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Analyze XYZ Boot Company, using ratio analysis. In which I have already done. Just unsure of a couple that are highlighted in yellow.

Analyze XYZ Boot Company, using ratio analysis.  In which I have already done.  Just unsure of a couple that are highlighted in yellow.   I will attach Excel Spreadsheet.   I must calculate overall break-even point in sales dollars and the cash break-even point.  Compute degree of operating leverage, degree of financial leverage, and degree of combined leverage - clueless of which figures to pull from. we must discuss risks associated with the company, deciding whether bank should loan funds.   I will attach a copy of Income Statement/ Balance Sheet to view.
Then XYZ Boot company is trying to plan for 2002, then anticipate sales of 20%, which can be absorbed w/o increasing fixed assets.  What are their needs for external funds on current balance sheet - Compute required new funds.  Noting that notes payable and bonds are not part of the liability calculation.  What would required funds be if company brings its ratios into line with industry average for 2002? (Examine receivables turnover, asset turnover, inventory turnover and profit margin)  
Explain: How would required new funds change if the company were at full capacity? Raised the dividend payout ratio?  Suffered a decreased growth in sales? Faced an accelerated inflation rate?

Analyze XYZ Boot Company, using ratio analysis. In which I have already
done. Just unsure of a couple that are highlighted in yellow. I will
attach Excel Spreadsheet. I must calculate overall break-even point in
sales dollars and the cash break-even point. Compute degree of
operating leverage, degree of financial leverage, and degree of combined
leverage - clueless of which figures to pull from. we must discuss risks
associated with the company, deciding whether bank should loan funds.
I will attach a copy of Income Statement/ Balance Sheet to view.
Then XYZ Boot company is trying to plan for 2002, then anticipate sales
of 20%, which can be absorbed w/o increasing fixed assets. What are
their needs for external funds on current balance sheet - Compute
required new funds. Noting that notes payable and bonds are not part of
the liability calculation. What would required funds be if company
brings its ratios into line with industry average for 2002? (Examine
receivables turnover, asset turnover, inventory turnover and profit
margin)
Explain: How would required new funds change if the company were at full
capacity? Raised the dividend payout ratio? Suffered a decreased growth
in sales? Faced an accelerated inflation rate?
Balance Sheet
Cash 50,000
Marketable Securities 80,000
Accounts Receivable 3,000,000
Inventory 1,000,000
Gross Plant & Equip 6,000,000
Less: Accumulated Depr. 2,000,000
Total Assets 8,130,000
Account Payables 2,200,000
Accrued Expenses 150,000
Notes Payable (current) 400,000
Bonds (10%) 2,500,000
Common Stock (1.7 mil)
shares, par val. $1 1,700,000
Retained Earnings 1,180,000
Total liabilities
And shareholders’ equity 8,130,000
Income Statement – 2001
Sales (credit) 7,000,000
Fixed Costs* 2,100,000
Variable costs (0.60) 4,200,000
EBIT 700,000
Less: Interest
Earnings before Taxes 450,000
Less: Taxes @ 35%
Earnings after Taxes 292,500
Dividends (40% payout) 117,000
Increased retained earnings 175,500
*Fixed costs include lease expense of $200,000 and depreciation of
$500,000.
Note: They also have $65,000 per year in sinking funds obligations
associated with its bond issue. The sinking fund represents an annual
repayment of the principal amount of the bond that is NOT tax
deductible.

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