Show All Your Work! Refer to the balance sheet and income statement for Sempra Energy (SRE), the parent company of SDG&E. Please calculate the following financial ratios for the fiscal year that ended December 31, 2019:

1. 1) Operating Margin

2. 2) Return on Assets (ROA)

3. 3) Return on Equity (ROE, a.k.a. Return on Investments, ROI)

4. 4) Current Ratio

5. 5) Acid Test Ratio (a.k.a. Quick Ratio)

6. 6) Times Interest Earned

7-8) Kimberly-Clark (KMB), the makers of Huggies and Scott Tissue, is currently paying $4.28 per year in dividends. They have been growing their dividend constantly at 5%. If we desire a 9% rate of return, what do we believe KMB is worth? The current price is approximately $138. Is this a potentially good investment for us? (2 points)

9-11) Medtronic (MDT), a medical device manufacturer, is currently selling for $97 per share. The dividends for the next three years are expected to be $2.16 for 2020, $2.24 for 2021, and $2.32 for 2022. Value Line forecasts the price per share to be approximately $125 by the end of 2022. If we desire a rate of return of 10%, using the Discounted Cash Flow Model, what price would we value this stock? Is this a potentially good investment for us? (3 points)

12-14) Someone at your company learns that you are taking BUS-123, Introduction to Investments, at Southwestern College. You are now the resident guru with regard to your companys 401(k) plan and all your fellow employees come to you for advice. One amiable fellow in his late 50s is approaching retirement. He tells you that he has not put a dime away for retirement and believes he needs to catch up quickly. He wants to put 50% of his contributions into very aggressive stock mutual funds and the other 50% into the self-directed portion of the 401(k) so he can buy and sell individual stocks on his own. He asks what you think about his strategy. What advice will you give him? (3 points)

Sempra Energy (SRE) Income Statement Period Ending (All numbers in thousands) 12/31/2019 12/31/2018 12/31/2017 12/31/2016 12/31/2015 Revenue Total Revenue (a.k.a. net sales, annual sales, the "top line") Cost of Revenue Gross Profit 10,817,000 4,103,000 6,714,000 11,661,000 5,229,000 6,432,000 11,191,000 5,272,000 5,919,000 10,201,000 5,223,000 4,978,000 10,189,000 5,128,000 5,061,000 Operating Expenses Research and Development Selling, General, and Administrative Non Recurring Others 3,466,000 0 3,117,000 3,308,000 2,969,000 2,896,000 496,000 3,962,000 Total Operating Expenses 472,000 3,780,000 436,000 3,553,000 426,000 3,395,000 423,000 3,319,000 Operating Income (Loss) 2,752,000 2,652,000 2,366,000 1,583,000 1,742,000 Income from Continuing Operations Total Other Income / Expenses Net Earnings Before Interest and Taxes Interest Expense Income Before Tax Income Tax Expense Minority Interest Net Income from Continuing Operations 1,099,000 3,851,000 1,433,000 1,734,000 (315,000) (148,000) 2,197,000 479,000 2,173,000 1,127,000 1,046,000 (79,000) 76,000 1,049,000 302,000 2,064,000 514,000 1,550,000 389,000 34,000 1,127,000 292,000 1,875,000 553,000 1,322,000 389,000 (438,000) 1,371,000 225,000 1,967,000 561,000 1,406,000 341,000 (285,000) 1,350,000 Non-recurring Events Discontinued Operations Extraordinary Items Effect of Accounting Changes Other Items (142,000) OOOO Net Income (a.k.a. net profit, the "bottom line") 2,055,000 1,049,000 1,127,000 1,371,000 1,350,000 Source: CNBC.com Sempra Energy (SRE) Balance Sheet Period Ending (All numbers in thousands) 12/31/2019 12/31/2018 12/31/2017 12/31/2016 12/31/2015 139,000 225,000 416,000 415,000 430,000 Assets Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivables Inventory Other Current Assets Total Current Assets 1,860,000 277,000 1,063,000 3,339,000 1,918,000 296,000 1,167,000 3,606,000 1,694,000 307,000 887,000 3,304,000 1,623,000 258,000 814,000 3,110,000 1,509,000 298,000 654,000 2,891,000 11,519,000 37,043,000 3,058,000 568,000 10,801,000 36,796,000 3,332,000 608,000 3,940,000 32,931,000 2,364,000 548,000 4,499,000 28,039,000 819,000 404,000 Long Term Investments Property, Plant, and Equipment Goodwill Intangible Assets Accumulated Amortization Other Assets Deferred Long Term Asset Charges Total Assets 3,574,000 35,257,000 2,402,000 596,000 0 4,659,000 455,000 50,247,000 9,495,000 488,000 65,510,000 4,889,000 416,000 60,448,000 4,659,000 234,000 47,786,000 4,378,000 120,000 41,150,000 00 Liabilities Current Liabilities Accounts Payable Short / Current Long Term Debt Other Current Liabilites Total Current Liabilties 1,239,000 5,031,000 2,880,000 9,150,000 1,474,000 3,752,000 2,297,000 7,523,000 1,523,000 2,967,000 2,145,000 6,635,000 2,215,000 2,775,000 937,000 5,927,000 2.015,000 1.585.000 1,012,000 4,612,000 Long Term Debt Other Liabilities Deferred Long Term Liability Charges Minority Interest Negative Goodwill Total Liabilties 20,758,000 7,337,000 6,433,000 527,000 (500,000) 43,705,000 21,611,000 6,366,000 5,714,000 520,000 (495,000) 41,239,000 16,455,000 6,336,000 5,559,000 639,000 (480,000) 35, 144,000 14,851,000 6,336,000 5,701,000 2,270.000 (270,000) 34,815,000 13,283,000 6,071,000 4,605,000 750,000 29,321,000 20,000 20,000 20,000 20,000 20,000 Stockholders' Equity Misc Stocks Options Warrants Redeemable Preferred Stock Preferred Stock Common Stock Retained Earnings Treasury Stock Capital Surplus Other Stockholder Equity Total Stockholders' Equity 7,480,000 11,130,000 (117,000) 5,540,000 10,104,000 (147,000) 3,149,000 10,147,000 (37,000) 2,982,000 10,717,000 2,621,000 9,994,000 (732,000) 17,761,000 (656,000) 14,841,000 (626,000) 12,633,000 (748,000) 12,951,000 (806,000) 11,809,000 Source: CNBC.com Sempra Energy (SRE) Income Statement Period Ending (All numbers in thousands) 12/31/2019 12/31/2018 12/31/2017 12/31/2016 12/31/2015 Revenue Total Revenue (a.k.a. net sales, annual sales, the "top line") Cost of Revenue Gross Profit 10,817,000 4,103,000 6,714,000 11,661,000 5,229,000 6,432,000 11,191,000 5,272,000 5,919,000 10,201,000 5,223,000 4,978,000 10,189,000 5,128,000 5,061,000 Operating Expenses Research and Development Selling, General, and Administrative Non Recurring Others 3,466,000 0 3,117,000 3,308,000 2,969,000 2,896,000 496,000 3,962,000 Total Operating Expenses 472,000 3,780,000 436,000 3,553,000 426,000 3,395,000 423,000 3,319,000 Operating Income (Loss) 2,752,000 2,652,000 2,366,000 1,583,000 1,742,000 Income from Continuing Operations Total Other Income / Expenses Net Earnings Before Interest and Taxes Interest Expense Income Before Tax Income Tax Expense Minority Interest Net Income from Continuing Operations 1,099,000 3,851,000 1,433,000 1,734,000 (315,000) (148,000) 2,197,000 479,000 2,173,000 1,127,000 1,046,000 (79,000) 76,000 1,049,000 302,000 2,064,000 514,000 1,550,000 389,000 34,000 1,127,000 292,000 1,875,000 553,000 1,322,000 389,000 (438,000) 1,371,000 225,000 1,967,000 561,000 1,406,000 341,000 (285,000) 1,350,000 Non-recurring Events Discontinued Operations Extraordinary Items Effect of Accounting Changes Other Items (142,000) OOOO Net Income (a.k.a. net profit, the "bottom line") 2,055,000 1,049,000 1,127,000 1,371,000 1,350,000 Source: CNBC.com Sempra Energy (SRE) Balance Sheet Period Ending (All numbers in thousands) 12/31/2019 12/31/2018 12/31/2017 12/31/2016 12/31/2015 139,000 225,000 416,000 415,000 430,000 Assets Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivables Inventory Other Current Assets Total Current Assets 1,860,000 277,000 1,063,000 3,339,000 1,918,000 296,000 1,167,000 3,606,000 1,694,000 307,000 887,000 3,304,000 1,623,000 258,000 814,000 3,110,000 1,509,000 298,000 654,000 2,891,000 11,519,000 37,043,000 3,058,000 568,000 10,801,000 36,796,000 3,332,000 608,000 3,940,000 32,931,000 2,364,000 548,000 4,499,000 28,039,000 819,000 404,000 Long Term Investments Property, Plant, and Equipment Goodwill Intangible Assets Accumulated Amortization Other Assets Deferred Long Term Asset Charges Total Assets 3,574,000 35,257,000 2,402,000 596,000 0 4,659,000 455,000 50,247,000 9,495,000 488,000 65,510,000 4,889,000 416,000 60,448,000 4,659,000 234,000 47,786,000 4,378,000 120,000 41,150,000 00 Liabilities Current Liabilities Accounts Payable Short / Current Long Term Debt Other Current Liabilites Total Current Liabilties 1,239,000 5,031,000 2,880,000 9,150,000 1,474,000 3,752,000 2,297,000 7,523,000 1,523,000 2,967,000 2,145,000 6,635,000 2,215,000 2,775,000 937,000 5,927,000 2.015,000 1.585.000 1,012,000 4,612,000 Long Term Debt Other Liabilities Deferred Long Term Liability Charges Minority Interest Negative Goodwill Total Liabilties 20,758,000 7,337,000 6,433,000 527,000 (500,000) 43,705,000 21,611,000 6,366,000 5,714,000 520,000 (495,000) 41,239,000 16,455,000 6,336,000 5,559,000 639,000 (480,000) 35, 144,000 14,851,000 6,336,000 5,701,000 2,270.000 (270,000) 34,815,000 13,283,000 6,071,000 4,605,000 750,000 29,321,000 20,000 20,000 20,000 20,000 20,000 Stockholders' Equity Misc Stocks Options Warrants Redeemable Preferred Stock Preferred Stock Common Stock Retained Earnings Treasury Stock Capital Surplus Other Stockholder Equity Total Stockholders' Equity 7,480,000 11,130,000 (117,000) 5,540,000 10,104,000 (147,000) 3,149,000 10,147,000 (37,000) 2,982,000 10,717,000 2,621,000 9,994,000 (732,000) 17,761,000 (656,000) 14,841,000 (626,000) 12,633,000 (748,000) 12,951,000 (806,000) 11,809,000 Source: CNBC.com