In the spring of 2020, Mohammed Khalid was an analyst at an investment bank who had recently graduated from the MBA program. As an initial assignment, his supervisor had given him the task of analyzing the financial position of JBC Stores.
Khalid was interested in JBC Stores because it was one of his favorite places to shop. However, recently he had read in the business press that JBCs stock had fallen dramatically, dropping from a high of $20 per share to less than $2, despite the fact that the company was known to pay out relatively constant dividends to its shareholders.
JBC was an established retailer that had been in business for over 15 years. In recent times, management had undertaken a series of new business strategies, one of which was to expand the number of JBCs new supercenter stores, while phasing out the traditional discount stores. The supercenter stores carried a greater selection of durable goods, such as appliances and furniture. In order to entice customers to purchase these more expensive items, JBC had started offering store credit to its customers. Each individual store manager was responsible for authorizing the opening of store credit accounts and ultimately had the final say as to whether credit would be granted to a customer. Store managers were paid an annual bonus, based on net income for their respective store, and were known for being quite lenient in granting credit in order to increase net income for the year and, therefore, the size of their bonus.
Khalid wondered whether these new strategies were responsible for the decline in JBCs share price, which he had read about. To collect the financial statement information that he required to complete his assignment, he went to a business reference library and obtained JBCs balance sheets and statements of income for the fiscal years ending 2012 through 2020 (see Exhibits 1and 2).Armed with these financial statements and the information he had learned in his MBA studies, Khalid calculated the most important financial ratios.
Question 2
Prepare statements of cash flows for JBC for each year from 2012 to 2020.I ALREADY SOLVE IT AS ATTACHED DOWN ! (I SEND ALL THE FILES YOU MIGHT NEED)
Question 3
- What do the cash flow statements show?
- What does this mean for the future viability of the firm?
- How helpful is this analysis in understanding the companys stock price performance?
B C J D 2014 F 2016 E 2015 198,426 G 2017 H 2018 2012 2013 2019 2020 -990,975 149,822 156,584 179,849 187,832 167,117 179,336 51,741 A 1 Cash flows from operating activities 2 Net income 3 Adjustments: 4 Amortization of property, plant and equipment 5 Decrease (Increase) in Accounts Receivable 6 Decrease (Increase) in Inventory 7 Decrease (Increase) in Prepaids 8 Decrease (Increase) in other assets 9 Increase (decrease) in accounts payable 10 Increase (decrease) in Corporate income taxes payable 11 Increase (decrease) Deferred corporate income taxes 12 Net cash from operating activities 13 Purchase of property, plant and equipment 14 Cash flows from investing activities 15 Net cash from investing activities 16 17 Cash flows from financing activities 18 Increase (decrease) in Short-term notes payable 19 Dividends Paid 20 Change in Capital Stocks 21 Payment of financing of LTD 22 Other liabilities 23 Net cash from (used in) financing activities 24 Net increase (decrease) in cash and cash equivalents 25 Beginning balance, cash and cash equivalents 26 Ending balance, cash and cash equivalents 35,709 38,931 39,810 42,581 45,652 50,198 56,971 62,932 3,028 -109,633 -101,679 -1,012,976 -244,248 -280,550 -310,142 3,925 -110,420 -43,141 -117,521 -64,759 -182,076 -181,221 -478,668 -242,540 -1,842 -2,226 -2,591 -4,348 -992 -627 -6,027 -3,090 -11,708 -87,198 -17,584 201,240 -15,391 -40,009 -15,253 -41,714 35,904 41,637 100,388 -9,582 47,174 52,148 -52,654 2,211 91,393 36,312 64,863 61,005 85,680 67,716 77,326 -168,668 3,631 2,454 1,851 1,642 1,096 5,439 10,735 12,923 195,517 33,720 147,387 -586,772 -75,272 -159,788 -538,375 -322,279 -72,268 -36,567 -47,598 -71,523 -76,600 -123,007 -124,588 -108,322 63,521 516,764 205,407 3,360 -26,165 115,460 -395,712 -69,524 -577,863 -68,020 -72,268 -36,567 -47,598 -71,523 -76,600 -123,007 -124,588 -108,322 -68,020 0 0 -66,876 12,790 0 1,779 -52,306 70,943 107,065 178,008 -68,186 -97,848 46,302 105,095 -35,016 -91,935 613 1,096 -56,287 -83,591 -59,135 16,198 178,008 118,873 118,873 135,071 864,399 305,111 -41,191 722,783 299,297 -93,672 -98,816 -100,325 -100,340 -100,245 -54,598 -35,158 45,732 -38,215 9,929 -37,251 -14,718 456,238 -8,353 295,211 854 351 -2,472 -2,649 -2,363 679,732 156,771 357,981 573,226 501,829 21,438 4,898 75,186 -89,738 71,228 135,071 156,509 161,407 236,593 146,856 156,509 161,407 236,593 146,855 218,084 697,201 -21,153 4,205 135,080 -9,554 805,781 159,898 218,084 377,981 A D H I J B 2012 E 2015 F 2016 G 2017 1 2013 2014 2018 2019 2020 2 Sales 4,380,7814,661,730 5,197,264 5,764,8055,975,7646,541,1797,823,7818,798,007 3,063,775 3,263,250 3,647,1783,880,666 4,001,789 4,419,6515,340,489 6,088,857 1,317,006 1,398,480 1,550,0861,884,1381,973,975 2,121,529 2,483,292 2,709,150 8,382,338 6,185,305 2,197,033 3 Cost of goods sold 4 Gross profit 5 Operating expenses 6 Amortization of property, plant and equipment 7 Selling, general, and administrative expenses 8 Interest expense 9 10 Operating income 11 Other income 12 Net income (loss) before taxes 13 Provision for income taxes 14 Net Income (loss) after taxes 15 Dividends 16 Retained earnings for the year 17 Opening retained earnings 18 Closing retained earnings 19 Other Data 20 Earnings per share 21 22 23 NI 24 DEP 25 35,709 38,931 39,810 42,581 45,652 50,198 56,971 62,932 63,521 982,166 1,045,211 1,130,806 1,412,680 1,519,427 1,723,932 2,052,0422,501,000 3,533,387 45,894 56,069 65,505 73,582 92,219 80,540 102,647 114,160 179,261 1,063,769 1,140,2121,236,120 1,528,843 1,657,298 1,854,670 2,211,6602,678,092 3,776,169 253,237 258,268 313,966 355.296 316,677 266,858 271,632 31,058 -1,579,136 14,808 22,757 27,247 23,479 26,825 26,027 29,914 36,293 30,668 268,045 281,025 341,213 378,774 343,501 292,886 301,546 67,350 -1,548,468 118,223 124,440 161,364 180,348 155,669 125,769 122,210 15,609 -557,493 149,822 156,584 179,849 198,426 187,832 167,117 179,336 51,741 -990,975 66,876 68,186 97,848 93,672 98,816 100,325 100,340 100,245 21,153 82,946 88,399 82,001 104,754 89,016 66,791 78,996 -48,504 -1,012,127 646,528 729,474 817,873 899,874 1,004,628 1,093,644 1,160,436 1,239,432 1,190,928 729,474 817,873 899,874 1,004,628 1,093,644 1,160,436 1,239,432 1,190,928 178,801 $1.75 $1.90 $2.09 $2.01 $1.85 $1.58 $1.74 $0.53 ($8.92) 156,584 38,931 . B C D E F G 2017 J 2019 K 2020 1 2011 2012 2014 2015 2016 2018 2013 2,159,867 1,750,724 1,979,167 2,423,227 3,354,450 3,833,003 4,483,403 5,271,373 5,671,409 5,136,439 0 0 0 0 280,550 173,580 454,131 316,454 264,974 581,428 358,091 301,286 659,376 458,479 366,149 824,628 864,399 1,169,510 1,128,319 1,851,102 2,150,399 2,847,600 448,897 496,070 548,218 495,564 497,775 613,235 427,154 512,834 580,550 657,876 489,208 93,496 1,740,449 2,178,414 2,257,087 3,004,542 3,137,382 3,554,331 11 Total assets 12 Liabilities and shareholders' equity 13 Current liabilities 14 Short-term notes payable 15 Accounts payable 16 Corporate income taxes payable 17 18 Long term liabilities 19 Long-term debt 20 Deferred corporate income taxes 21 Other liabilities 22 Shareholders' equity 23 Share capital 24 Retained earnings 25 26 Total liabilities and equity 27 28 29 30 31 332,220 29,753 22,705 332,220 33,384 24,485 297,204 35,837 25,097 205,269 37,688 26,193 168,018 39,330 27,047 153,301 40,426 27,399 609,538 45,865 24,926 601,185 56,601 22,278 896,396 1,031,477 69,524 0 19,914 10,361 265,387 278,177 646,528 729,474 911,915 1,007,651 1,750,724 1,979,167 324,479 817,873 1,142,352 2,159,867 429,575 374,977 339,819 385,551 347,336 357,265 361,470 899,874 1,004,628 1,093,644 1,160,436 1,239,432 1,190,928 178,801 1,329,448 1,379,605 1,433,463 1,545,986 1,586,768 1,548,193 540,271 2,423,227 3,354,450 3,833,003 4,483,403 5,271,373 5,671,409 5,136,439 0 0 0 0 0 0 0 0 0 0 32 72,268 -72,268 36,567 -36,567 47,598 -47,598 71,523 -71,523 76,600 -76,600 123,007 -123,007 124,588 -124,588 108,322 -108,322 68,020 -68,020 33 B C J D 2014 F 2016 E 2015 198,426 G 2017 H 2018 2012 2013 2019 2020 -990,975 149,822 156,584 179,849 187,832 167,117 179,336 51,741 A 1 Cash flows from operating activities 2 Net income 3 Adjustments: 4 Amortization of property, plant and equipment 5 Decrease (Increase) in Accounts Receivable 6 Decrease (Increase) in Inventory 7 Decrease (Increase) in Prepaids 8 Decrease (Increase) in other assets 9 Increase (decrease) in accounts payable 10 Increase (decrease) in Corporate income taxes payable 11 Increase (decrease) Deferred corporate income taxes 12 Net cash from operating activities 13 Purchase of property, plant and equipment 14 Cash flows from investing activities 15 Net cash from investing activities 16 17 Cash flows from financing activities 18 Increase (decrease) in Short-term notes payable 19 Dividends Paid 20 Change in Capital Stocks 21 Payment of financing of LTD 22 Other liabilities 23 Net cash from (used in) financing activities 24 Net increase (decrease) in cash and cash equivalents 25 Beginning balance, cash and cash equivalents 26 Ending balance, cash and cash equivalents 35,709 38,931 39,810 42,581 45,652 50,198 56,971 62,932 3,028 -109,633 -101,679 -1,012,976 -244,248 -280,550 -310,142 3,925 -110,420 -43,141 -117,521 -64,759 -182,076 -181,221 -478,668 -242,540 -1,842 -2,226 -2,591 -4,348 -992 -627 -6,027 -3,090 -11,708 -87,198 -17,584 201,240 -15,391 -40,009 -15,253 -41,714 35,904 41,637 100,388 -9,582 47,174 52,148 -52,654 2,211 91,393 36,312 64,863 61,005 85,680 67,716 77,326 -168,668 3,631 2,454 1,851 1,642 1,096 5,439 10,735 12,923 195,517 33,720 147,387 -586,772 -75,272 -159,788 -538,375 -322,279 -72,268 -36,567 -47,598 -71,523 -76,600 -123,007 -124,588 -108,322 63,521 516,764 205,407 3,360 -26,165 115,460 -395,712 -69,524 -577,863 -68,020 -72,268 -36,567 -47,598 -71,523 -76,600 -123,007 -124,588 -108,322 -68,020 0 0 -66,876 12,790 0 1,779 -52,306 70,943 107,065 178,008 -68,186 -97,848 46,302 105,095 -35,016 -91,935 613 1,096 -56,287 -83,591 -59,135 16,198 178,008 118,873 118,873 135,071 864,399 305,111 -41,191 722,783 299,297 -93,672 -98,816 -100,325 -100,340 -100,245 -54,598 -35,158 45,732 -38,215 9,929 -37,251 -14,718 456,238 -8,353 295,211 854 351 -2,472 -2,649 -2,363 679,732 156,771 357,981 573,226 501,829 21,438 4,898 75,186 -89,738 71,228 135,071 156,509 161,407 236,593 146,856 156,509 161,407 236,593 146,855 218,084 697,201 -21,153 4,205 135,080 -9,554 805,781 159,898 218,084 377,981 A D H I J B 2012 E 2015 F 2016 G 2017 1 2013 2014 2018 2019 2020 2 Sales 4,380,7814,661,730 5,197,264 5,764,8055,975,7646,541,1797,823,7818,798,007 3,063,775 3,263,250 3,647,1783,880,666 4,001,789 4,419,6515,340,489 6,088,857 1,317,006 1,398,480 1,550,0861,884,1381,973,975 2,121,529 2,483,292 2,709,150 8,382,338 6,185,305 2,197,033 3 Cost of goods sold 4 Gross profit 5 Operating expenses 6 Amortization of property, plant and equipment 7 Selling, general, and administrative expenses 8 Interest expense 9 10 Operating income 11 Other income 12 Net income (loss) before taxes 13 Provision for income taxes 14 Net Income (loss) after taxes 15 Dividends 16 Retained earnings for the year 17 Opening retained earnings 18 Closing retained earnings 19 Other Data 20 Earnings per share 21 22 23 NI 24 DEP 25 35,709 38,931 39,810 42,581 45,652 50,198 56,971 62,932 63,521 982,166 1,045,211 1,130,806 1,412,680 1,519,427 1,723,932 2,052,0422,501,000 3,533,387 45,894 56,069 65,505 73,582 92,219 80,540 102,647 114,160 179,261 1,063,769 1,140,2121,236,120 1,528,843 1,657,298 1,854,670 2,211,6602,678,092 3,776,169 253,237 258,268 313,966 355.296 316,677 266,858 271,632 31,058 -1,579,136 14,808 22,757 27,247 23,479 26,825 26,027 29,914 36,293 30,668 268,045 281,025 341,213 378,774 343,501 292,886 301,546 67,350 -1,548,468 118,223 124,440 161,364 180,348 155,669 125,769 122,210 15,609 -557,493 149,822 156,584 179,849 198,426 187,832 167,117 179,336 51,741 -990,975 66,876 68,186 97,848 93,672 98,816 100,325 100,340 100,245 21,153 82,946 88,399 82,001 104,754 89,016 66,791 78,996 -48,504 -1,012,127 646,528 729,474 817,873 899,874 1,004,628 1,093,644 1,160,436 1,239,432 1,190,928 729,474 817,873 899,874 1,004,628 1,093,644 1,160,436 1,239,432 1,190,928 178,801 $1.75 $1.90 $2.09 $2.01 $1.85 $1.58 $1.74 $0.53 ($8.92) 156,584 38,931 . B C D E F G 2017 J 2019 K 2020 1 2011 2012 2014 2015 2016 2018 2013 2,159,867 1,750,724 1,979,167 2,423,227 3,354,450 3,833,003 4,483,403 5,271,373 5,671,409 5,136,439 0 0 0 0 280,550 173,580 454,131 316,454 264,974 581,428 358,091 301,286 659,376 458,479 366,149 824,628 864,399 1,169,510 1,128,319 1,851,102 2,150,399 2,847,600 448,897 496,070 548,218 495,564 497,775 613,235 427,154 512,834 580,550 657,876 489,208 93,496 1,740,449 2,178,414 2,257,087 3,004,542 3,137,382 3,554,331 11 Total assets 12 Liabilities and shareholders' equity 13 Current liabilities 14 Short-term notes payable 15 Accounts payable 16 Corporate income taxes payable 17 18 Long term liabilities 19 Long-term debt 20 Deferred corporate income taxes 21 Other liabilities 22 Shareholders' equity 23 Share capital 24 Retained earnings 25 26 Total liabilities and equity 27 28 29 30 31 332,220 29,753 22,705 332,220 33,384 24,485 297,204 35,837 25,097 205,269 37,688 26,193 168,018 39,330 27,047 153,301 40,426 27,399 609,538 45,865 24,926 601,185 56,601 22,278 896,396 1,031,477 69,524 0 19,914 10,361 265,387 278,177 646,528 729,474 911,915 1,007,651 1,750,724 1,979,167 324,479 817,873 1,142,352 2,159,867 429,575 374,977 339,819 385,551 347,336 357,265 361,470 899,874 1,004,628 1,093,644 1,160,436 1,239,432 1,190,928 178,801 1,329,448 1,379,605 1,433,463 1,545,986 1,586,768 1,548,193 540,271 2,423,227 3,354,450 3,833,003 4,483,403 5,271,373 5,671,409 5,136,439 0 0 0 0 0 0 0 0 0 0 32 72,268 -72,268 36,567 -36,567 47,598 -47,598 71,523 -71,523 76,600 -76,600 123,007 -123,007 124,588 -124,588 108,322 -108,322 68,020 -68,020 33
