This case study is an individual assignment. Independent completion, without collaborating with other students is required.

This case study is based on the course material covered to the mid-term point. It includes:

Chapter 1 - The goals and functions of financial management

Chapter 2 - Review of accounting

Chapter 3 - Financial analysis

Chapter 5 - Operating and financial leverage

Instruction:

Read the case material very carefully and answer the questions at the end of the case material. You can place your answer right after each question. When you provide your answers, you need to write them in full sentences and in a logical manner with comprehensive explanation. Your final answers must be explained completely. If you enter any of the followings as your final answer, you will not receive your full mark: Entering yes or no, short answers, repetition of your sentence, and definition of a formula. All the submission will go through a plagiarism software and students subject to cheating will receive zero and be reported.

Enter all your answers and numbers in Blue colour.

Ms. Jackson Story

When Ms. Jackson was in her twenties, she decided to start a business. Since she was from Manitoba, she decided to get into Agriculture. After some research, she found out that farming business has the following characteristics:

1. This business is very cyclical.
2. This business is very competitive.
3. This business is subject to various governmental regulations, including export, import, and environmental regulations. They have an impact, sometimes beneficial, sometimes detrimental, on the industry.

Eventually Ms. Jackson decided to go ahead and try her luck. The Jackson Farming Corp. was born and started operation on Jan 1^st 2016.

After two years of operation, Ms. Jackson was contemplating to expand the company with selling some of the shares so that she could raise some capital to improve and expand her business. The total number of outstanding common shares are 100,000 shares with common dividend payment of 10,000 and proffered dividend payment of 2,000.

Questions:

The answers for the following questions must be for year 2019. Round your final numbers to 2 decimal places.

1. Complete the attached income statement and calculate Earning Per Share (EPS)

2. A) Calculate the retained earning and make the statement of Cash Flow (2019) B) Complete the balance sheet based on your numbers in part A

3. In your opinion, how Ms. Jackson has been doing with her business in terms of profitability, operational efficiency, liquidity and debt utilization? Use the template below and data from the statements to answer your questions.

Category	Jackson Farming Corp 2019	Industry Average	Better / worse
Profitability
Profit margin		10%
Return on Assets		20%
Return on Equity		15%
Asset utilization
Inventory turn-over		5.5
Total assets turn-over		1.15
Liquidity
Current Ratio		2.5
Quick ratio		1.2
Debt Utilization
Debt to equity		0.40

4. Using DuPont model, Decompose ROE to the main three components, and explain how to improve companys return on equity (ROE).

5. A) What does the company P/E ratio of 12 tell you? B) Is there a need to improve this ratio? Why? You need to compare it with the industry statistics and if it helps calculate the book value as well.

6. A) Calculate the degrees of operating leverage (DOL) and financing leverage (DFL). B) Calculate the degrees of combined leverage DCL. C) Compare DFL and DOL with the industry statistics, explain and interpret your result for both DFL and DOL.