Required information Financial Analysis: Avon The following questions are about key financials that impart useful insights into the financial health of Avon. The financials offer quantitative measurements of the success or failure of Avons strategies. Part 1: Key Financial Ratios Using available data in the case, calculate the requested financial ratios. Round all numbers to the nearest hundredth. For example, answers should look like -0.05 or 1.33.
| | 2016 | 2015 | 2014 |
| ROA | % | % | % |
| Current Ratio | | | |
| Cash Ratio | | | |
| Selling, General and Administrative Expenses to Revenue | % | % | % |
Years Ended December 31 Net sales Other revenue Total revenue Costs, expenses and other: $5,578.8 138.9 5,717.7 $ 6,076.5 84.0 6,160.5 $7,472.5 175.5 7,648.0 2,257.0 3,138.8 2,445.4 3,006.9 Cost of sales Selling, general and administrative expenses Impairment of goodwil 3,543.2 4,206.8 165.0 120.5 5.5 Operating prolit 321.9 434.3 Interest expense 136.6 108.8 Gain) loss on extinguishment of debt Interest income (15.8) Other expense, net 73.7 139.5 Gain on sale of business Total other expenses Income from continuing operations, before taxes Income taxes Loss from continuing operations, net of tax Loss from discontinued operations, net of tax Net loss Net income attributable to nonconlrolling interess Net loss attributable to Avon Loss per share: 142.3 22.7 (819.2) (796.5) (349.1) (1,145.6) 290.7 31.2 (124.6) 233.5 9.4) c.2) $ 0.6) (384.9) $(1,148.9) $ (388.6) $ (0.25) Basic from continuing operations Basic from discontinued operations Basic attributable to Avon Diluted from continuing operations Diluted from discontinued operations Diluted attributable to Avon $(1.81) $ (0.79) (0.03) $ (0.25) (0.03) (0.29) (0.88) $(0.79) (0.09) 0.88) $(1.81 (2.60) Weighted-average shares outstanding Basic 437.0 435.2 434.5 Diluted 437.0 435.2 434.5 ource: Avon 2016 annual report. 138 CASE 20: AVON: A NEW ERA? EXHIBIT 4 Avon Products, Inc., Consolidated Balance Sheets ($ millions, except per-share data) December 31 Assets Current Assets Cash, including cash equivalents of $79.4 and $123.2 $ 654.4 458.9 586.4 291.3 $ 686.9 443.0 624.0 296.1 291.1 2.341,1 Accounts receivable (less allowances of $131.1 and $86.7) Inventories Prepaid expenses and other Current assets of discontinued operations 1,992.3 Total current assets Property. plant and equipment, at cost Land 29.5 621.5 773.1 1,424.1 32.2 665.8 797.7 1,495.7 Buildings and improvements Equipment 0128)728.8) Less accumulated depreclation Property, plant and equipment, net Goodwill Other assets Noncurrent assets of discontinued operations 766.9 92.3 490.0 180.1 $3,870.4 93.6 621.7 $3.418.9 Total assets Liabilities and Shareholders' (Deficit) Equity Current Liabilities Debt maturing within one year Accounts payable Accrued compensation Other accrued liabilities Sales and taxes other than income Income taxes Payable to discontinued operations $ 55.2 $18.1 768.1 129.2 401.9 147.0 774.2 157.6 419.6 174.9 10.7 1,485.7 1,875.8 164.5 23.9 100.0 489.7 2.195.1 2,150.5 Current liabilities of discontinued operations Total current liabilities Long-term debt Employee benefit plans continued CASE 20 AVON: A NEW ERA? C139 Years Ended December 31 Net sales Other revenue Total revenue Costs, expenses and other: $5,578.8 138.9 5,717.7 $ 6,076.5 84.0 6,160.5 $7,472.5 175.5 7,648.0 2,257.0 3,138.8 2,445.4 3,006.9 Cost of sales Selling, general and administrative expenses Impairment of goodwil 3,543.2 4,206.8 165.0 120.5 5.5 Operating prolit 321.9 434.3 Interest expense 136.6 108.8 Gain) loss on extinguishment of debt Interest income (15.8) Other expense, net 73.7 139.5 Gain on sale of business Total other expenses Income from continuing operations, before taxes Income taxes Loss from continuing operations, net of tax Loss from discontinued operations, net of tax Net loss Net income attributable to nonconlrolling interess Net loss attributable to Avon Loss per share: 142.3 22.7 (819.2) (796.5) (349.1) (1,145.6) 290.7 31.2 (124.6) 233.5 9.4) c.2) $ 0.6) (384.9) $(1,148.9) $ (388.6) $ (0.25) Basic from continuing operations Basic from discontinued operations Basic attributable to Avon Diluted from continuing operations Diluted from discontinued operations Diluted attributable to Avon $(1.81) $ (0.79) (0.03) $ (0.25) (0.03) (0.29) (0.88) $(0.79) (0.09) 0.88) $(1.81 (2.60) Weighted-average shares outstanding Basic 437.0 435.2 434.5 Diluted 437.0 435.2 434.5 ource: Avon 2016 annual report. 138 CASE 20: AVON: A NEW ERA? EXHIBIT 4 Avon Products, Inc., Consolidated Balance Sheets ($ millions, except per-share data) December 31 Assets Current Assets Cash, including cash equivalents of $79.4 and $123.2 $ 654.4 458.9 586.4 291.3 $ 686.9 443.0 624.0 296.1 291.1 2.341,1 Accounts receivable (less allowances of $131.1 and $86.7) Inventories Prepaid expenses and other Current assets of discontinued operations 1,992.3 Total current assets Property. plant and equipment, at cost Land 29.5 621.5 773.1 1,424.1 32.2 665.8 797.7 1,495.7 Buildings and improvements Equipment 0128)728.8) Less accumulated depreclation Property, plant and equipment, net Goodwill Other assets Noncurrent assets of discontinued operations 766.9 92.3 490.0 180.1 $3,870.4 93.6 621.7 $3.418.9 Total assets Liabilities and Shareholders' (Deficit) Equity Current Liabilities Debt maturing within one year Accounts payable Accrued compensation Other accrued liabilities Sales and taxes other than income Income taxes Payable to discontinued operations $ 55.2 $18.1 768.1 129.2 401.9 147.0 774.2 157.6 419.6 174.9 10.7 1,485.7 1,875.8 164.5 23.9 100.0 489.7 2.195.1 2,150.5 Current liabilities of discontinued operations Total current liabilities Long-term debt Employee benefit plans continued CASE 20 AVON: A NEW ERA? C139
