Chapter 2. Ch 02 P14 Build a Model
| a. Cumberland Industries’ most recent sales were $455,000,000; operating costs (excluding depreciation) were equal to 85% of sales; net fixed assets were $67,000,000; depreciation amounted to 10% of net fixed assets; interest expenses were $8,550,000; the state-plus-federal corporate tax rate was 40% and Cumberland paid 25% of its net income out in dividends. Given this information, construct Cumberland’s income statement. Also calculate total dividends and the addition to retained earnings. |
| The input information required for the problem is outlined in the “Key Input Data” section below. Using this data and the balance sheet above, we constructed the income statement shown below. | ||||||
| Key Input Data for Cumberland Industries | 2010 | |||||
| (Thousands of dollars) | ||||||
| Sales Revenue | $455,000 | |||||
| Expenses (excluding depreciation) as a percent of sales | 85.0% | |||||
| Net fixed assest | $67,000 | |||||
| Depr. as a % of net fixed assets | 10.0% | |||||
| Tax rate | 40.0% | |||||
| Interest expense | $8,550 | |||||
| Dividend Payout Ratio | 25% |
Ch 03 P15 Build a Model
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| Joshua & White Technologies: December 31 Balance Sheets | |||||
| (Thousands of Dollars) | |||||
| Assets | 2010 | 2009 | |||
| 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 | $161,259 | $127,240 | |||
| Net fixed assets | 218,400 | 200,000 | |||
| Total assets | $379,659 | $327,240 | |||
| 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 | $133,791 | $108,800 | |||
| Common stock | 183,793 | 178,440 | |||
| Retained Earnings | 62,075 | 40,000 | |||
| Total common equity | $245,868 | $218,440 | |||
| Total liabilities and 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. and amort. | 327,600 | 320,000 | |||
| EBITDA | $92,400 | $80,000 | |||
| Depreciation and Amortization | 19,660 | 18,000 | |||
| EBIT | $72,740 | $62,000 | |||
| 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 | |||
| Addition to retained earnings | $22,075 | $17,262 | |||
| Other Data | 2010 | 2009 | |||
| Year-end Stock Price | $100.00 | $96.00 | |||
| # of shares (Thousands) | 4,052 | 4,000 | |||
| Lease payment (Thousands of Dollars) | $20,000 | $20,000 | |||
| Sinking fund payment (Thousands of Dollars) | $0 | $0 | |||
| Ratio Analysis | 2010 | 2009 | Industry Avg | ||
| Liquidity Ratios | |||||
| Current Ratio | 2.58 | ||||
| Quick Ratio | 1.53 | ||||
| Asset Management Ratios | |||||
| Inventory Turnover | 7.69 | ||||
| Days Sales Outstanding | 47.45 | ||||
| Fixed Assets Turnover | 2.04 | ||||
| Total Assets Turnover | 1.23 | ||||
| Debt Management Ratios | |||||
| Debt 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 |
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