Name: Section:

#:

Red Company Chapter 3 - Homework Exercise 3-1 Net Profit Margin % (Profitability)

1. Numerator line item: Amt.

2. Denominator line item: Amt.

2011 Net Profit Margin % %

2010 Net Profit Margin % 5.52%

The Net Profit Margin % is a(n): (click the drop-down button and select from the list)

Which year had a better Net Profit Margin % ? (click the drop-down button and select from the list)

Exercise 3-2 Total Assets Turnover Ratio (Efficiency)

1. Numerator line item: Amt.

2. Denominator line item:

End Yr

	Amt: Beg Yr

2011 Total Assets Turnover Ratio

2010 Total Assets Turnover Ratio 1.92 times

times

The Total Assets Turnover Ratio is a(n): (click the drop-down button and select from the list)

Which year had a better Total Assets Turnover Ratio ? (click the drop-down button and select from the list)

Exercise 3-3 Assets-to-Equity Ratio (Leverage)

1. Numerator line item:

End Yr

	Amt: Beg Yr

2. Denominator line item:

End Yr

	Amt: Beg Yr

2011 Assets-to-Equity Ratio

2010 Assets-to-Equity Ratio 2.98 to 1

to 1

The Assets-to-Equity Ratio is a(n): (click the drop-down button and select from the list)

Which year had more financial leverage? (click the drop-down button and select from the list)

Name: Section:

#:

Red Company Chapter 3 - Homework Exercise 3-4 Return on Equity %

1. Numerator line item: Amt.

2. Denominator line item:

End Yr

	Amt: Beg Yr

2011 Return on Equity %

%

2010 Return on Equity % 31.55%

The Return on Equity % is a(n): (click the drop-down button and select from the list)

Which year had a better Return on Equity % ? (click the drop-down button and select from the list)

Exercise 3-5 Return on Assets %

1. Numerator line item: Amt.

2. Denominator line item:

End Yr

	Amt: Beg Yr

2011 Return on Assets %

%

2010 Return on Assets % 10.61%

The Return on Assets % is a(n): (click the drop-down button and select from the list)

Which year had a better Return on Assets % ? (click the drop-down button and select from the list)

Exercise 3-6 Toro's DuPont Analysis for 2011 compared to 2010

CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars and shares in thousands, except per share data) Fiscal years ended October 31 2011 2010 2009

Net sales $1,883,953 $1,690,378 $1,523,447

Cost of sales Gross profit Selling, general, and administrative expense Operating earnings	1,247,306	1,113,987	1,012,472
	636,647	576,391	510,975
	452,160	425,125	395,778
	184,487	151,266	115,197
Interest expense	(16,970)	(17,113)	(17,578)
Other income (expense), net	7,309	7,115	(1,831)
Earnings before income taxes	174,826	141,268	95,788
Provision for income taxes	57,168	48,031	32,951
Net earnings	$ 117,658 $	93,237 $	62,837
Basic net earnings per share of common stock	$ 3.76 $	2.83 $	1.76
Diluted net earnings per share of common stock	$ 3.70 $	2.79 $	1.73
Weighted-average number of shares of common stock outstanding Basic	31,267	32,982	35,788
Weighted-average number of shares of common stock outstanding Diluted	31,797	33,437	36,240

The financial statements should be read in conjunction with the Notes to Consolidated Financial Statements.

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CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data) October 31	2011 2010
ASSETS
Cash and cash equivalents	$ 80,886 $177,366
Receivables, net:
Customers (net of $1,964 and $3,828 as of October 31, 2011 and 2010, respectively, for
allowance for doubtful accounts)	142,400	128,354
Other	5,740	14,547
Total receivables, net	148,140	142,901
Inventories, net	223,030	194,402
Prepaid expenses and other current assets	18,303	10,766
Deferred income taxes	62,523	59,538
Total current assets	532,882	584,973
Property, plant, and equipment, net	191,140	173,407
Other assets	19,075	17,880
Goodwill	92,020	86,400
Other intangible assets, net	35,546	22,962
Total assets	$870,663	$885,622
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt	$ 1,978	$ 1,970
Short-term debt	41	1,034
Accounts payable	118,036	125,138
Accrued liabilities:
Warranty	62,730	56,934
Advertising and marketing programs	47,161	43,095
Compensation and benefit costs	53,653	58,707
Insurance	19,417	24,858
Income taxes	2,504	7,645
Other	53,560	48,902
Total current liabilities	359,080	368,283
Long-term debt, less current portion	225,178	223,578
Deferred revenue	10,619	10,944
Deferred income taxes	1,368
Other long-term liabilities	7,651	7,007
Stockholders' equity:

Preferred stock, par value $1.00, authorized 1,000,000 voting and 850,000 non-voting shares,

none issued and outstanding

Common stock, par value $1.00, authorized 100,000,000 shares, issued and outstanding

29,603,095 shares as of October 31, 2011 and 31,394,942 shares as of October 31, 2010 29,603 31,395

Retained earnings 243,990 253,477

Accumulated other comprehensive loss (6,826) (9,062)

Total stockholders' equity	266,767 275,810
Total liabilities and stockholders' equity	$870,663 $885,622
The financial statements should be read in conjunction with the Notes to Consolidated Financial Statements.

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(Dollars in thousands) Fiscal years ended October 31	2011	2010	2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities:	$ 117,658 $	93,237 $	62,837
Provision for depreciation, amortization, and impairment losses	48,506	45,011	44,535
Noncash (income) loss from affiliates	(5,682)	(2,599)	136
Gain on disposal of property, plant, and equipment	(118)	(85)	(18)
(Increase) decrease in deferred income taxes	(2,006)	2,940	4,691
Stock-based compensation expense	8,533	6,442	4,116
Changes in operating assets and liabilities, net of effect of acquisitions:

CONSOLIDATED STATEMENTS OF CASH FLOWS

Receivables, net	(2,908)	(80)	126,721
Inventories, net	(25,667)	(9,920)	40,036
Prepaid expenses and other assets	(7,144)	3,056	(4,360)
Accounts payable, accrued liabilities, deferred revenue, and other long-term liabilities	(17,295)	55,505	(27,224)
Net cash provided by operating activities	113,877	193,507	251,470
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment, net	(57,447)	(48,699)	(37,939)
Proceeds from asset disposals	653	574	208
Distributions from (investments in) finance affiliate, net	3,034	(3,659)	(3,811)
(Increase) decrease in other assets	(360)	635	1,982
Acquisitions, net of cash acquired	(15,155)	(9,657)	(6,400)
Net cash used in investing activities	(69,275)	(60,806)	(45,960)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) increase in short-term debt, net	(776)	776	(2,326)
Repayments of long-term debt	(1,857)	(3,646)	(3,422)
Excess tax benefits from stock-based awards	2,988	3,396	7,403
Proceeds from exercise of stock options	14,467	16,680	13,726
Purchases of Toro common stock	(129,955) (135,777	) (115,283	)
Dividends paid on Toro common stock	(24,970)	(23,721)	(21,403)
Net cash used in financing activities	(140,103) (142,292	) (121,305	)
Effect of exchange rates on cash	(979)	(816)	4,209
Net (decrease) increase in cash and cash equivalents	(96,480)	(10,407)	88,414
Cash and cash equivalents as of the beginning of the fiscal year	177,366	187,773	99,359

Cash and cash equivalents as of the end of the fiscal year $ 80,886 $ 177,366 $ 187,773

Supplemental disclosures of cash flow information: Cash paid during the fiscal year for:

Interest	$ 17,120 $	17,281 $	17,724
Income taxes	60,296	28,569	29,803
Shares issued in connection with stock-based compensation plans	4,005	903	1,524
Long-term debt issued in connection with acquisitions	3,515	440	1,500

The financial statements should be read in conjunction with the Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME

(Dollars in thousands, except per share data)

Common

Stock

Retained Earnings

Accumulated

Other Comprehensive

Loss

Total Stockholders'

Equity

Comprehensive

Income

Balance as of October 31, 2008 $ 35,485 $ 337,734 $ (8,544)$ 364,675 Cash dividends paid on common stock $0.60 per

share (21,403) (21,403)

Issuance of 1,201,256 shares under stock-based

compensation plans 1,201 16,524 17,725 Contribution of stock to a deferred compensation

trust 118 118

Purchase of 3,316,536 shares of common stock (3,317) (111,967) (115,284) Excess tax benefits from stock-based awards 7,403 7,403

Retirement benefits adjustment, net of tax (2,633) (2,633)$ (2,633) Foreign currency translation adjustments 13,286 13,286 13,286 Unrealized loss on derivative instruments, net of

tax (11,512) (11,512) (11,512)

Net earnings 62,837 62,837 62,837 Total comprehensive income $ 61,978

Balance as of October 31, 2009 $ 33,369 $ 291,246 $ (9,403)$ 315,212 Cash dividends paid on common stock $0.72 per

share (23,721) (23,721)

Issuance of 703,930 shares under stock-based

compensation plans 704 22,348 23,052 Contribution of stock to a deferred compensation

trust 70 70

Purchase of 2,678,474 shares of common stock (2,678) (133,099) (135,777) Excess tax benefits from stock-based awards 3,396 3,396

Retirement benefits adjustment, net of tax 681 681 $ 681

Foreign currency translation adjustments (640) (640) (640)

Unrealized gain on derivative instruments, net of

tax 300 300 300

Net earnings 93,237 93,237 93,237 Total comprehensive income $ 93,578

Balance as of October 31, 2010 $ 31,395 $ 253,477 $ (9,062)$ 275,810

Cash dividends paid on common stock $0.80

per share (24,970) (24,970)

Issuance of 504,760 shares under stock-based

compensation plans 504 22,364 22,868 Contribution of stock to a deferred

compensation trust 132 132

Purchase of 2,296,380 shares of common stock (2,296) (127,659) (129,955) Excess tax benefits from stock-based awards 2,988 2,988

Retirement benefits adjustment, net of tax (539) (539)$ (539) Foreign currency translation adjustments 104 104 104

Unrealized gain on derivative instruments, net

of tax 2,671 2,671 2,671

Net earnings 117,658 117,658 117,658

Total comprehensive income $ 119,894

Balance as of October 31, 2011 $ 29,603 $ 243,990 $ (6,826)$ 266,767

The financial statements should be read in conjunction with the Notes to Consolidated Financial Statements.

44