,000's consistent with proforma. (Note one plug is always zero for cells D28 and D41 on the Proforma Spreadsheet) a. Cash & Marketable Securities = $ 101.5 b. Notes Payable Bank = 17. Using the same parameters as in question 16, what is the proforma Net Income (Loss) (omitting 000,000's)? Proforma Net Income = $ 41.3 18. Suppose all parameter estimates are based on last years results, except Sales is expected to grow at 25%. What would be the impact on Net Income and the Plugs? (Note omit 000,000's and one of the plugs is always zero.) Cash & Marketable Securities = 69.3 Notes Payable Bank = 367.1 Proforma Net Income = $ 22.4 19. Assuming MLHR is expecting a 25% increase in Sales and they have the plant capacity, what should they do now to prepare for this? Increase notes payable to be able to fund growth Short-Answer Question 20. Summarize your advise to management of MLHR based on inferences gained from this common size analysis. Income Statement Miller Herman Income Statement (000,000's omitted) Sales COGS Gross Margin Selling, Gen & Adm Exp. Research & Design Restr & Impair Exp Depreciation Exp.* Total Operating Exp. EBIT Less Expenses (Income) Interest Expense Interest (Income) Other Expenses (Income) Net Other Expenses (Incom EBT Taxes & Cum Eff of Act Ch Net Income EPS - Diluted Inputs are highlighted FYE 5/29/2010 1318.8 890.3 428.5 275.1 40.5 16.7 42.6 374.9 53.6 21.7 (4.6) 1.7 18.8 34.8 6.5 28.3 $1.25 % FYE % FYE Chng 5/28/2011 Chng 6/2/2012 25% 1649.2 5% 1724.1 25% 1111.1 2% 1133.5 26% 538.1 10% 590.6 20% 329.8 9% 360.5 13% 45.8 15% 52.7 -82% 3.0 80% 5.4 -15% 36.2 -5% 34.4 11% 414.8 9% 453.0 130% 123.3 12% 137.6 -8% -67% 11% 195% 388% 150% 19.9 (1.5) 2.4 20.8 102.5 31.7 70.8 $0.43 -12% -33% -13% 17% 40% 6% % Chng 3% 3% 2% 10% 14% -78% 0% 8% -16% 17.5 -2% (1.0) n/a 1.6 18.1 -2% 119.5 -19% 44.3 -35% 75.2 -9% $1.06 FYE 6/1/2013 1774.9 1169.7 605.2 394.8 59.9 1.2 34.4 490.3 114.9 % FYE Chng 5/31/2014 6% 1882.0 7% 1251.0 4% 631.0 33% 526.5 10% 65.9 2108% 26.5 10% 37.8 34% 656.7 -122% (25.7) 17.2 2% (0.4) n/a 0.9 17.7 0% 97.2 -145% 29.0 -173% 68.2 -133% $1.29 17.6 (0.4) 0.5 17.7 (43.4) (21.2) (22.2) Common Size RMA % of Ind Sales Comp 100.0% 100.0% 66.5% 71.7% 33.5% 28.3% 28.0% -3.5% -2.0% 34.9% -1.4% 23.8% 4.5% 0.9% 0.0% 0.9% -2.3% -1.1% -1.2% $0.37 * Depretiation & Amortization Expenses are included in the total Selling, General and Administration Expense. In order to calculate Cash Flow you will need to look for the amount of Depreciation Epense by clicking on the Notes to Financial Statements section on Edgar.com. Under the notes section you will click on Supplemental Disclosure of Cash Flow Information to obtian the Depreciation & Amortization Expenses. You will then need to reduce the amount of total Selling, General & Administration Expenses in Cell J9 above to reflect the amount of Depretiation & Amortization Expenses broken out. (See the formula in Cell H9 for example.) Page 5 Balance Sheet Miller Herman Balance Sheet (000,000's omitted) FYE ASSETS 5/31/2008 Cash & Cash Equivalents 155.4 Acct. Rec., less allowances 226.1 Inventory 55.1 Marketable Securities 15.7 Other Current Assets 40.9 Total Current Assets 493.2 Net Property, Plant, & Equip Fixed Assets (Net) Goodwill & Intangible Assets Other Assets Total Assets 196.3 196.3 40.2 53.5 783.2 LIABILITIES Notes Payable - Bank Accounts Payable Accruals Current Maturities - LTD Other Current Liabilities Total Current Liabilities 0.0 285.4 0.0 0.0 25.1 310.5 Long Term Debt (LTD) Other Liabilities Total Liabilities Inputs are highlighted % FYE Chng 5/28/2011 -8% 142.2 -15% 193.1 20% 66.2 -30% 11.0 59.2 -4% 471.7 -14% -14% -83% 3% 169.1 169.1 157.9 9.3 808.0 -14% 0.0 112.7 153.1 0.0 0.0 265.8 375.5 73.8 759.8 -33% 18% -21% Common Stock Retained Earnings Accum. Other Comprehen. Additional Paid-In Capital Total Equity 11.1 76.7 (64.4) 0.0 23.4 5% 184% 66% Total Liabilities & Equity 783.2 % FYE Chng 6/2/2012 21% 172.2 -17% 159.7 -10% 59.3 -13% 9.6 54.5 -3% 455.3 -8% -8% 18% 4% 156.0 156.0 216.8 11.0 839.1 % Chng -52% 12% 28% 13% -12% 18% 18% FYE 6/1/2013 82.7 178.4 76.2 10.8 51.2 399.3 % FYE Chng 5/31/2014 23% 101.5 15% 204.3 3% 78.4 3% 11.1 10% 56.5 13% 451.8 135% 13% 184.1 184.1 337.3 25.8 946.5 6% 6% -7% 19% 5% 12% 16% 0.0 130.1 159.9 5% 6% 14% 290.0 Common Size RMA % of Industry Tot Assets Comp 10.2% 4.5% 20.6% 40.3% 7.9% 29.2% 1.1% 2.0% 5.7% 45.6% 76.0% 195.2 195.2 313.3 30.6 990.9 19.7% 19.7% 31.6% 3.1% 100.0% 7.4% 100.0% 23% 0.0 136.9 169.2 50.0 0.0 356.1 0.0% 13.8% 17.1% 5.0% 0.0% 35.9% 12.5% 18.7% 0.6% 1.3% 8.5% 41.6% 16.7% -5% 0.0 115.8 137.9 0.0 0.0 253.7 250.0 87.2 603.0 0% 0% -2% 250.0 87.1 590.8 0% 0% 6% 250.0 87.0 627.0 -20% -28% -1% 200.0 62.7 618.8 20.2% 6.3% 62.4% 6.7% 7.2% 55.5% 776% 11.6 218.2 (106.8) 82.0 205.0 1% 32% 33% 11% 21% 11.7 288.2 (142.5) 90.9 248.3 0% 15% -11% 13% 29% 11.7 331.1 (126.2) 102.9 319.5 2% -16% -69% 19% 16% 11.9 277.4 (39.6) 122.4 372.1 1.2% 28.0% -4.0% 12.4% 37.6% 44.3% 3% 808.0 4% 839.1 13% 946.5 5% 990.9 100.0% 100.0% -61% 3% -10% Page 6 Miller Herman RATIO ANALYSIS RMA 5/31/2008 5/28/2011 6/2/2012 6/1/2013 5/31/2014 Industry Comparison 1.6 1.4 1.8 1.5 1.8 1.6 1.4 1.1 1.3 1.0 2.1 0.9 16.2 16.8 19.1 15.4 16.0 6.2 1.7 2.0 2.1 1.9 1.9 2.3 63 43 34 37 39.6 51 23 22 19 24 22.9 59 117 37 37 41 39.9 37 -32 27 16 20 22.6 73 2.5 32.5 4.4 6.2 2.9 8.0 7.9 2.4 9.8 6.7 2.0 8.7 -1.5 1.7 0.9 5.6 1.5 12.69% 32.63% 4.29% 14.24% 34.26% 4.36% 10.27% 34.10% 3.84% -4.38% 33.53% -1.17% 13.40% 28.30% 4.50% DuPont Analysis: ROE = ROA*EM, ROA=PM*TAT ROE (NI / Total Equity) 120.94% 34.54% ROA (NI / Total Assets) 3.61% 8.76% PM (NI / Sales) 2.15% 4.29% Total Asset Turnover 1.68 2.04 Equity Multiplier (A / E) 33.47 3.94 30.29% 8.96% 4.36% 2.05 3.38 21.35% 7.21% 3.84% 1.88 2.96 -5.94% -2.23% -1.17% 1.90 2.66 25.88% 10.35% 4.50% 2.30 2.50 $1.06 $1.29 $0.37 LIQUIDITY Current Quick ASSET MANAGEMENT Inventory Turnover (COGS / Inventory) Total Asset Turnover DSO (AR Period) (365/AR Turnover) Inventory Period (365/Inventory Turnover) Days in AP (AP Period) (365/[COGS/AP]) Cash Cycle LEVERAGE TIE (EBIT / Interest) Debt / Equity (RMA Debt/Worth) Cash Coverage Ratio PROFITABILITY % Profit BT / Tot Assets 4.44% Gross Profit 32.49% PM (NI/Sales) RMA uses NIBT/Sales 2.15% MARKET VALUE EPS - diluted $1.25 $0.43 Management's estimate of the weighted average of the minimum equity and debt returns required by the providers of capital. Reevaluated every year and adjusted when necessary to reflect the current rate environment and capital structure. * Proforma Miller Herman Proformas (000,000's are omitted all numbers are in millions) Inputs are highlighted FYE 5/31/2014 1,882.0 CS % of Sales 100% Proforma 1,882.0 (1,251.0) 631.0 (526.5) (92.4) (37.8) (25.7) -66% 34% -28% -5% -2% -1% (1,251.0) 631.0 (526.5) (92.4) (37.8) (25.7) (17.6) 0.4 -1% 0% (12.4) - Other (Expenses) Income Net Other Expenses (Income) NIBT (0.5) (17.7) (43.4) 0% -1% -2% (0.5) (12.9) (38.6) New Depreciation Growth Rate on Sales Income taxes Net Income 21.2 (22.2) 1% -1% 16.2 (22.4) Dividends Retained Earnings (22.2) 0% -1% (22.4) Interest & Tax Rate Parameters Marketable Sec. 0.50% Long Term Invest. 7.00% NP - Bank 4.00% Long Term Debt 6.90% Tax Rate 42.00% Sales Cost of Goods Sold(COGS) Gross Profit Operating Expense Research & Dev. & Non Recu Depreciation Expense EBIT Less (Expenses) Income Interest (Expense) Interest Income Herman Miller Balance Sheet (000's) ASSETS Cash & Mkt Securties (plug) Accounts Receivable Inventory Prepaids Other Current Assets Step 1: Input Parameter Estimates Parameters & Ratios Days Sales Outstanding 39.6 Days in Inventory 22.9 Days in Accounts Payable 39.9 Planned Capital Expend. - FYE CS % of 5/31/2014 Tot Assets 101.5 10% 204.3 21% 78.4 8% 11.1 1% 56.5 6% Proforma 204.2 78.5 11.1 56.5 Total Current Assets 451.8 46% 350.3 Property, Plant, & Equip Notes Receivables 195.2 313.3 20% 32% 195.2 313.3 Other Assets Total Assets 30.6 990.9 3% 100% 30.6 889.4 LIABILITIES Notes Payable - Bank (Plug) Accounts Payable Accruals Current Maturities - LTD Other Current Liabilities Total Current Liabilities Other Liabilities Long Term Debt (LTD) Total Liabilities Common Stock Other Retained Earnings Total Liabilities & Equity 136.9 169.2 50.0 356.1 62.7 200.0 618.8 11.9 237.8 122.4 990.9 0% 14% 17% 5% 0% 36% 136.8 169.2 50.0 356.0 62.7 150.0 568.7 11.9 237.8 122.2 940.6 20% 62% 1% 12% 100% Step 2: Balance Sheet Check Make sure your proforma balance sheet is balanced. Use the plugs to force A = L + E. Use the following Balance Sheet Check Total Assets 889.4 Total Liabilities & Equity Should be 0: A - (L + E) = If not adjust plug until it is. 940.6 (51.2)