Cmpute 2013 current and quick ratios based on projected

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Reference no: EM13476154

Income Statements

2012

2013

Sales

$3,432,000

$5,834,400

Cost of goods sold except depr.

2,864,000

4,980,000

Depreciation and amortization

18,900

116,960

Other expenses

340,000

720,000

Total operating costs

$3,222,900

$5,816,960

EBIT

$209,100

$17,440

Interest expense

62,500

176,000

EBT

$146,600

($158,560)

Taxes (40%)

58,640

-63,424

Net income

$87,960

($95,136)

Other Data

2012

2013

Stock price

$8.50

$6.00

Shares outstanding

100,000

100,000

EPS

$0.88

($0.95)

DPS

$0.22

0.11

Tax rate

40%

40%

Book value per share

$6.64

$5.58

Lease payments

$40,000

$40,000

Ratio Analysis

2012

2013

Current

2.3

1.5

Quick

0.8

0.5

Inventory turnover

4

4

Days sales outstanding

37.3

39.6

Fixed assets turnover

10

6.2

Total assets turnover

2.3

2

Debt ratio

35.60%

59.60%

Liabilities-to-assets ratio

54.80%

80.70%

TIE

3.3

0.1

EBITDA coverage

2.6

0.8

Profit margin

2.60%

-1.6%

Basic earning power

14.20%

0.60%

ROA

6.00%

-3.3%

ROE

13.30%

-17.1%

Price/Earnings (P/E)

9.7

-6.3

Price/Cash flow

8

27.5

Market/Book

1.3

1.1

1. What is the free cash flow for 2013?

2. Suppose Congress changed the tax laws so that Berndt's depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow?

3. Calculate the 2013 current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position in 2013?

4. Calculate the 2013 inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover.

5. Calculate the 2013 debt ratio, liabilities-to-assets ratio, times-interest-earned, and EBITDA coverage ratios. What can you conclude from these ratios?

6. Calculate the 2013 profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). What can you say about these ratios?

7. Calculate the 2013 price / earnings ratio, price / cash flow ratio, and market / book ratio.

8. Use the extended DuPont equation to provide a summary and overview of company's financial condition as projected for 2013. What are the firm's major strengths and weaknesses?

Reference no: EM13476154

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