FLORIDA TECH COMPANY Changes in Working Capital Accounts For the years ended

Florida tech company changes in working capital

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FLORIDA TECH COMPANY Changes in Working Capital Accounts For the years ended 12/31/20X2 and 12/31/20X3 20X2 20X3 Accounts Receivable ($176) ($239) Inventory -61 -149 Accounts Payable 25 53 Accruals 5 10 ($207) ($325) FLORIDA TECH COMPANY Statement of Cash Flows For the years ended 12/31/20X2 and 12/31/20X3 20X2 20X3 Operating Activities Net Income $145 77 Depreciation 250 275 Change in Working Capital -207 -325 Cash from Operating Activities $188 27 Investing Activities Increase in Fixed Assets -808 -345 Cash from Investing Activities ($808) ($345) Financing Activities Increase in Debt 630 340 Cash from Financing Activities $630 $340
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[SHORTENED TITLE UP TO 50 CHARACTERS] 6 Net Cash Flow $10 $22 Reconciliation 20X2 20X3 Beginning Cash $30 $40 Net Cash Flow 10 22 Ending Cash $40 $62 The company mainly invests in working capital and fixed assets. This was made from borrowings from banks and investors resulting in an increase of debt. c Calculate the indicated ratios for all three years. Analyze trends in each ratio and compare each with the industry average. What can you infer from this information? Make specific statements about liquidity, asset management, especially receivables and inventories, debt management, and profitability. Do not simply say that ratios are higher or lower than the average or that they are going up or down. Think about what might be going on in the company and propose reasons why the ratios are acting as they are. Use only ending balance sheet figures to calculate your ratios. Do certain specific problems tend to affect more than one ratio? Which ones? Industry Average 2011 2012 2013
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[SHORTENED TITLE UP TO 50 CHARACTERS] 7 Current Ratio 4.5 1.154 5.366 5.804 Quick Ratio 3.2 2.887 3.871 3.975 ACP 42 days 39.6 59.76 64.8 Inventory Turnover 7.5x 7.01 6.36 5.01 Fixed Asset Turnover 1.6x 1.65 1.39 2.06 Total Asset Turnover 1.2x 1.26 1.02 1.29 Debt Ratio 53% 0.56 0.66 0.77 Debt to Equity 1.01 1.15 1.82 2.08 TIE 4.5 5.5 3.32 1.82 ROS 9.00% 0.012 0.06 0.02 ROA 10.80% 0.15 0.07 0.03 ROE 22.80% 0.34 0.2 0.09 Equity Multiplier 2.1 1.06 1.05 1.07 d Construct both Du Pont Equations for Florida Tech Company. What, if anything, do they tell us? DuPont for 2012
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[SHORTENED TITLE UP TO 50 CHARACTERS] 8 DuPont for 2013 From the DuPont analyses, we can see that that Florida Tech Company’s ROE was cut by more than half from 2012 to 2013. This means that the firm didn’t make as effective
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