Question:

- What information would you need to appraise its business risk and financial risk? Do so to the extent possible.

- Enter reasonable inputs in empty cells in the BS. Calculate the % change (yellow highlighted cells).

- Using historical financial ratios, judge Apex's performance.

2019 (Actual) 106,042 2020 2021 (Projected) (Projected) 110,284 114,695 APEX CARBON FIBERS ANSWER BOXES AT ROW 70 Historical and Projected Financial Statements Years Ended December 31. Assume today is December 31, 2019 (000) 2016 2017 2018 (Actual) (Actual) (Actual) Sales 71,924 80.115 92,613 Operating expenses: Production costs and expenses 33,703 38,393 46,492 Admin. and selling expenses 16,733 17,787 21,301 Depreciation 8,076 9,028 10,392 Total operating expenses 58 512 78,185 Operating profit 13,412 14,907 2007 14,428 Interest expense 3,487 3,929 Earnings before taxes 6,227 22 9,925 10,978 8,201 Income taxes 2,430 2,430 Net earnings 7,495 8,273 6,276 Dividends to all common shares 2,000 2,000 2,000 Retentions of earnings 5,495 6,273 4,276 65,208 53,445 24,633 11,360 89.438 16,604 7,614 @ 000 8,990 2.420 2,430 6,770 2,000 4,770 55,142 25,365 15,260 95,767 14,517 27 8,227 6,289 2,430 4,748 2,000 2,748 57,348 26,380 19,160 102,887 11,808 8,967 2,841 2,430 2,145 2,000 145 2,430 2016 (Actual) 2017 2018 (Actual) (Actual) 2019 (Actual) 2020 2021 (Projected) (Projected) Assets: Cash Accounts receivable Inventories Total current assets Gross property plant & equipt. Accumulated depreciation Net property plant & equipt. Total assets 4,816 22,148 23 301 50,265 64,611 -4,559 60,052 110,317 5,670 25,364 27,662 58,696 80,153 -13,587 66.566 125,262 5,090 28,078 53,828 86,996 97,899 -23,979 73,920 160,916 5,795 35,486 63,778 105,059 115,153 -35,339 79.814 184,873 0 115,153 -35,339 79.814 79,814 0 115,153 -35,339 79,814 79,814 91,226 102,023 Liabilities and stockholders' equity: Short-term borrowings (bank) Accounts payable Other accrued liabilities Total current liabilities Long-term debt Shareholders' equity Total liabilities & stockholders' equity 29,002 35,462 69,005 12,315 12,806 11,890 24,608 26.330 25,081 65,925 74,598 105,976 10,000 10,000 10,000 34,391 40,664 44,940 110,316 125,262 160,916 B31 vs. B40 difference due to rounding error 82,275 13,370 21,318 116,963 18,200 49,710 184,873 EFR 91,226 18,200 52,458 161,884 102,023 18,200 52,603 prev SE+RE 172,825 Enter correct formula and calculate EFR for 2020 and 2021 2016 (Actual) 2017 (Actual) 2018 (Actual) 2019 (Actual) PROFITABILITY: Operating margin Tax rate Return on sales Return on equity Return on assets 18.6% 24.5% 10.4% 21.8% 6.8% 18.6% 24.6% 10.3% 20.3% 6.6% 15.6% 23.5% 6.8% 14.0% 3.9% 15.7% 24.7% 6.4% 13.6% 3.7% 2020 2021 % change (Projected) (Projected) 2016-2019 13.2% 10.3% 24.7% 24.7% 4.3% 1.9% 9.1% 4.1% 5.9% 2.7% LEVERAGE: Debt/equity ratio Debt/total capital EBIT/interest 113.4% 35.4% 3.8 111.8% 36.3% 3.8 175.8% 49.1% 2.3 202.1% 54.3% 2.2 208.6% 67.6% 1.8 228.5% 69.6% 1.3 ASSET USE: Sales/assets Sales growth rate Assets growth rate Days sales outstanding Days payable outstanding Days inventory outstanding 65.2% 15.0% 8.0% 112 133 252 64.0% 11.4% 13.5% 116 122 263 57.6% 15.6% 28.5% 111 93 423 57.4% 14.5% 14.9% 122 91 436 138.2% 4.0% -56.8% 120 90 435 143.7% 4.0% 0.0% 120 90 435 LIQUIDITY: Current ratio Quick ratio 0.8 0.4 0.8 0.4 0.8 0.3 0.9 0.4 0.0 0.0 0.0 0.0 Q1 Enter reasonable inputs in empty cells in the BS. Calculate the % change (yellow highlighted cells). Using historical financial ratios, judge Apex's performance. What information would you need to appraise its business risk and financial risk? Do so to the extent possible. 2019 (Actual) 106,042 2020 2021 (Projected) (Projected) 110,284 114,695 APEX CARBON FIBERS ANSWER BOXES AT ROW 70 Historical and Projected Financial Statements Years Ended December 31. Assume today is December 31, 2019 (000) 2016 2017 2018 (Actual) (Actual) (Actual) Sales 71,924 80.115 92,613 Operating expenses: Production costs and expenses 33,703 38,393 46,492 Admin. and selling expenses 16,733 17,787 21,301 Depreciation 8,076 9,028 10,392 Total operating expenses 58 512 78,185 Operating profit 13,412 14,907 2007 14,428 Interest expense 3,487 3,929 Earnings before taxes 6,227 22 9,925 10,978 8,201 Income taxes 2,430 2,430 Net earnings 7,495 8,273 6,276 Dividends to all common shares 2,000 2,000 2,000 Retentions of earnings 5,495 6,273 4,276 65,208 53,445 24,633 11,360 89.438 16,604 7,614 @ 000 8,990 2.420 2,430 6,770 2,000 4,770 55,142 25,365 15,260 95,767 14,517 27 8,227 6,289 2,430 4,748 2,000 2,748 57,348 26,380 19,160 102,887 11,808 8,967 2,841 2,430 2,145 2,000 145 2,430 2016 (Actual) 2017 2018 (Actual) (Actual) 2019 (Actual) 2020 2021 (Projected) (Projected) Assets: Cash Accounts receivable Inventories Total current assets Gross property plant & equipt. Accumulated depreciation Net property plant & equipt. Total assets 4,816 22,148 23 301 50,265 64,611 -4,559 60,052 110,317 5,670 25,364 27,662 58,696 80,153 -13,587 66.566 125,262 5,090 28,078 53,828 86,996 97,899 -23,979 73,920 160,916 5,795 35,486 63,778 105,059 115,153 -35,339 79.814 184,873 0 115,153 -35,339 79.814 79,814 0 115,153 -35,339 79,814 79,814 91,226 102,023 Liabilities and stockholders' equity: Short-term borrowings (bank) Accounts payable Other accrued liabilities Total current liabilities Long-term debt Shareholders' equity Total liabilities & stockholders' equity 29,002 35,462 69,005 12,315 12,806 11,890 24,608 26.330 25,081 65,925 74,598 105,976 10,000 10,000 10,000 34,391 40,664 44,940 110,316 125,262 160,916 B31 vs. B40 difference due to rounding error 82,275 13,370 21,318 116,963 18,200 49,710 184,873 EFR 91,226 18,200 52,458 161,884 102,023 18,200 52,603 prev SE+RE 172,825 Enter correct formula and calculate EFR for 2020 and 2021 2016 (Actual) 2017 (Actual) 2018 (Actual) 2019 (Actual) PROFITABILITY: Operating margin Tax rate Return on sales Return on equity Return on assets 18.6% 24.5% 10.4% 21.8% 6.8% 18.6% 24.6% 10.3% 20.3% 6.6% 15.6% 23.5% 6.8% 14.0% 3.9% 15.7% 24.7% 6.4% 13.6% 3.7% 2020 2021 % change (Projected) (Projected) 2016-2019 13.2% 10.3% 24.7% 24.7% 4.3% 1.9% 9.1% 4.1% 5.9% 2.7% LEVERAGE: Debt/equity ratio Debt/total capital EBIT/interest 113.4% 35.4% 3.8 111.8% 36.3% 3.8 175.8% 49.1% 2.3 202.1% 54.3% 2.2 208.6% 67.6% 1.8 228.5% 69.6% 1.3 ASSET USE: Sales/assets Sales growth rate Assets growth rate Days sales outstanding Days payable outstanding Days inventory outstanding 65.2% 15.0% 8.0% 112 133 252 64.0% 11.4% 13.5% 116 122 263 57.6% 15.6% 28.5% 111 93 423 57.4% 14.5% 14.9% 122 91 436 138.2% 4.0% -56.8% 120 90 435 143.7% 4.0% 0.0% 120 90 435 LIQUIDITY: Current ratio Quick ratio 0.8 0.4 0.8 0.4 0.8 0.3 0.9 0.4 0.0 0.0 0.0 0.0 Q1 Enter reasonable inputs in empty cells in the BS. Calculate the % change (yellow highlighted cells). Using historical financial ratios, judge Apex's performance. What information would you need to appraise its business risk and financial risk? Do so to the extent possible