Day 2-Part4

Day 2-Part4 - Business Management 301 Day 2: Part 4 Chapter...

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Unformatted text preview: Business Management 301 Day 2: Part 4 Chapter 3: Ratio Analysis June 23, 2011 POW #1: Bill & Skip 1) Evaluate the two firms over the 1999-2003 period in terms of (1) liquidity, (2) operating profitability, (3) financing, and (4) equity returns. 2) Compare the two firms. What are the differences and similarities? You have been asked to analyze the financial performance and soundness of Bill Inc. and Skip Corp. The two firms compete head-to-head in the consumer goods industry. Bill Inc. Income Statement 1999 2000 2001 2002 2003 Sales 3,481 3,479 3,644 3,225 2,900 COGS 2,083 2,109 2,255 1,997 1,746 Gross Profit 1,398 1,370 1,389 1,228 1,154 SG&A 999 1,065 1,070 1,043 972 Depreciation 35 40 43 45 43 Operating Profit 364 265 276 140 139 Interest Expense 26 42 64 61 50 Non-operating income/exp 10 15 5 (8) 1 Special Items (72) (59) (34) (62) EBT 276 238 158 37 28 Income Taxes 100 84 12 12 10 Minority Interest 11 15 10 1 7 Net Income 165 139 136 24 11 Bill Inc.Balance Sheet 1999 2000 2001 2002 2003 ASSETS Cash and equivalents 80 232 210 180 282 Net receivables 507 591 562 518 417 Inventories 635 545 564 535 415 Other current assets 121 95 129 129 129 Total Current Assets 1,343 1,463 1,465 1,362 1,243 Gross PP&E 336 357 354 399 422 Accum. Depreciation 144 172 197 226 244 Net PP&E 192 185 157 173 178 Other Assets 121 138 134 205 143 Total Assets 1,656 1,786 1,756 1,740 1,564 L IABILITI ES Current Portion of LT Debt 1 53 121 87 185 Notes Payable 67 33 41 48 28 Accounts Payable 166 196 192 203 154 Taxes Payable 53 66 4 82 8 Accrued Expenses 145 169 219 192 249 Total Current Liabilities 432 517 577 612 624 LT Debt 254 854 639 554 370 Minority Interest 31 34 33 33 Other Liabilities 41 Total Liabilities 717 1,405 1,249 1,199 1,035 EQUITY Preferred Stock 44 17 Common Stock 1 1 1 1 1 Retained Earnings 1,497 998 1,124 1,141 1,146 Less: Treasury Stock 603 618 618 618 618 Common Equity 895 381 507 524 529 Total Equity 939 381 507 541 529 Total Liabilities & Equity 1,656 1,786 1,756 1,740 1,564 Bill Inc. Ratios Bill Inc. 1999 2000 2001 2002 2003 Current ratio 3.11 2.83 2.54 2.22 1.99 Acid-test ratio 1.64 1.78 1.56 1.35 1.33 Average collection period 53.16 62.00 56.29 58.63 52.48 Accounts receivable turnover 6.87 5.89 6.48 6.23 6.95 Inventory turnover 3.28 3.87 4.00 3.73 4.21 Operating income return on investment 0.22 0.15 0.16 0.08 0.09 Gross profit margin 0.40 0.39 0.38 0.38 0.40 Operating profit margin 0.10 0.08 0.08 0.04 0.05 Total asset turnover 2.10 1.95 2.07 1.85 1.85 Fixed asset turnover 18.13 18.81 23.21 18.64 16.29 Debt ratio 0.43 0.79 0.71 0.69 0.66 Times interest earned 14.00 14....
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This note was uploaded on 11/17/2011 for the course BUS M 301 taught by Professor Jimbrau during the Summer '11 term at BYU.

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Day 2-Part4 - Business Management 301 Day 2: Part 4 Chapter...

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