The directors as well as the other stakeholders of Roche Pakistan were worried as the company documented losses in 2010 after the implementation of an expansion plan. Therefore, they hired you to get the company back on tract in terms of its financial position. You being the financial analyst would analyze the current financial health and suggest that what actions should be taken to recover the losses and regain its financial health. Moreover, you are required to answer the following questions, using the recent and projected financial information shown below. Clearly explain your answers, not just no or yes. Income Statements 2009 2010 2011E Sales $ 3,432,000 $ 5,834,400 $ 7,035,600 CGS 2,864,000 4,980,000 5,800,000 Depreciation 18,900 116,960 120,000 Other Expenses 340,000 720,000 612,960 Total Op Costs $ 3,222,900 $ 5,816,960 $ 6,532,960 EBIT $ 209,100 $ 17,440 $ 502,640 Interest Expense 62,500 176,000 80,000 EBT $ 146,600 $ (158,560) $ 422,640 Taxes (40%) 58,640 (63,424) 169,056 Net Income $ 87,960 $ (95,136) $ 253,584 Balance Sheets Assets 2009 2010 2011E Cash $ 9,000 $ 7,282 $ 14,000 Accounts Receivable 351,200 632,160 878,000 Short-Term Investments 48,600 20,000 71,632 Inventories 715,200 1,287,360 1,716,480 Total Current Assets $ 1,124,000 $ 1,946,802 $ 2,680,112 Gross Fixed Assets 491,000 1,202,950 1,220,000 Less: Accumulated Depreciation 146,200 263,160 383,160 Net Fixed Assets $ 344,800 $ 939,790 $ 836,840 Total Assets $ 1,468,800 $ 2,886,592 $ 3,516,952 Liabilities And Equity 2009 2010 2011E Accounts Payable $ 145,600 $ 324,000 $ 359,800 Notes Payable 200,000 720,000 300,000 Accruals 136,000 284,960 380,000 Total Current Liabilities $ 481,600 $ 1,328,960 $ 1,039,800 Long-Term Debt 323,432 1,000,000 500,000 Common Stock (100,000 Shares) 460,000 460,000 1,680,936 Retained Earnings 203,768 97,632 296,216 Total Equity $ 663,768 $ 557,632 $ 1,977,152 Total Liabilities And Equity $ 1,468,800 $ 2,886,592 $ 3,516,952 Other Data 2009 2010 2011E Stock Price $ 8.50 $ 6.00 $ 12.17 EPS $ 0.880 $ (0.951) $ 1.014 DPS $ 0.220 $ 0.110 $ 0.220 Shares Outstanding 100,000 100,000 250,000 Tax Rate 40% 40% 40% Book Value Per Share $ 6.638 $ 5.576 $ 7.909 Lease Payments $ 40,000 $ 40,000 $ 40,000 Compute Roche’s quick and current ratios for 2011 using the information given. What are your comments regarding the liquidity position of company in 2009, 2010, and as projected for 2011? What do you think that the managers, bankers and stockholders have an equal interest in the liquidity ratios? Estimate total assets turnover, fixed assets turnover, days sales outstanding (DSO) and inventory turnover for 2011 and compare Roche’s assets utilization against other firms in the same industry? Compute EBITDA coverage ratios, liabilities-to-assets ratio, times-interest-earned and debt ratio for 2011. Moreover, compare these findings with the industry peers and conclude your results.
. The directors as well as the other stakeholders of Roche Pakistan were worried as the company documented losses in 2010 after the implementation of an expansion plan. Therefore, they hired you to get the company back on tract in terms of its financial position. You being the financial analyst would analyze the current financial health and suggest that what actions should be taken to recover the losses and regain its financial health. Moreover, you are required to answer the following questions, using the recent and projected financial information shown below. Clearly explain your answers, not just no or yes.
Income Statements
2009
2010
2011E
Sales
$ 3,432,000
$ 5,834,400
$ 7,035,600
CGS
2,864,000
4,980,000
5,800,000
18,900
116,960
120,000
Other Expenses
340,000
720,000
612,960
Total Op Costs
$ 3,222,900
$ 5,816,960
$ 6,532,960
EBIT
$ 209,100
$ 17,440
$ 502,640
Interest Expense
62,500
176,000
80,000
EBT
$ 146,600
$ (158,560)
$ 422,640
Taxes (40%)
58,640
(63,424)
169,056
Net Income
$ 87,960
$ (95,136)
$ 253,584
Balance Sheets
Assets
2009
2010
2011E
Cash
$ 9,000
$ 7,282
$ 14,000
351,200
632,160
878,000
Short-Term Investments
48,600
20,000
71,632
Inventories
715,200
1,287,360
1,716,480
Total Current Assets
$ 1,124,000
$ 1,946,802
$ 2,680,112
Gross Fixed Assets
491,000
1,202,950
1,220,000
Less: Accumulated Depreciation
146,200
263,160
383,160
Net Fixed Assets
$ 344,800
$ 939,790
$ 836,840
Total Assets
$ 1,468,800
$ 2,886,592
$ 3,516,952
Liabilities And Equity
2009
2010
2011E
Accounts Payable
$ 145,600
$ 324,000
$ 359,800
Notes Payable
200,000
720,000
300,000
Accruals
136,000
284,960
380,000
Total Current Liabilities
$ 481,600
$ 1,328,960
$ 1,039,800
Long-Term Debt
323,432
1,000,000
500,000
Common Stock (100,000 Shares)
460,000
460,000
1,680,936
203,768
97,632
296,216
Total Equity
$ 663,768
$ 557,632
$ 1,977,152
Total Liabilities And Equity
$ 1,468,800
$ 2,886,592
$ 3,516,952
Other Data
2009
2010
2011E
Stock Price
$ 8.50
$ 6.00
$ 12.17
EPS
$ 0.880
$ (0.951)
$ 1.014
DPS
$ 0.220
$ 0.110
$ 0.220
Shares Outstanding
100,000
100,000
250,000
Tax Rate
40%
40%
40%
Book Value Per Share
$ 6.638
$ 5.576
$ 7.909
Lease Payments
$ 40,000
$ 40,000
$ 40,000
Compute Roche’s quick and
Estimate total assets turnover, fixed assets turnover, days sales outstanding (DSO) and inventory turnover for 2011 and compare Roche’s assets utilization against other firms in the same industry?
Compute EBITDA coverage ratios, liabilities-to-assets ratio, times-interest-earned and debt ratio for 2011. Moreover, compare these findings with the industry peers and conclude your results.
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