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Problem 12 92A Preparation of Ratios The financial statements for Burch Industries follow: Burch Industries Consolidated Income Statements (in thousands, except per share data) Year ended December 31, 2019 2018 2017 Revenues $3,930,984 $3,405,211 $3,003,610 Costs and expenses: Cost of goods sold $2,386,993 $2,089,089 $1,850,530 Selling and administrative 922,261 761,498 664,061 Interest 25,739 30,665 27,316 Other expenses (income) 1,475 2,141 (43) Total costs and expenses $3,336,468 $2,883,393 $2,541,864 Income before income taxes $594,516 $521,818 $461,746 Income taxes 229,500 192,600 174,700 Net income $365,016 $329,218 $287,046 Calculator Print Item Burch Industries Consolidated Balance Sheets (in thousands) December 31, 2019 2018 ASSETS Current assets: $260,050 Cash and equivalents Accounts receivable, less allowance for doubtful accounts of $19,447 and $20,046 $291,284 667,547 596,018 Inventories Deferred income taxes Prepaid expenses 592,986 26,378 42,452 471,202 27,511 32,977 Total current assets $1,387,758 Property, plant, and equipment Less accumulated depreciation $1,620,647 $571,032 (193,037) Net property, plant, and equipment $497,795 (151,758) $346,037 110,363 28,703 $1,872,861 $377,995 157,894 30,927 Goodwill Other assets Total assets $2,187,463 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Check My Work Calculator Print item $161 2,716 Stockholders' equity: Common stock at stated value: Class A convertible-26,691 and 26,919 shares outstanding Class B-49,161 and 48,591 shares outstanding Capital in excess of stated value Treasury stock (common at cost) Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 93,799 $159 2,720 108,451 (7,790) 1,542,486 $1,646,026 $2,187,463 (6,860) 1,234,333 $1,324,149 $1,872,861 Use the following data to respond to the requirements below. 2019 2018 2017 Average number of common shares outstanding Accounts receivable, net 77,063 $667,547 592,986 Inventories Total assets 2,187,463 76,602 $596,018 471,202 1,872,861 1,324,149 581,134 150,000 76,067 $521,588 586,594 1,708,430 1,032,789 288,320 137,000 Stockholders' equity Stock repurchases Cash flows from operating activities 1,646,026 930,111 190,000 Commen sonde natt 57 707 4510 20 KS Check My Work Average number of common shares outstanding Accounts receivable, net Inventories Total assets Stockholders' equity Stock repurchases Cash flows from operating activities Common dividends paid Dividends per common share Market price per share: 77,063 $667,547 592,986 2,187,463 1,646,026 930,111 190,000 57,797 76,602 $596,018 471,202 1,872,861 1,324,149 581,134 150,000 45,195 76,067 $521,588 586,594 1,708,430 1,032,789 288,320 137,000 39,555 0.52 0.75 0.59 High 90.25 77.45 Low 7.45 55.00 Close 35.12 54.50 26.00 43.22 1.33 71.65 Industry Averages Year ended December 31, 2019 2018 25.98% 23.04% 0.04 Return on equity profit margin 0.05 Asset turnover no Check My Work Year ended December 31, Industry Averages 2019 2018 Return on equity profit margin 25.98% 0.05 2.24 Asset turnover 23.04% 0.04 2.56 2.25 Leverage 2.32 Required: 1. Prepare all the financial ratios for Burch for 2019 and 2018. In your computations, round the tax rate to three decimal places decimal places. : 46 2019 2018 Short-Term Liquidity Ratios: Current ratio 3.58 7 3.30 Quick ratio 2.12 2.04 Cash ratio 0.64 0.62 Operating cash flow ratio 0.42 0.36 Debt Management Ratios: Times interest earned ratio (Accrual Basis) Check My Work Required: would be ). Round your finalowers to w 1. Prepare all the financial ration for Burch for 2019 and 2018. In your computations, round the tax rate to three dedmal places de: A decimal places. 2019 2018 Short-Term Liquidity Ratios: Current ratio Quick ratio Cash ratio Operating cash flow ratio Debt Management Ratios: Times interest earned ratio (Accrual Basis) Long-term debt to equity ratio Debt to equity ratio Long-term debt to total assets ratio 0.29 Debt to total assets ratio Asset Efficiency Ratios: Accounts receivables turnover ratio 6.2 Submit Assign Save and Exit Check My Work All work saved. Debt to total assets ratio 0.25 0.29 Asset Efficiency Ratios: Accounts receivables turnover ratio Inventory turnover ratio 6.22 4.49 1.94 6.09 3.95 1.90 Asset turnover ratio Profitability Ratios: Gross profit percentage 39.28 % Operating margin percentage 15.82 x % Net profit margin percentage 9.29 17.98 24.58 38.65 16.29 X 9.67 18.39 X 27.94 % % % Return on assets ratio % % % % % Return on equity ratio Stockholder Ratios: 4.74 $ 4.30 Earnings per share (EPS) 27.94 % Return on common equity 24.58 0.87 % % 0.82 96 Dividend yield ratio 15.83 % 13.73 % Dividend payout ratio 270.65 190.25 % Total payout ratio Check My Work SECRET KERS Earnings per share (EPS) 4.74 27.94 0.82 % 13.73 Return on common equity 24.58 % Dividend yield ratio 0.87 % Dividend payout ratio 15.83 % Total payout ratio 270.65 % Stock repurchase payout 254.81 % 2. Conceptual Connection: Is Burch's short-term liquidity adequate? Yes 190.25 176.52 % % 3. Conceptual Connection: Is Burch using its assets efficiently? Yes, because receivables and inventory turnovers appear strong. 4. Conceptual Connection: Determine whether Burch is profitable. Yes 5. Conceptual Connection: Discuss whether long-term creditors should regard Burch as a high-risk or a low-risk firm. Low-risk 6. Perform a Dupont analysis for 2018 and 2019. Round your intermediate calculations and final answers to two decimal place Dupont Analysis Check My Work All work saved. Problem 12 92A Preparation of Ratios The financial statements for Burch Industries follow: Burch Industries Consolidated Income Statements (in thousands, except per share data) Year ended December 31, 2019 2018 2017 Revenues $3,930,984 $3,405,211 $3,003,610 Costs and expenses: Cost of goods sold $2,386,993 $2,089,089 $1,850,530 Selling and administrative 922,261 761,498 664,061 Interest 25,739 30,665 27,316 Other expenses (income) 1,475 2,141 (43) Total costs and expenses $3,336,468 $2,883,393 $2,541,864 Income before income taxes $594,516 $521,818 $461,746 Income taxes 229,500 192,600 174,700 Net income $365,016 $329,218 $287,046 Calculator Print Item Burch Industries Consolidated Balance Sheets (in thousands) December 31, 2019 2018 ASSETS Current assets: $260,050 Cash and equivalents Accounts receivable, less allowance for doubtful accounts of $19,447 and $20,046 $291,284 667,547 596,018 Inventories Deferred income taxes Prepaid expenses 592,986 26,378 42,452 471,202 27,511 32,977 Total current assets $1,387,758 Property, plant, and equipment Less accumulated depreciation $1,620,647 $571,032 (193,037) Net property, plant, and equipment $497,795 (151,758) $346,037 110,363 28,703 $1,872,861 $377,995 157,894 30,927 Goodwill Other assets Total assets $2,187,463 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Check My Work LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: $3,652 Current portion of long-term debt Notes payable Accounts payable $52,985 108,165 135,701 138,563 17,150 Accrued liabilities 105,696 134,729 134,089 42,422 $420,588 77,022 Income taxes payable Total current liabilities $452,564 15,033 Long-term debt Noncurrent deferred income taxes 22 29,965 27,079 43,575 23,728 Other noncurrent liabilities 0 Commitments and contingencies Redeemable preferred stock 300 $541,437 300 $548,712 Total liabilities $159 Stockholders' equity: Common stock at stated value: Class A convertible-26,691 and 26,919 shares outstanding Class B-49,161 and 48,591 shares outstanding Capital in excess of stated value 2,720 $161 2,716 93,799 108,451 Check My Work Calculator Print item $161 2,716 Stockholders' equity: Common stock at stated value: Class A convertible-26,691 and 26,919 shares outstanding Class B-49,161 and 48,591 shares outstanding Capital in excess of stated value Treasury stock (common at cost) Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 93,799 $159 2,720 108,451 (7,790) 1,542,486 $1,646,026 $2,187,463 (6,860) 1,234,333 $1,324,149 $1,872,861 Use the following data to respond to the requirements below. 2019 2018 2017 Average number of common shares outstanding Accounts receivable, net 77,063 $667,547 592,986 Inventories Total assets 2,187,463 76,602 $596,018 471,202 1,872,861 1,324,149 581,134 150,000 76,067 $521,588 586,594 1,708,430 1,032,789 288,320 137,000 Stockholders' equity Stock repurchases Cash flows from operating activities 1,646,026 930,111 190,000 Commen sonde natt 57 707 4510 20 KS Check My Work Average number of common shares outstanding Accounts receivable, net Inventories Total assets Stockholders' equity Stock repurchases Cash flows from operating activities Common dividends paid Dividends per common share Market price per share: 77,063 $667,547 592,986 2,187,463 1,646,026 930,111 190,000 57,797 76,602 $596,018 471,202 1,872,861 1,324,149 581,134 150,000 45,195 76,067 $521,588 586,594 1,708,430 1,032,789 288,320 137,000 39,555 0.52 0.75 0.59 High 90.25 77.45 Low 7.45 55.00 Close 35.12 54.50 26.00 43.22 1.33 71.65 Industry Averages Year ended December 31, 2019 2018 25.98% 23.04% 0.04 Return on equity profit margin 0.05 Asset turnover no Check My Work Year ended December 31, Industry Averages 2019 2018 Return on equity profit margin 25.98% 0.05 2.24 Asset turnover 23.04% 0.04 2.56 2.25 Leverage 2.32 Required: 1. Prepare all the financial ratios for Burch for 2019 and 2018. In your computations, round the tax rate to three decimal places decimal places. : 46 2019 2018 Short-Term Liquidity Ratios: Current ratio 3.58 7 3.30 Quick ratio 2.12 2.04 Cash ratio 0.64 0.62 Operating cash flow ratio 0.42 0.36 Debt Management Ratios: Times interest earned ratio (Accrual Basis) Check My Work 1. Prepare all the financial ratios for Burch for 2019 and 2018. In your computations, round the tax rate to three decimal places (le: decimal places. 2019 2018 Short-Term Liquidity Ratios: Current ratio 3.30 Quick ratio 2.12 2.04 Cash ratio 0.62 Operating cash flow ratio 0.42 0.36 Debt Management Ratios: 241.6 18.09 Times interest earned ratio (Accrual Basis) 0.04 0.06 Long-term debt to equity ratio 0.33 0.41 Debt to equity ratio 0.03 0.04 Long-term debt to total assets ratio 0.25 0.29 Debt to total assets ratio Asset Efficiency Ratios: 6.09 Accounts receivables turnover ratio 3.95 Inventory turnover ratio Check My Work Asset Efficiency Ratios: Accounts receivables turnover ratio 6.22 6.09 Inventory turnover ratio 4.49 3.95 Asset turnover ratio 1.94 1.90 Profitability Ratios: Gross profit percentage 39.28 % 38.65 % Operating margin percentage 15.82 % 16.29 X Net profit margin percentage 9.29 9.67 Return on assets ratio 17.98 X % 18.39 X % Return on equity ratio 24.58 % 27.94 % Stockholder Ratios: 4.74 Earnings per share (EPS) 4.30 27.94 24.58 Return on common equity 0.87 Dividend yield ratio 0.82 13.73 15.83 Dividend payout ratio 0.65 190.25 6 Total payout ratio Check My Work Assignment Score: 87.69% Stockholder Ratios: Earnings per share (EPS) 4.30 Return on common equity 27.94 Dividend yield ratio 0.87 0.82 % Dividend payout ratio 13.73 Total payout ratio 15.83 270.65 254.81 % 190.25 Stock repurchase payout % 176.52 2. Conceptual Connection: Is Burch's short-term liquidity adequate? Yes 3. Conceptual Connection: Is Burch using its assets efficiently? Yes, because receivables and inventory turnovers appear strong. 4. Conceptual Connection: Determine whether Burch is profitable. Yes 5. Conceptual Connection: Discuss whether long-term creditors should regard Burch as a high-risk or a low-risk firm. Low-risk 6. Perform a Dupont analysis for 2018 and 2019. Round your intermediate calculations and final answers to two decimal places. Check My Work Assignment Score: 87.69% U U TULULL LEJU... ISU Canvas Dividend payout ratio 15.83 % 13.73 % Total payout ratio 270.65 % Stock repurchase payout 254.81 % 2. Conceptual Connection: Is Burch's short-term liquidity adequate? Yes 190.25 176.52 % % 3. Conceptual Connection: Is Burch using its assets efficiently? Yes, because receivables and inventory turnovers appear strong. 4. Conceptual Connection: Determine whether Burch is profitable. Yes 5. Conceptual Connection: Discuss whether long-term creditors should regard Burch as a high-risk or a low-risk firm. Low-risk 6. Perform a Dupont analysis for 2018 and 2019. Round your intermediate calculations and final answers to two decimal plac Dupont Analysis 23.97 X % 2019 2018 25.91 X % Check My Work
