Start with the partial model in the file Ch03 P15 Build a Model.xls from the textbooks Web site. Joshua & White (J&W) Technologiess financial statements are also shown below. Answer the following questions. (Note: Industry average ratios are provided in Ch03 P15 Build a Model.xls.) a. Has J&Ws liquidity position improved or worsened? Explain. b. Has J&Ws ability to manage its assets improved or worsened? Explain. c. How has J&Ws profitability changed during the last year? d. Perform an extended Du Pont analysis for J&W for 2009 and 2010. What do these results tell you? e. Perform a common size analysis. What has happened to the composition (that is, percentage in each category) of assets and liabilities? f. Perform a percentage change analysis. What does this tell you about the change in profitability and asset utilization?

Joshua & White Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets 2010 2009

Liabilities & Equity 2010 2009

Cash and cash equivalents $ 21,000 $ 20,000 Accounts payable $ 33,600 $ 32,000 Short-term investments 3,759 3,240 Accruals 12,600 12,000 Accounts receivable 52,500 48,000 Notes payable 19,929 6,480 Inventories 84,000 56,000

Total current liabilities $ 66,129 $ 50,480

Total current assets $161,259 $127,240

Long-term debt 67,662 58,320 Net fixed assets 218,400 200,000 Total liabilities $133,791 $108,800 Total assets $379,659 $327,240 Common stock 183,793 178,440

Retained earnings 62,075 40,000 Total common equity $245,868 $218,440 Total liabilities & equity $379,659 $327,240 Joshua & White Technologies December 31 Income Statements (Thousands of Dollars)

2010 2009 Sales $420,000 $400,000 Expenses excluding depr. & amort. 327,600 320,000 EBITDA $ 92,400 $ 80,000 Depreciation and amortization 19,660 18,000 EBIT $ 72,740 $ 62,000

resource 116 Part 1: Fundamental Concepts of Corporate Finance

2010 2009 Interest expense 5,740 4,460 EBT $67,000 $57,540 Taxes (40%) 26,800 23,016 Net income $40,200 $34,524 Common dividends $18,125 $17,262 Other Data 2010 2009 Year-end stock price $ 90.00 $ 96.00 Number of shares (Thousands) 4,052 4,000 Lease payment (Thousands of Dollars) $20,000 $20,000 Sinking fund payment (Thousands of Dollars) $ 0 $ 0