Annual Income Statements$1000s20141,9231,43848511654501502113209337562013$ 1,20294026273544002075502


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Annual Income Statements$1000s20141,9231,43848511654501502113209337562013$ 1,20294026273544002075502510152013$ 1,2029402627354400207550251015DividendsAdditions to Retained Earnings561515Old Accumulated Retained EarningsAdditions to Retained EarningsNew Accumulated Retained Earnings1556710151501515Net SalesCost of Goods SoldGross ProfitSG&AResearch and DevelopmentDepreciationLease PaymentsOther Operating ExpensesEBITInterest ExpenseEBTTaxes (40%)Net IncomeSG&A = Sales, General, & AdministrativeSG&A includes Marketing ExpensesEBIT = Earnings Before Interest And TaxesEBIT is also known as Operating IncomeEBT = Earnings Before Taxes$Pierpont FishBalance Sheets As of December 31$1000’s2014AssetsCashMarketable SecuritiesAccounts ReceivableInventoriesTotal Current AssetsGross Plant and EquipmentAccumulated DepreciationNet Plant and EquipmentTotal AssetsLiabilities and EquityAccounts PayableNotes PayableAccrualsTotal Current LiabilitiesMortgageTotal LiabilitiesContributed CapitalAccumulated Retained EarningsTotal Common EquityTotal Liabilities and Equity$10Ave201420131841703646110150145365$111201151203667911006911,05572175646101165050600966145050195105143302786528510360214409575716461,05521349147743520101021257237915394966Statement of Cash FlowsFor Year 2014 ($1,000s)Funds from OperationsNet IncomeDepreciation Expense+ Increase in Accounts Payable+Increase in Accruals-Increase in Receivables-Increase in InventoriesTotal Funds from Operations$56508040(69)(50)$$Funds from Investing ActivitiesIncrease in Gross Fixed AssetsTotal Funds from Investing Activities(141)$(87)$(121)(141)Funds from Financing ActivitiesIncrease in Notes PayableIncrease in MortgagesIncrease in Contributed CapitalLess DividendsTotal Funds from Financing Activities107(285)21960Change in Cash and Marketable SecuritiesCash Flow Analysis$1000sEBITDA = EBIT + Dep Exp + Amortizatin Exp$2014163NOPAT = EBIT*(1-t)Total Net Operating Capital (TNOC)Free Cash Flow = NOPAT – Increase in TNOC$68Cash Fixed Costs = Fixed Cash Operating Costs + Interest +LeasingVariable Cost Ratio = CGS/SalesContribution Margin = (1 – CGS/Sales) = GPM%Cash Breakeven RevenueCash Burn = CGS + CFC + Taxes + DInventory +DGFA -DSpLiabCash Build = Sales – Increase in ReceivablesNet Cash Burn = – TFO Activities -TFI ActivitiesMonthly Cash BurnMonrhly BuildMonthly Net Cash BurnEBDAT = Revenues – CFC*TNOC = Cash + A/R + Inv + NFA – A/P – Accruals)$2013115$45Common Size Annual Income Statements$1000s2014Net SalesCost of Goods SoldGross ProfitSG&AResearch and DevelopmentDepreciationLease PaymentsOther Operating ExpensesEBITInterest ExpenseEBTTaxes (40%)Net Income2013IndustryAverage2014100%77.00%23.00%6.00%1.40%4.00%1.12%1.48%9.00%2.00%7.00%2.80%4.20%Ratio Analysis20142014A2013Ind1.00.70.62%2.20.814.00%Liquidity ratiosCurrent Ratio = CA/CLQuick Ratio = (CA – Inventories)/CLNWC to Total AssetsAsset Management ratiosTotal Asset Turnover = Sales/TAAsset Intensity = TA/SalesFixed Asset Turnover = Sales/Fixed assetsDays Sales Outstanding = Accounts receivable/Daily salesInventory Turnover = COGS/Inventories1.90250%33010Debt Management RatiosDebt Ratio = Debt-to-Assets Ratio = Total debt/TADebt-to-Equity Ratio = Total debt/Total common equityEquity Multiplier = TA/TotalEquityTimes Interest Earned = EBIT/Interest expenseInterest Coverage = EBITDA/Interest ExpenseFixed Charge Coverage Coverage Ratio* = (EBITDA +Leasing)/(Int. + Lease + Rep.)35.0%0.541.545.09.03.0Profitability ratiosGross Profit Margin = Gross Profit /SalesOperating Profit Margin = EBIT/SalesNOPAT Margin = NOPAT/salesNet Profit Margin = Net income/SalesBasic Earning Power = EBIT/TAReturn on Assets = Net income/TAReturn on Equity = Net income/Total common equity23.00%9.00%5.40%4.20%18.00%11.00%19.00%Cash Conversion CycleAverage201412%Marginal InterestSales / DayCGS/DaySimple201412%Simple201313%Purchase to Payment Period = Sp. Lib / CGS per dayInventory to Sale Period = Inv. / CGS per daySale to Cash = Accs Rec / Sales per dayCash Conversion Cycle (C3)InputsD Payables DaysD Inventory DaysD Receivables PeriodResulting Decrease in Financing CostsFrom D in Payables DaysFrom D in Inventory DaysFrom D in Receivables PeriodTotal SavingsSee Page 161 of the Text.Days of InventoryDays PayablesDays ReceivablesCash Conversion Cycle C3