Reference no: EM132403245
After Han's analysis of LSUS corporation' cash flow, Amanda, the CEO of the company, approached Han about the company's performance and future growth plans. First, Amanda wants to find out how LSUS corporation is performing relative to its peers. Additionally, she wants to find out the future financing necessary to fund the company's growth. In the past, LSUS corporation experienced difficulty in financing its growth plan, in large part because of poor planning. In fact, the company had to turn down several large jobs because its facilities were unable to handle the additional demand. Amanda hoped that Han would be able to estimate the amount of capital the company would have to raise next year so that LSUS corporation would be better prepared to fund its expansion plans. To get Han started with his analyses, Amanda provided the following financial statements. Han then gathered the industry ratios for the LSUS Corporation industry.
2019 Income Statement LSUS Corporation Sales $611,582,000 Cost of goods sold 431,006,000 Selling, general, and administrative 73,085,700 Depreciation 19,958,400 EBIT $ 87,531,900 Interest expense 11,000,900 EBT $ 76,531,000 Taxes 30,612,400 Net income $ 45,918,600 Dividends $ 17,374,500 Retained earnings $ 28,544,100 7 2019
Balance Sheet LSUS Corporation Current assets Current liabilities Cash and equivalents $ 11,119,700 Accounts payable $ 44,461,550 Accounts receivable 18,681,500 Accrued expenses 6,123,200 Inventory 20,149,650 Total current liabilities $ 50,584,750 Other 1,172,200 Total current assets $ 51,123,050 Fixed assets Long-term debt $169,260,000 Property, plant, and equipment $457,509,600 Total long-term liabilities $169,260,000 Less accumulated depreciation (113,845,900) Net property, plant, and equipment $343,663,700 Intangible assets and others 6,772,000 Stockholders' equity Total fixed assets $350,435,700 Preferred stock $ 1,970,000 Common stock 37,583,700 Capital surplus 28,116,300 Accumulated retained earnings 161,564,000 Less treasury stock (47,520,000) Total equity $181,714,000 Total assets $401,558,750 Total liabilities and shareholders' equity $401,558,750
LSUS Corporation Industry Ratios LOWER QUARTILE/ MEDIAN /UPPER QUARTILE Current ratio .86 1.51 1.97 Quick ratio .43 .75 1.01 Total asset turnover 1.10 1.27 1.46 Inventory turnover 12.18 14.38 16.43 Receivables turnover 10.25 17.65 22.43 Debt ratio .32 .56 .61 Debt-equity ratio .83 1.13 1.44 Equity multiplier 1.83 2.13 2.44 Interest coverage 5.72 8.21 10.83 Profit margin 5.02% 7.48% 9.05% Return on assets 7.05% 10.67% 14.16% Return on equity 14.06% 19.32% 26.41%
My questions:
How do I determine if preferred stock should be included as a part of the company's total equity?
How do I calculate the growth rate by 20 percent?
How do I prepare a pro forma income statement and balance sheet while incorporating $95,000,000 expansion of the company? What is the EFN?
What is capacity utilization?