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You are an investor who is considering adding one of the company to your portfolio. As such, you are interested in the companys record of
You are an investor who is considering adding one of the company to your portfolio. As such, you are interested in the companys record of profitability, prospects for the future, degree of risk, and how it compares with other company. Follow the steps before you attempt to answer the required questions. STEP-1-Select two company- Company-A (first letter of your first name) and CompanyB (first letter of your last name) STEP-2-After selecting the company go to the companys website to get the financial relevant data as per the below format. You will be collecting the same data for two company that you selected in STEP-1 SAMPLE-1 COMPANY-A Income Statements 20202022 (in 000s) Pro Forma Income Statements 2020 2021 2022 2023 2024 2025 Net sales (all credit) ....................................... $ 777 $3,051 $3,814 $5,340 $7,475 $10,466 Cost of goods sold.......................................... 257 995 1,040 1,716 2,154 3,054 Gross profit ................................................... 520 2,056 2,774 3,624 5,321 7,412 Selling, etc., expenses.................................... 610 705 964 1,520 2,120 2,645 Other inc (exps)*............................................ 0 0 0 500 0 0 Operating profit............................................. (90) 1,351 1,810 2,604 3,201 4,767 Interest expense ............................................ 11 75 94 202 302 434 Income before tax .......................................... (101) 1,276 1,716 2,402 2,899 4,333 Income taxes 0 510 566 793 957 1,430 Net income .................................................... ($ 101) $ 766 $1,150 $1,609 $1,943 $ 2,903 Dividends paid............................................... 0 0 0 0 0 0 Increase in retained earnings......................... ($ 101) $ 766 $1,150 $1,609 $1,943 $ 2,903 Average number of shares**........................... 2,326 2,326 2,347 2,347 2,347 2,347 Earnings per share ........................................ ($ 0.04) $ 0.33 $ 0.49 $ 0.69 $ 0.83 $ 1.24 SAMPLE-2 COMPANY-A Balance Sheets Pro Forma Balance Sheets As of Dec. 31, years ended: As of Dec. 31, years ended: 2020 2021 2022 2023 2024 2025 Assets: Cash and equivalents ...................................... $ 124 $ 103 $ 167 $ 205 $ 422 $ 101 Accounts receivable ......................................... 100 409 564 907 1,495 2,351 Inventories ........................................................................ ........................................................................ 151 302 960 1,102 1,443 798 Other current .................................................. 28 59 29 41 57 11 Total current assets .................................... 403 873 1,720 2,255 3,417 3,261 Property, plant, and equipment ....................... 1,901 2,298 2,917 4,301 5,531 8,923 Less: accumulated depreciation.................. 81 82 346 413 522 588 Property, plant, and equipment, net ........ 1,820 2,216 2,571 3,888 5,009 8,335 Other fixed assets............................................ 0 101 200 200 215 399 Total assets ..................................................... $2,223 $3,190 $4,491 $6,343 $8,641 $11,995 Liabilities: Accounts payable............................................. 210 $ 405 $ 551 $ 771 $1,080 $ 1,512 Short-term debt............................................... 35 39 42 59 82 135 Total current liabilities................................ 245 444 593 830 1,162 1,647 Long-term debt................................................ 17 19 21 27 50 17 Total liabilities ......................................... 262 463 614 857 1,212 1,664 Equity: Common stock................................................. 2,062 2,062 2,062 2,062 2,062 2,062 Retained earnings............................................ (101) 665 1,815 3,424 5,366 8,269 Total equity................................................. 1,961 2,727 3,877 5,486 7,428 10,331 Total liabilities and equity................................ $2,223 $3,190 $4,491 $ 6,343 $8,641 $11,995 STEP-3-After analyzing the information answer the questions from the below required section STEP-4-Upload the file as Instructed below Required Based on the above information, answer the following questions: 1. What was Company-As rate of sales growth in 2022? What is it forecasted to be in 2023, 2024, and 2025? 2. What was company-As net income growth in 2022? What is it forecasted to be in 2023, 2024, and 2025? Is projected net income growing faster or slower than projected sales? 3. How does Company-As current ratio for 2022 compare to Company-Bs? 4. What is Company-As total debt-to-assets ratio for 2019, 2020, 2021, 2022? Is any trend evident in the four-year period? 5. What is Company-As average accounts receivable collection period for 2019, 2020, 2021, 2022? Is the period getting longer or shorter? What are the consequences? 6. How does Company-As return-on-equity ratio (ROE) compare to Company-Bs for 2022? Using the Du Pont method, compare the positions of Company-A and Company-B. Compute ROE for each company using the following formula: a. ROE = Profit margin Asset turnover/(1Debt to assets) b. Compare the results to determine the sources of ROE for each company. File Upload Instructions: You will work on an excel file Worksheet-1- Your Name, ID and the question Worksheet-2-Company A Data Worksheet-3-Company B Data Worksheet-4-Answer-1 Worksheet-5-Answer-2 Worksheet-6-Answer-3 Worksheet-7-Answer-4 Worksheet-8-Answer-5 Worksheet-9-Answer-6 Worksheet-10-Overall recommendation
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