Build a Model 26-11-2018
Chapter: 3
Problem: 15

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

Assets 2019 2018
Cash and cash equivalents $21,000 $20,000
Short-term investments 3,759 3,240
Accounts Receivable 52,500 48,000
Inventories 84,000 56,000
Total current assets $1,61,259 $1,27,240
Net fixed assets 2,23,097 2,00,000
Total assets $3,84,356 $3,27,240

Liabilities and equity
Accounts payable $33,600 $32,000
Accruals 12,600 12,000
Notes payable 19,929 6,480
Total current liabilities $66,129 $50,480
Long-term debt 67,662 58,320
Total liabilities $1,33,791 $1,08,800
Common stock 1,78,440 1,78,440
Retained Earnings 72,125 40,000
Total common equity $2,50,565 $2,18,440
Total liabilities and equity $3,84,356 $3,27,240

Joshua & White Technologies December 31 Income Statements
(Thousands of Dollars)
2019 2018
Sales $4,20,000 $4,00,000
COGS except excluding depr. and amort. 3,00,000 2,98,000
Depreciation and Amortization 19,660 18,000
Other operating expenses 27,600 22,000
EBIT $72,740 $62,000
Interest Expense 5,740 4,460
EBT $67,000 $57,540
Taxes (25%) 16,750 14,385
Net Income $50,250 $34,524

Common dividends $18,125 $17,262
Addition to retained earnings $32,125 $17,262

Other Data 2019 2018
Year-end Stock Price $90.00 $96.00
# of shares (Thousands) 4,052 4,000
Lease payment (Thousands of Dollars) $20,000 $20,000
Sinking fund payment (Thousands of Dollars) $5,000 $5,000

Ratio Analysis 2019 2018 Industry Avg
Liquidity Ratios
   Current Ratio 2.58
   Quick Ratio 1.53
Asset Management Ratios
   Inventory Turnover (Total COGS/Inventories) 7.69
   Days Sales Outstanding 47.45
   Fixed Assets Turnover 2.04
   Total Assets Turnover 1.23
Debt Management Ratios
   Debt Ratio (Total debt-to-assets) 20.0%
   Liabilities-to-assets ratio 32.1%
   Times-interest-earned ratio 15.33
   EBITDA coverage ratio 4.18
Profitability Ratios
   Profit Margin 8.86%
   Basic Earning Power 19.48%
   Return on Assets 10.93%
   Return on Equity 16.10%
Market Value Ratios
   Earnings per share NA
   Price-to-earnings ratio 10.65
   Cash flow per share NA
   Price-to-cash flow ratio 7.11
   Book Value per share NA
   Market-to-book ratio 1.72

a. Has Joshua & White's liquidity position improved orworsened? Explain.




b. Has Joshua & White's ability to manage its assets improvedor worsened? Explain.





c. How has Joshua & White's profitability changed during thelast year?



d. Perform an extended Du Pont analysis for Joshua & White foreach year.
ROE =          PM     x TA Turnover   x    Equity Multiplier
2019 20.05% 11.96% 1.09 1.53
2018 15.80% 8.63% 1.22 1.50





e. Perform a common size analysis. What has happened to thecomposition
     (that is, percentage in each category) ofassets and liabilities?

Common Size Balance Sheets
Assets 2019 2018
Cash and cash equivalents
Short-term investments
Accounts Receivable
Inventories
Total current assets
Net fixed assets
Total assets

Liabilities and equity 2019 2018
Accounts payable
Accruals
Notes payable
Total current liabilities
Long-term debt
Total liabilities
Common stock
Retained Earnings
Total common equity
Total liabilities and equity

Common Size Income Statements 2019 2018
Sales
COGS except excluding depr. and amort.
Depreciation and Amortization
Other operating expenses
EBIT
Interest Expense
EBT
Taxes (25%)
Net Income





f. Perform a percent change analysis. What does this tell you aboutthe change in profitability
     and asset utilization?

Percent Change Balance Sheets Base
Assets 2019 2018
Cash and cash equivalents
Short-term investments
Accounts Receivable
Inventories
Total current assets
Net fixed assets
Total assets

Base
Liabilities and equity 2019 2018
Accounts payable
Accruals
Notes payable
Total current liabilities
Long-term debt
Total liabilities
Common stock
Retained Earnings
Total common equity
Total liabilities and equity

Base
Percent Change Income Statements 2019 2018
Sales
COGS except excluding depr. and amort.
Depreciation and Amortization
Other operating expenses
EBIT
Interest Expense
EBT
Taxes (25%)
Net Income