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Posted on Sep 07, 2024

QUESTION ABS Company and CDS Company are all household appliance companies. They have similar products and share the same market. Their balance sheets and income

QUESTION

ABS Company and CDS Company are all household appliance companies. They have similar products and share the same market. Their balance sheets and income statements are listed below.

INSTRUCTION

1. Prepare the common size balance sheet and income statement for ABS and CDS company respectively.

2. Please figure out corresponding financial ratios for the two companies for the year 2017 and 2018 respectively.

3. What can you get from the common size balance sheets and the income statements of the two companies?

4. Please evaluate liquidity, solvency, profitability and assets utilization for the two companies respectively.

5. Please make DuPont Analysis for the two companies respectively. (Year 2017 and 2018).

6. Please describe the advantages and disadvantages of the financial position and operating results for the two companies respectively. If possible, show your opinions of the improvement of their assets structures and capital structures to help them get a better financial position.

7. According to materials you get, which company do you choose to invest in (or rather not choose any of them)? Please give your reasons.

QUESTION ABS Company and CDS Company are all household appliance companies. They have similar products and share the same market. Their balance sheets and income statements are listed below. INSTRUCTION 1. Prepare the common size balance sheet and income statement for ABS and CDS company respectively. 2. Please figure out corresponding financial ratios for the two companies for the year 2017 and 2018 respectively. 3. What can you get from the common size balance sheets and the income statements of the two companies? 4. Please evaluate liquidity, solvency, profitability and assets utilization for the two companies respectively. s. Please make DuPont Analysis for the two companies respectively. (Year 2017 and 2018) 6 Please describe the advantages and disadvantages of the financial position and operating results for the two companies respectively. If possible, show your opinions of the improvement of their assets structures and capital structures to help them get a better financial position. 7. According to materials you get which company do you choose to invest in (or rather not choose any of them)? Please give your reasons. The CDS COMPANY Balance Sheet (Millions of 5) YEAR 2018 YEAR 2017 YEAR 2016 Current Assets Cash and Cash Equivalents 4,875 4,986 5,012 Accounts Receivable (net) 12.239 11,073 6,400 Inventories 2,147 2086 2,036 Prepaid Expenses 600 380 300 Total Current Assets 19.861 18.525 13,748 Long-term Investments 1.874 650 0 Net property, plant and Equipment 15,000 14,000 14,000 Net Intangible Assets 8,000 8,800 9,600 Other Assets 1.234 0 Total Long-term Assets 26.108 23.450 23.600 Total Assets 45.969 41.975 37.348 2,011 1,083 926 858 346 Current Liabilities Short-term Debt 3,025 4,045 Accounts Payable 1,013 1,908 Sales Taxes Payable 874 1,023 Income Taxes Payable 651 990 Accrued Wages Payable 357 42 Dividends Payable 104 324 Short-Term Notes Payable 3,000 Total Current Liabilities 9.204 9.532 Long-Term Liabilities Long-Term Bonds Payable 6,488 5,638 Mortgage Payable 1.300 4.300 Total long-Term liabilities 154 2.120 1.200 7.498 8. 882 2.300 11 182 Long-Term Liabilities Long-Term Bonds Payable 8, 882 6,488 5,638 Mortgage Payable 2.300 1.300 4.300 Total Long-Term Liabilities 11.182 7.788 9.938 Total Liabilities 1.8680 16.992 19.470 Owners' Equity Owner's Investment 19,665 19,665 13,665 Retained Earnings 2.624 5.318 3.213 Total Owners' Equity 2.7289 24.983 17.878 Total Liabilities and Owners' Equity 45.969 41.975 37.348 The CDS COMPANY Income Statement YEAR 2018 YEAR 2017 YEAR 2016 Sales 29,105 28,184 29.924 Cost of Goods Sold 18.867 17.277 17.094 Gross Profit on Sales 10.238 10,907 12,830 Selling, General and Administrative Expenses 2,666 2.986 2.808 Research and Development Expenses 1,802 1,986 2,000 Other Expenses 1.008 1.211 1.680 Income from Operations 4,762 4,724 6,342 Other Income and Expenses 598 1.100 1.200 Income Before Interest and Taxes 4,164 3.624 5,142 Interest Expenses 764 2.090 Income Before Taxes 3,318 2,860 3,052 Provision for Taxes 858 651 623 Net Income 2.460 2.209 2.429 846 2.429 The ABS COMPANY Balance Sheet (Millions of $) YEAR 2018 YEAR 2017 YEAR 2016 Current Assets Cash and Cash Equivalents 3409 3.986 4.212 Accounts Receivable (net) 6087 4,073 4,219 Inventories (net) 2652 4,098 4.509 Prepaid Expenses 4065 3.246 2.622 Total Current Assets 16.213 15,403 15,562 Long-term Investments 2.763 2,650 2,802 Net property, plant and Equipment 17050 16.940 16,540 Net Intangible Assets 8,030 8,800 9,570 Other Assets 1.009 2.010 1.031 Total Long-term Assets 28.852 30.400 29.943 Total Assets 45.065 45.803 45.505 Current Liabilities Short-term Debt 10.011 9020 6,890 Accounts Payable 6,086 4900 5,210 Sales Taxes Payable 1087 1200 980 Income Taxes Payable 1230 1320 1,020 Accrued Wages Payable 1492 1512 1,503 Dividends Payable 212 Total Current Liabilities 20.239 17.952 15,815 Long-Term Liabilities Long-Term Bonds Payable 9.482 10,488 10,200 Mortgage Payable 3.300 6.600 9.600 Total Long-Term Liabilities 12.782 17088 19.800 22.021 Total Liabine 250 An 25 615 Long-Term Liabilities Long-Term Bonds Payable 10,488 10.200 Mortgage Payable 6.600 9.600 Total Long-Term Liabilities 17088 19.800 9.482 3.300 12.782 Total Liabilities 35040 35,615 33.021 Owners' Equity Owner's Investment 8,605 8,605 Retained Earnings 2.158 1.285 Total Owners' Equity 10.763 9.890 8,605 3.439 12.044 Total Liabilities and Owners' Equity 45.065 45.803 45.505 The ABS COMPANY Income Statement YEAR 2018 YEAR 2017 YEAR 2016 Sales 31098 32.184 28,940 Cost of Goods Sold 14.547 16092 15.786 Gross Profit on Sales 16,551 16092 13,154 Selling, General and Administrative Expenses 4,026 3,002 3,821 Research and Development Expenses 3,802 4.006 4.924 Other Expenses 1.211 692 Income from Operations 8,069 7.873 3,717 Other Income and Expenses 130 310 441 Income Before Interest and Taxes 7.839 7,563 3,276 Interest Expenses 2.357 1.961 1.987 Income Before Taxes 5.582 5,602 1.289 Provision for Taxes 1.230 1,320 348 Net Income 4.352 4.282 941 1,230 Provision for Taxes 1,320 348 Net Income 941 4.352 4.282 1. The CDS COMPANY Balance Sheet (Common Size) YEAR 2018 YEAR 2017 YEAR 2016 Current Assets Cash and Cash Equivalents Accounts Receivable (net) Inventories Prepaid Expenses Total Current Assets Long-term Investments Net property, plant and Equipment Net Intangible Assets Other Assets Total Long-term Assets Total Assets Current Liabilities Short-term Debt Accounts Payable Sales Taxes Payable Income Taxes Payable Accrued Wages Payable Dividends Payable Short-Term Notes Payable Total Current Liabilities Long-Term Liabilities Long-Term Bonds Payable Mortgage Payable Total Long-Term Liabilities Total Liabilities Owners' Equity Owner's Investment Retained Earnings Total Owners' Equity Total Liabilities and Owners' Equity 2.429 The ABS COMPANY Balance Sheet (Millions of $) YEAR 2018 YEAR 2017 YEAR 2016 Current Assets Cash and Cash Equivalents 3409 3.986 4.212 Accounts Receivable (net) 6087 4,073 4,219 Inventories (net) 2652 4,098 4.509 Prepaid Expenses 4065 3.246 2.622 Total Current Assets 16.213 15,403 15,562 Long-term Investments 2.763 2,650 2,802 Net property, plant and Equipment 17050 16.940 16,540 Net Intangible Assets 8,030 8,800 9,570 Other Assets 1.009 2.010 1.031 Total Long-term Assets 28.852 30.400 29.943 Total Assets 45.065 45.803 45.505 Current Liabilities Short-term Debt 10.011 9020 6,890 Accounts Payable 6,086 4900 5,210 Sales Taxes Payable 1087 1200 980 Income Taxes Payable 1230 1320 1,020 Accrued Wages Payable 1492 1512 1,503 Dividends Payable 212 Total Current Liabilities 20.239 17.952 15,815 Long-Term Liabilities Long-Term Bonds Payable 9.482 10,488 10,200 Mortgage Payable 3.300 6.600 9.600 Total Long-Term Liabilities 12.782 17088 19.800 22.021 Total Liabine 250 An 25 615 Long-Term Liabilities Long-Term Bonds Payable 10,488 10.200 Mortgage Payable 6.600 9.600 Total Long-Term Liabilities 17088 19.800 9.482 3.300 12.782 Total Liabilities 35040 35,615 33.021 Owners' Equity Owner's Investment 8,605 8,605 Retained Earnings 2.158 1.285 Total Owners' Equity 10.763 9.890 8,605 3.439 12.044 Total Liabilities and Owners' Equity 45.065 45.803 45.505 The ABS COMPANY Income Statement YEAR 2018 YEAR 2017 YEAR 2016 Sales 31098 32.184 28,940 Cost of Goods Sold 14.547 16092 15.786 Gross Profit on Sales 16,551 16092 13,154 Selling, General and Administrative Expenses 4,026 3,002 3,821 Research and Development Expenses 3,802 4.006 4.924 Other Expenses 1.211 692 Income from Operations 8,069 7.873 3,717 Other Income and Expenses 130 310 441 Income Before Interest and Taxes 7.839 7,563 3,276 Interest Expenses 2.357 1.961 1.987 Income Before Taxes 5.582 5,602 1.289 Provision for Taxes 1.230 1,320 348 Net Income 4.352 4.282 941 1,230 Provision for Taxes 1,320 348 Net Income 941 4.352 4.282 1. The CDS COMPANY Balance Sheet (Common Size) YEAR 2018 YEAR 2017 YEAR 2016 Current Assets Cash and Cash Equivalents Accounts Receivable (net) Inventories Prepaid Expenses Total Current Assets Long-term Investments Net property, plant and Equipment Net Intangible Assets Other Assets Total Long-term Assets Total Assets Current Liabilities Short-term Debt Accounts Payable Sales Taxes Payable Income Taxes Payable Accrued Wages Payable Dividends Payable Short-Term Notes Payable Total Current Liabilities Long-Term Liabilities Long-Term Bonds Payable Mortgage Payable Total Long-Term Liabilities Total Liabilities Owners' Equity Owner's Investment Retained Earnings Total Owners' Equity Total Liabilities and Owners' Equity QUESTION ABS Company and CDS Company are all household appliance companies. They have similar products and share the same market. Their balance sheets and income statements are listed below. INSTRUCTION 1. Prepare the common size balance sheet and income statement for ABS and CDS company respectively. 2. Please figure out corresponding financial ratios for the two companies for the year 2017 and 2018 respectively. 3. What can you get from the common size balance sheets and the income statements of the two companies? 4. Please evaluate liquidity, solvency, profitability and assets utilization for the two companies respectively. s. Please make DuPont Analysis for the two companies respectively. (Year 2017 and 2018) 6 Please describe the advantages and disadvantages of the financial position and operating results for the two companies respectively. If possible, show your opinions of the improvement of their assets structures and capital structures to help them get a better financial position. 7. According to materials you get which company do you choose to invest in (or rather not choose any of them)? Please give your reasons. The CDS COMPANY Balance Sheet (Millions of 5) YEAR 2018 YEAR 2017 YEAR 2016 Current Assets Cash and Cash Equivalents 4,875 4,986 5,012 Accounts Receivable (net) 12.239 11,073 6,400 Inventories 2,147 2086 2,036 Prepaid Expenses 600 380 300 Total Current Assets 19.861 18.525 13,748 Long-term Investments 1.874 650 0 Net property, plant and Equipment 15,000 14,000 14,000 Net Intangible Assets 8,000 8,800 9,600 Other Assets 1.234 0 Total Long-term Assets 26.108 23.450 23.600 Total Assets 45.969 41.975 37.348 2,011 1,083 926 858 346 Current Liabilities Short-term Debt 3,025 4,045 Accounts Payable 1,013 1,908 Sales Taxes Payable 874 1,023 Income Taxes Payable 651 990 Accrued Wages Payable 357 42 Dividends Payable 104 324 Short-Term Notes Payable 3,000 Total Current Liabilities 9.204 9.532 Long-Term Liabilities Long-Term Bonds Payable 6,488 5,638 Mortgage Payable 1.300 4.300 Total long-Term liabilities 154 2.120 1.200 7.498 8. 882 2.300 11 182 Long-Term Liabilities Long-Term Bonds Payable 8, 882 6,488 5,638 Mortgage Payable 2.300 1.300 4.300 Total Long-Term Liabilities 11.182 7.788 9.938 Total Liabilities 1.8680 16.992 19.470 Owners' Equity Owner's Investment 19,665 19,665 13,665 Retained Earnings 2.624 5.318 3.213 Total Owners' Equity 2.7289 24.983 17.878 Total Liabilities and Owners' Equity 45.969 41.975 37.348 The CDS COMPANY Income Statement YEAR 2018 YEAR 2017 YEAR 2016 Sales 29,105 28,184 29.924 Cost of Goods Sold 18.867 17.277 17.094 Gross Profit on Sales 10.238 10,907 12,830 Selling, General and Administrative Expenses 2,666 2.986 2.808 Research and Development Expenses 1,802 1,986 2,000 Other Expenses 1.008 1.211 1.680 Income from Operations 4,762 4,724 6,342 Other Income and Expenses 598 1.100 1.200 Income Before Interest and Taxes 4,164 3.624 5,142 Interest Expenses 764 2.090 Income Before Taxes 3,318 2,860 3,052 Provision for Taxes 858 651 623 Net Income 2.460 2.209 2.429 846 2.429 The ABS COMPANY Balance Sheet (Millions of $) YEAR 2018 YEAR 2017 YEAR 2016 Current Assets Cash and Cash Equivalents 3409 3.986 4.212 Accounts Receivable (net) 6087 4,073 4,219 Inventories (net) 2652 4,098 4.509 Prepaid Expenses 4065 3.246 2.622 Total Current Assets 16.213 15,403 15,562 Long-term Investments 2.763 2,650 2,802 Net property, plant and Equipment 17050 16.940 16,540 Net Intangible Assets 8,030 8,800 9,570 Other Assets 1.009 2.010 1.031 Total Long-term Assets 28.852 30.400 29.943 Total Assets 45.065 45.803 45.505 Current Liabilities Short-term Debt 10.011 9020 6,890 Accounts Payable 6,086 4900 5,210 Sales Taxes Payable 1087 1200 980 Income Taxes Payable 1230 1320 1,020 Accrued Wages Payable 1492 1512 1,503 Dividends Payable 212 Total Current Liabilities 20.239 17.952 15,815 Long-Term Liabilities Long-Term Bonds Payable 9.482 10,488 10,200 Mortgage Payable 3.300 6.600 9.600 Total Long-Term Liabilities 12.782 17088 19.800 22.021 Total Liabine 250 An 25 615 Long-Term Liabilities Long-Term Bonds Payable 10,488 10.200 Mortgage Payable 6.600 9.600 Total Long-Term Liabilities 17088 19.800 9.482 3.300 12.782 Total Liabilities 35040 35,615 33.021 Owners' Equity Owner's Investment 8,605 8,605 Retained Earnings 2.158 1.285 Total Owners' Equity 10.763 9.890 8,605 3.439 12.044 Total Liabilities and Owners' Equity 45.065 45.803 45.505 The ABS COMPANY Income Statement YEAR 2018 YEAR 2017 YEAR 2016 Sales 31098 32.184 28,940 Cost of Goods Sold 14.547 16092 15.786 Gross Profit on Sales 16,551 16092 13,154 Selling, General and Administrative Expenses 4,026 3,002 3,821 Research and Development Expenses 3,802 4.006 4.924 Other Expenses 1.211 692 Income from Operations 8,069 7.873 3,717 Other Income and Expenses 130 310 441 Income Before Interest and Taxes 7.839 7,563 3,276 Interest Expenses 2.357 1.961 1.987 Income Before Taxes 5.582 5,602 1.289 Provision for Taxes 1.230 1,320 348 Net Income 4.352 4.282 941 1,230 Provision for Taxes 1,320 348 Net Income 941 4.352 4.282 1. The CDS COMPANY Balance Sheet (Common Size) YEAR 2018 YEAR 2017 YEAR 2016 Current Assets Cash and Cash Equivalents Accounts Receivable (net) Inventories Prepaid Expenses Total Current Assets Long-term Investments Net property, plant and Equipment Net Intangible Assets Other Assets Total Long-term Assets Total Assets Current Liabilities Short-term Debt Accounts Payable Sales Taxes Payable Income Taxes Payable Accrued Wages Payable Dividends Payable Short-Term Notes Payable Total Current Liabilities Long-Term Liabilities Long-Term Bonds Payable Mortgage Payable Total Long-Term Liabilities Total Liabilities Owners' Equity Owner's Investment Retained Earnings Total Owners' Equity Total Liabilities and Owners' Equity 2.429 The ABS COMPANY Balance Sheet (Millions of $) YEAR 2018 YEAR 2017 YEAR 2016 Current Assets Cash and Cash Equivalents 3409 3.986 4.212 Accounts Receivable (net) 6087 4,073 4,219 Inventories (net) 2652 4,098 4.509 Prepaid Expenses 4065 3.246 2.622 Total Current Assets 16.213 15,403 15,562 Long-term Investments 2.763 2,650 2,802 Net property, plant and Equipment 17050 16.940 16,540 Net Intangible Assets 8,030 8,800 9,570 Other Assets 1.009 2.010 1.031 Total Long-term Assets 28.852 30.400 29.943 Total Assets 45.065 45.803 45.505 Current Liabilities Short-term Debt 10.011 9020 6,890 Accounts Payable 6,086 4900 5,210 Sales Taxes Payable 1087 1200 980 Income Taxes Payable 1230 1320 1,020 Accrued Wages Payable 1492 1512 1,503 Dividends Payable 212 Total Current Liabilities 20.239 17.952 15,815 Long-Term Liabilities Long-Term Bonds Payable 9.482 10,488 10,200 Mortgage Payable 3.300 6.600 9.600 Total Long-Term Liabilities 12.782 17088 19.800 22.021 Total Liabine 250 An 25 615 Long-Term Liabilities Long-Term Bonds Payable 10,488 10.200 Mortgage Payable 6.600 9.600 Total Long-Term Liabilities 17088 19.800 9.482 3.300 12.782 Total Liabilities 35040 35,615 33.021 Owners' Equity Owner's Investment 8,605 8,605 Retained Earnings 2.158 1.285 Total Owners' Equity 10.763 9.890 8,605 3.439 12.044 Total Liabilities and Owners' Equity 45.065 45.803 45.505 The ABS COMPANY Income Statement YEAR 2018 YEAR 2017 YEAR 2016 Sales 31098 32.184 28,940 Cost of Goods Sold 14.547 16092 15.786 Gross Profit on Sales 16,551 16092 13,154 Selling, General and Administrative Expenses 4,026 3,002 3,821 Research and Development Expenses 3,802 4.006 4.924 Other Expenses 1.211 692 Income from Operations 8,069 7.873 3,717 Other Income and Expenses 130 310 441 Income Before Interest and Taxes 7.839 7,563 3,276 Interest Expenses 2.357 1.961 1.987 Income Before Taxes 5.582 5,602 1.289 Provision for Taxes 1.230 1,320 348 Net Income 4.352 4.282 941 1,230 Provision for Taxes 1,320 348 Net Income 941 4.352 4.282 1. The CDS COMPANY Balance Sheet (Common Size) YEAR 2018 YEAR 2017 YEAR 2016 Current Assets Cash and Cash Equivalents Accounts Receivable (net) Inventories Prepaid Expenses Total Current Assets Long-term Investments Net property, plant and Equipment Net Intangible Assets Other Assets Total Long-term Assets Total Assets Current Liabilities Short-term Debt Accounts Payable Sales Taxes Payable Income Taxes Payable Accrued Wages Payable Dividends Payable Short-Term Notes Payable Total Current Liabilities Long-Term Liabilities Long-Term Bonds Payable Mortgage Payable Total Long-Term Liabilities Total Liabilities Owners' Equity Owner's Investment Retained Earnings Total Owners' Equity Total Liabilities and Owners' Equity