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Chapter 3. Solution to 3-15 Joshua & White Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets 2010 2009 Cash and cash equivalents $21,000 $20,000 Short-term investments 3,759 3,240 Accounts Receivable 52,500 48,000 Inventories 84,000 56,000 Total current assets $161,259 $127,240 Net fixed assets 218,400 200,000 Total assets $379,659 $327,240 Liabilities and equity Accounts payable $33,600 $32,000 Accruals 12,600 12,000 Notes payable 19,929 6,480 Total current liabilities $66,129 $50,480 Long-term debt 67,662 58,320 Total liabilities $133,791 $108,800 Common stock 183,793 178,440…show more content…
d. Perform an extended Du Pont analysis for Joshua & White for 2008 and 2009. ROE = PM x TA Turnover x Equity Multiplier 2010 16.35% 9.57% 1.11 1.54 2009 15.80% 8.63% 1.22 1.50 The Company had increased in ROE 15.80% to 16.35% when an extended Du Pont analysis is done. e. Perform a common size analysis. What has happened to the composition (that is, percentage in each category) of assets and liabilities? Common Size Balance Sheets Assets 2010 2009 Cash and cash equivalents 5.5% 6.1% Short-term investments 1.0% 1.0% Accounts Receivable 13.8% 14.7% Inventories 22.1% 17.1% Total current assets 42.5% 38.9% Net fixed assets 57.5% 61.1% Total assets 100.0% 100.0% Liabilities and equity 2010 2009 Accounts payable 8.9% 9.8% Accruals 3.3% 3.7% Notes payable 5.2% 2.0% Total current liabilities 17.4% 15.4% Long-term debt 17.8% 17.8% Total liabilities 35.2% 33.2% Common stock 48.4% 54.5% Retained Earnings 16.4% 12.2% Total common equity 64.8% 66.8% Total liabilities and equity 100.0% 100.0% Common Size Income Statements 2010 2009 Sales 100.0% 100.0% Expenses excluding depr. and amort. 78.0% 80.0% EBITDA 22.0% 20.0% Depreciation and Amortization 4.7% 4.5% EBIT 17.3% 15.5% Interest Expense 1.4%
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