please ONLY anwser question 6
Margaret O'Flaherty, a portfolio manager for MCF Investments, is considering investing in Alpine Chemical 7% bonds, which mature in 10 years. She asks you to analyse the company to determine the riskiness of the bonds. Alpine Chemical Company Financial Statements Years Ended December 31, (S in millions) 2012 2013 2014 2015 2016 2017 Assets Cash $ 190 $ 55 $ O $ 157 $ 249 $ 0 Accounts receivable 1,637 2,087 1,394 2.143 3,493 3,451 Inventories 2,021 945 1,258 1,293 1,322 1,643 Other current assets 17 55 393 33171 Current assets 3,865 3,114 2,707 3,986 5,097 5,265 Gross fixed assets 4,650 5,038 5,619 5,757 6,1817,187 27 Less: Accumulated depreciation 2,177 2,473 2,543 2.495 2,841 2,778 3,138 2,619 3.465 2,716 3,893 3,294 Net fixed assets Total assets Liabilities and net worth $ 6,338 $ 5,609 S 5,485 $ 6,605 $ 7,813 $ 8,559 $ Notes payable Accounts payable 525 673 $ 750 638 SO $ 1,300 $ 1,750 $ 1,900 681 338 743 978 172 Accrued liabilities Current liabilities Long-term debt 303 1,501 1,985 1,560 1,044 _359359483761 1,040 1,997 2,976 3,639 1,401 1,457 1,542 1,491 352 336 3,838 Deferred tax credits Total liabilities Common stock Capital surplus 347 2,951 50 100 363 2,804 100 345 4,863 100 0 3,790 100 0 354 5,484 100 0 50 100 Retained earnings 2,350 2,500 2,508 2,658 2,581 2,681 2,715 2,815 2.850 2,950 2.975 3,075 Net worth Total liabilities and net worth $ 6,338 $ 5,609 $ 5,485 $ 6,605 $ 7,813 $ 8,559 Income statement Net sales Cost of goods sold Gross profit Operating expense Operating income Interest expense Depreciation expense Profit before tax Income taxes Net income 2012 $ 14,100 10,200 3,900 2.065 1,835 624 2013 $15,508 11,220 4,288 2.203 2,085 465 477 1,143 115 $ 1,028 2014 $13,875 9,366 4,509 2,665 1,844 275 479 1,090 2015 $14,750 10,059 4,691 2,685 2,006 319 478 1,209 145 $ 1,064 2016 $19,133 13,400 5,733 3,472 2,261 376 495 1,390 192 $ 1,198 2017 $19,460 13,117 6,343 _3,885 2,458 318 511 1,629 275 475 1,085 193 892 265 150 $ $ 825 $ 1,479 4. Are the opero fits (EBITD) of Alpine keeping pace with sales? Comment on the growth crez e/decrease sa es and opera ng p Ofits in 2017 in respect to the pricars. Show" w rkings in uding p rcentages (worki is to be tabul 5. Cor pute n un das receivah out and receiyoles for eac year ... the schedul. Use mounts receivab es of Alpine or amniompar ug s o In 2011 e to the ease years). - sino year-end o comment on the wth and accounts 6. Show the cash flow from operating activities of Alpine Chemical Company in 2017 (for this part of the requirement, assume all net sales are credit sales; accrued liabilities include operating expense, interest expense and income taxes, and no prepaid expenses). Taking into account your computations and comments in parts (iv), (v) and (vi), comment on the overall liquidity and cash flow position of Alpine Chemical Company in 2017. 7. Identify the accounts that most likely would require further disclosure in the notes to the financial statements in an amma mation would have to be locul inose mpany before the statements can be i.uued as part of the report for presentation to its stockholders, and that may assist prospective investors in decision-making. TABLE 1 Alpine Chemical Company. 2012 2013 2014 4.95.3.464.96 2015 2016 4.794.70. 2017 ? EBIT/Interest expense. Long-term debt/Total 44% 28% 34% 34% 34% capitalization Funds from operations/Total debt 54% 13% 84% 13% 93% 13% 56% 14% 51% 12% Operating income/Sales TABLE 2 Industry Data Three-Year Medians (2015-2017) by Credit-Rating Category EBIT/Interest expense Long-term debt/Total capitalization Funds from operations/Total debt: Operating income/Sales AaaAaA Bbb Bb. B 11.0 9.5. 4.5. 3.0, 2.0, 1.0 13.0 16.5. 29.5. 39.0 45.5. 63.5. 83.0 74.0. 45.5. 31.5. 18.5. 8.0. 21.5. 16.0 15.0 12.0 11.0. 9.0 please
