Question #2: Evaluating Financial Performance a. Use the spreadsheet to calculate as many of the company's profitability, turnover-control, and leverage and liquidity ratios as you can for these years (See Table 2.4 on the next page. You do not have to calculate these ratios: price to earnings, times burden covered, debt to assets (market value), and debt to equity (market value)). b. What do these ratios suggest about the company's performance over this period? BALANCE SHEET ($ millions) 2006 2007 2008 2009 2010 ASSETS Cash & Short-Term Investments Net Receivables Inventories Prepaid Expenses Other Current Assets Total Current Assets 263.001 19.276 416.603 0.000 30.732 729.612 179.694 17.018 448.586 0.000 35.531 680.829 99.367 24.872 492.423 27.179 27.154 670.995 104.533 40.662 440.099 26.603 19.718 631.615 186.018 16.745 431.492 0.000 74.075 708.330 Gross Plant, Property & Equipment Accumulated Depreciation Net Plant, Property & Equipment Intangibles Other Assets TOTAL ASSETS 611.957 342.371 269.586 63.073 61.003 1,123.274 669.340 379.700 289.640 61.765 64.718 1,096.952 865.084 454.917 410.167 75.609 99.696 1,256.467 885.981 498.509 387.472 65.268 103.375 1,187.730 866.005 521.259 344.746 59.414 119.616 1,232.106 LIABILITIES Long Term Debt Due In One Year Accounts Payable Taxes Payable Accrued Expenses Other Current Liabilities Total Current Liabilities 0.000 125.064 21.086 72.531 19.404 238.085 0.000 111.213 19.676 75.458 19.791 226.138 0.000 146.713 5.590 70.222 54.730 277.255 0.000 108.800 0.019 66.542 44.862 220.223 0.000 83.052 23.936 0.000 117.047 224.035 Long Term Debt Deferred Taxes Other Liabilities TOTAL LIABILITIES 207.750 24.400 25.506 495.741 72.967 12.200 31.875 343.180 92.399 4.000 66.876 440.530 62.916 2.700 59.743 345.582 43.491 0.000 62.236 329.762 EQUITY Common Stock Capital Surplus Retained Earnings Less: Treasury Stock TOTAL EQUITY TOTAL LIABILITIES & EQUITY 0.671 255.214 641.558 269.910 627.533 1,123.274 0.691 286.120 775.857 308.896 753.772 1,096.952 0.696 305.209 923.713 413.681 815.937 1,256.467 0.700 315.404 938.580 412.536 842.148 1,187.730 0.705 327.742 986.523 412.626 902.344 1,232.106 Common Shares Outstanding 53.069 53.919 51.479 51.918 52.288 INCOME STATEMENT ($ millions, except per share) 2006 2007 2008 2009 2010 Sales Cost of Goods Sold Gross Profit Selling, General, & Administrative Exp. Operating Income Before Deprec. Depreciation, Depletion, & Amortization Operating Profit 1,724.898 965.889 759.009 531.839 227.170 61.874 165.296 1,882.064 1,004.972 877.092 591.767 285.325 61.387 223.938 2,112.558 1,062.205 1,050.353 741.405 308.948 80.296 228.652 1,972.418 1,031.241 941.177 757.073 184.104 90.665 93.439 1,909.575 1,025.759 883.816 732.722 151.094 86.090 65.004 Interest Expense Non-Operating Income/Expense Special Items Pretax Income Total Income Taxes Income Before Extraordinary Items & Discontinued Operations Savings Due to Common Stock Equiv. Adjusted Net Income 5.888 3.280 0.000 162.688 58.785 9.216 9.786 0.000 224.508 75.933 5.046 5.987 0.000 229.593 82.552 4.300 2.592 (2.968) 88.763 29.919 0.332 0.000 3.200 67.872 22.364 103.903 0.000 103.903 148.575 0.000 148.575 147.041 0.000 147.041 58.844 0.000 58.844 45.508 (0.834) 44.674 EPS Basic from Operations EPS Diluted from Operations 2.010 1.950 2.710 2.620 2.760 2.730 1.180 1.170 0.820 0.820 Dividends Per Share 0.000 0.200 0.230 0.280 0.280 Com Shares for Basic EPS Com Shares for Diluted EPS 53.753 55.365 53.111 54.749 53.258 53.890 51.645 51.944 52.280 52.280
