View the step-by-step solution to:

# 31. See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. a. How did Mydeco's accounts receivable days change over

31. See Table 2.5 showing financial statement data and stock price data for Mydeco Corp.
• a. How did Mydeco’s accounts receivable days change over this period?
• b. How did Mydeco’s inventory days change over this period?
• c. Based on your analysis, has Mydeco improved its management of its working capital during this time period?
TABLE 2.5 2009–2013 Financial Statement Data and Stock Price Data for Mydeco Corp.
Mydeco Corp. Please see the Attached File I've attached all the 4 Question.

36. You are analyzing the leverage of two firms and you note the following (all values in millions of dollars):
Debt Book Equity Market Equity EBIT Interest Expense
Firm A 500 300 400 100 50
Firm B 80 35 40 8 7
• a. What is the market debt-to-equity ratio of each firm?
• b. What is the book debt-to-equity ratio of each firm?
• c. What is the EBIT/interest coverage ratio of each firm?
• d. Which firm may have more difficulty meeting its debt obligations? Explain.

42. For fiscal year 2011, Starbucks Corporation (SBUX) had total revenues of \$11.70 billion, net income of \$1.25 billion, total assets of \$7.36 billion, and total shareholder’s equity of \$4.38 billion.
• a. Calculate the Starbucks’ ROE directly, and using the DuPont Identity.
• b. Comparing with the data for Peet’s in Problem 41, use the DuPont Identity to understand the difference between the two firms’ ROEs.
43. Consider a retailing firm with a net profit margin of 3.5%, a total asset turnover of 1.8, total assets of \$44 million, and a book value of equity of \$18 million.
• a. What is the firm’s current ROE?
• b. If the firm increased its net profit margin to 4%, what would be its ROE?
• c. If, in addition, the firm increased its revenues by 20% (while maintaining this higher profit margin and without changing its assets or liabilities), what would be its ROE?

31. See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. a. How did Mydeco’s accounts receivable days change over this period? b. How did Mydeco’s inventory days change over this period? c. Based on your analysis, has Mydeco improved its management of its working capital during this time period? TABLE 2.5 2009–2013 Financial Statement Data and Stock Price Data for Mydeco Corp. Mydeco Corp. 2009– 2013 (All data as of fiscal year end; in \$ million) Income Statement 2009 2010 2011 2012 2013 Revenue Cost of Goods Sold 404.3 (188.3) 363.8 (173.8) 424.6 (206.2) 510.7 (246.8) 604.1 (293.4) Gross Profit Sales and Marketing Administration Depreciation & Amortization 216.0 (66.7) (60.6) (27.3) 190.0 (66.4) (59.1) (27.0) 218.4 (82.8) (59.4) (34.3) 263.9 (102.1) (66.4) (38.4) 310.7 (120.8) (78.5) (38.6) EBIT Interest Income (Expense) 61.4 (33.7) 37.5 (32.9) 41.9 (32.2) 57.0 (37.4) 72.8 (39.4) Pretax Income Income Tax 27.7 (9.7) 4.6 (1.6) 9.7 (3.4) 19.6 (6.9) 33.4 (11.7) Net Income Shares outstanding (millions) Earnings per share 18.0 55.0 \$0.33 3.0 55.0 \$0.05 6.3 55.0 \$0.11 12.7 55.0 \$0.23 21.7 55.0 \$0.39 Balance Sheet 2009 2010 2011 2012 2013 Assets Cash Accounts Receivable Inventory 48.8 88.6 33.7 68.9 69.8 30.9 86.3 69.8 28.4 77.5 76.9 31.7 85.0 86.1 35.3 Total Current Assets Net Property, Plant & Equip. Goodwill & Intangibles 171.1 245.3 361.7 169.6 169.6 243.3 184.5 309 361.7 186.1 345.6 361.7 206.4 347.0 361.7 Total Assets Liabilities & Stockholders’ Equity Accounts Payable Accrued Compensation 778.1 18.7 6.7 774.6 17.9 6.4 855.2 22.0 7.0 893.4 26.8 8.1 915.1 31.7 9.7 Total Current Liabilities Long-term Debt 25.4 500.0 24.3 500.0 29.0 575.0 34.9 600.0 41.4 600.0 Total Liabilities 525.4 524.3 604.0 634.9 641.4
Mydeco Corp. 2009– 2013 (All data as of fiscal year end; in \$ million) Stockholders’ Equity 252.7 250.3 251.2 258.5 273.7 Total Liabilities & Stockholders’ Equity 778.1 774.6 855.2 893.4 915.1 Statement of Cash Flows 2009 2010 2011 2012 2013 Net Income Depreciation & Amortization Chg. in Accounts Receivable Chg. in Inventory Chg. in Payables & Accrued Comp. 18.0 27.3 3.9 (2.9) 2.2 3.0 27.0 18.8 2.8 (1.1) 6.3 34.3 (0.0) 2.5 4.7 12.7 38.4 (7.1) (3.3) 5.9 21.7 38.6 (9.2) (3.6) 6.5 Cash from Operations Capital Expenditures 48.5 (25.0) 50.5 (25.0) 47.8 (100.0) 46.6 (75.0) 54.0 (40.0) Cash from Investing Activities Dividends Paid Sale (or purchase) of stock Debt Issuance (Pay Down) (25.0) (5.4) (25.0) (5.4) (100.0) (5.4) 75.0 (75.0) (5.4) 25.0 (40.0) (6.5) Cash from Financing Activities (5.4) (5.4) 69.6 19.6 (6.5) Change in Cash 18.1 20.1 17.4 (8.8) 7.5 Mydeco Stock Price \$7.92 \$3.30 \$5.25 \$8.71 \$10.89 36. You are analyzing the leverage of two firms and you note the following (all values in millions of dollars): Debt Book Equity Market Equity EBIT Interest Expense Firm A 500 300 400 100 50 Firm B 80 35 40 8 7 a. What is the market debt-to-equity ratio of each firm? b. What is the book debt-to-equity ratio of each firm? c. What is the EBIT/interest coverage ratio of each firm? d. Which firm may have more difficulty meeting its debt obligations? Explain. 42. For fiscal year 2011, Starbucks Corporation (SBUX) had total revenues of \$11.70 billion, net income of \$1.25 billion, total assets of \$7.36 billion, and total shareholder’s equity of \$4.38 billion. a. Calculate the Starbucks’ ROE directly, and using the DuPont Identity. b. Comparing with the data for Peet’s in Problem 41, use the DuPont Identity to understand the difference between the two firms’ ROEs. 43. Consider a retailing firm with a net profit margin of 3.5%, a total asset turnover of 1.8, total assets of \$44 million, and a book value of equity of \$18 million. a. What is the firm’s current ROE?
Show entire document

Here is the explanation for... View the full answer

2013
Accounts Receivable
a) Period b) Inventory days c) Working Capital (Average Accounts
Receivable*365)/Sales
Sales
Average Accounts Receivable 2012 2011 2010 49.24
52.42 60.00
604.10 510.70...

### Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

### -

Educational Resources
• ### -

Study Documents

Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

Browse Documents