subject: analytical financial statements

Part B) Following are the financial information for Welmark Coporation. Year 2018 Year 2019 Sales 25,423 28,131 Net Income 1,706 2,312 Common Stocks, $4 Par 8,000 8,000 Retained Earnings 3,254 4,459 Outstanding Common Stocks 2000 2000 Past Ratios Assumptions for Forecasting Sales Growth 8.50% 15.00 % 9% Net profit Margin (Net Income/Sales) 6.71% Dividend per share Rs. 1.10 Forecast horizon is FOUR years. Cost of Equity is 12%. Sales growth will be 15% in till Year 2023 and 3.5 % onwards. No changes in Common stock is expected across forecasted period. Using Residual Income Discounting Model, Compute the Intrinsic Value of Welmark Corporation in YEAR 2019. Question Allen Company and Barker Company are competitors in the same industry. Selected financial data from their 2011 statements are as follow: Statement of Financial Position As on December 31, 2019 Barker Company Allen Company S Cash $ 35,000 Accounts receivable 120,000 Inventory 190,000 Intangibles 120,000 Property, plant, and equipment. 520,000 985,000 Total Assets Accounts payable Bonds payable Preferred stock, $1 par Common stock, $10 par Retained earnings 10,000 45,000 70,000 51,000 180,000 356,000 60,000 100,000 50,000 100,000 46,000 356,000 Total liabilities and capital Statement of Profit or Loss Account For the Year Ended on December 31, 2019 Allen Company Sales $ 1,050,000 Cost of goods sold 725,000 Selling and administrative expenses 230,000 Interest expense 10,000 Income taxes 42.000 Net income $ 43,000 Industry Averages: Times interest earned Debt ratio Debt/equity Debt to tangible net worth 1. Compute the following ratios for each company: a) Times interest earned b) Debt/equity ratio c) Debt to tangible net worth 2. Is Barker Company able to take on additional long-term debt? Explain. 3. Which company has the better long-term debt position? Explain. $ *** 165,000 410,000 30,000 280,000 100,000 985,000 Barker Company 2,800,000 $ 2,050,000 580,000 32,000 65,000 $ 73,000 7.2 times 40.30% 66.60% 72.70%