FNEC-1600 Study Guide - Final Guide: Treasury Stock, Dividend Yield, Cash Flow Statement
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Star Industries Inc comparative financial statements for the years ending December 31, 2010 and 2009, are as follows. The market price for Star Industries common stock was $ 20 on December 31, 2009, and $ 32 on December 31, 2010. Common stock shares outstanding for both 2010 and 2009 are 70000 shares (Ie $ 700,000 / $ 10 par)
Star Industries
Comparative Income Statement
For the Years Ended December 31, 2010 and 2009
| 2010 | 2009 | ||
| Sales | $7,000,000 | $5,670,000 | |
| Sales returns and allowances | $325,000 | $175,000 | |
| Net Sales | $6,675,000 | $5,495,000 | |
| Cost of Goods Sold | $4,850,000 | $3,950,000 | |
| Gross Profit | $1,825,000 | $1,545,000 | |
| Selling Expenses | $780,000 | $464,000 | |
| Administrative Expenses | $485,000 | $423,000 | |
| Total Operating Expenses | $1,465,000 | $887,000 | |
| Income From Operations | $360,000 | $658,000 | |
| Other Income | $25,000 | $19,200 | |
| Earnings before Interest & taxes (EBIT) | $385,000 | $677,200 | |
| Other Expenses (interest) | $105,000 | $64,000 | |
| Income Before Income Tax | $280,000 | $613,200 | |
| Income Tax Expense | $35,000 | $176,000 | |
| Net Income | $245,000 | $437,200 |
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Star Industries
Comparative Retained Earnings Statement
For the Years Ended December 31, 2010 and 2009
| 2010 | 2009 | ||
| Retained Earnings, Januray 1 | $ 723,000 | $ 355,800 | |
| Add Net Income for year | $245,000 | $437,200 | |
| Total | $ 968,000 | $ 793,000 | |
| Deduct dividends: | |||
| Preferred Stock | $ 40,000 | $ 40,000 | |
| Common Stock | $ 45,000 | $ 30,000 | |
| Total | $ 85,000 | $ 70,000 | |
| Retained Earnings, December 31 | $883,000 | $ 723,000 |
Star Industries
Comparative Balance Statement
December 31, 2010 and 2009
| 12-31-2010 | 12-31-2009 | ||||
| Assets | |||||
| Current Assets | |||||
| Cash | $235,000 | $215,000 | |||
| Temporary Investments | $10,000 | $50,000 | |||
| Accounts Receivable (Net) | $525,000 | $425,000 | |||
| Inventories | $940,000 | $580,000 | |||
| Prepaid Expenses | $30,000 | $20,000 | |||
| Total Current Assets | $1,740,000 | $1,290,000 | |||
| Long-Term Investments | $165,000 | $135,000 | |||
| Property, Plant and Equipment (Net) | $2,525,000 | $1,878,000 | |||
| Total Assets | $4,430,000 | $3,303,000 | |||
| Liabilities | |||||
| Current Liabilities | $950,000 | $780,000 | |||
| Long-Term Liabilities | |||||
| Mortgage Note Payable 8% (due 2013) | $410,000 | $0 | |||
| Bonds Payable, 7% (due 2016) | $1,200,000 | $800,000 | |||
| Total Long Term Liabilities | $1,610,000 | $800,000 | |||
| Total Liabilities | $2,560,000 | $1,580,000 | |||
| Stockholders' Equity | |||||
| Preferred 8% stock, $ 100 Par | $300,000 | $300,000 | |||
| Common Stock, $ 10 Par | $700,000 | $700,000 | |||
| Retained Earnings | $883,000 | $723,000 | |||
| Total Stockholders' Equity | $1,883,000 | $1,723,000 | |||
| Total Liabilities and Stockholders' Equity | $4,443,000 | $3,303,000 | |||
Determine the following measures for 2010: Compare with industry norms and comment:
| Ratios | Industry Norm | ||||
| 1. Working Capital | N/A | ||||
| 2. Current Ratio | 2.2 | ||||
| 3. Quick Ratio | 0.8 | ||||
| 4. Accounts Receivable Turnover | 16.0 | ||||
| 5. Number of days sales in receivables | 22.2 | ||||
| 6. Inventory Turnover | 5.0 | ||||
| 7. Number of days sales in inventory | 75.0 | ||||
| 8. Ratio of fixed assets to long-term liabilites | 2.0 | ||||
| 9. Ratio of liabilities to stockkholders equity | 0.7 | ||||
| 10. Number of times interest charges are earned | 8.5 | ||||
| 11. Number of times preferred dividends earned | 7.1 | ||||
| 12. Ratio of net sales to assets | 2.1 | ||||
| 13. Rate earned on total assets | 8.5% | ||||
| 14. Rate earned on stockholders' equity | 12.0% | ||||
| 15. Rate earned on common stockholders' equity | 14.2% | ||||
| 16. Earnings per share on common stock | $3.65 | ||||
| 17. Price-earnings ratio | 9.2 | ||||
| 18. Dividends per share | $0.80 | ||||
| 19. Dividend yield | 2.50% | ||||
Thanks!
I just need help with the chart at the bottom. Here is all the information for the company.
Accounts receivable for 2015__$300____
Total current assets= cash and marketable securities + account rec + inventory
1,542=347+a/r+895
Accounts rec = $300
Accounts payable for 2014__$319_____
Total Current Liabilities = Accrued Wages and taxes + Accounts Payable + Notes Payable
997 = 257 + Accounts Payable + 421
Accounts Payable = $319
c. Gross plant and equipment for 2015_$3,159______
Net Plant and Equipment = Gross Plant and Equipment â Depreciation
2,872 = Gross Plant and Equipment â 287
Gross Plant and Equipment = $3,159
d. Long-term debt for 2014__$132_____
Total Debt = Long-term Debt + Current Liabilities
1,129 = Long-term Debt + 997
Long-term Debt = $132
e. Common stock and paid-in surplus (250 million shares) for 2014 $300
Total Equity = Preferred Stock + Common Stock and paid surplus + Retained Earnings
1,472 = 30 + Common Stock and paid surplus + 1,142
Common Stock and paid surplus = $300
f. Total FA for 2015 $3,393
Total FA = Net Plant and Equipment + Other long-term assets
Total FA = $2,872 + 521
Total FA = $3,393
g. Net sales for 2015_______
Net Sales â Cost of Goods Sold = Gross Profit
Net Sales â 987 = 1,396
Net Sales = $2,383
h. Less: Cost of goods sold for 2014_______
Net Sales â Cost of Goods Sold = Gross Profit
2,018 - Cost of Goods Sold = 1,189
Cost of Goods Sold = $829
i. Less: Interest for 2015_______
EBIT- Interest = EBT
1,086 â Interest = 949
Interest = $137
j. Less: Taxes for 2015_______
Net Income = EBT â Taxes
644 = 949 â Taxes
Taxes = $305
k. Earnings per share (EPS) for 2015_______
Earning per share for 2015 = Net Income available to Common Stockholders / No of Common Stocks
Earning per share =566 / 250
Earning per share = $2.27 per share
l. Dividends per share (DPS) for 2014_______
Dividend per share = Common stock Dividend/ No of Common Stocks
Dividend per share = 219/250
Dividend per share = $0.88 per share
m. Book value per share (BVPS) for 2015_______
Book value per share= total common stockholderâs equity/No of Common Stocks
Book value per share= 1,789/250
Book value per share= 7.16
n. Net income $664
o. Increase in accrued wages and taxes $309-$257= $52
p. Increase in inventory â(895-797)= $ -98
q. Net cash flow from operating activities 664+287+52+62-41-98=$926
r. Increase in other long-term assets â(521-487)= $-34
s. Net cash flow from investing activities -343-34=-377
t. Increase in notes payable 492-421= 71
u. Pay dividends 98+219= 317
v. Net cash flow from financing activities 71+147-317= -99
w. Plus: Net income for 2015 $664
x. Preferred stock $98
Worldwide Widget Manufacturing, Inc.
| Company | Industry | Comparison | |
| Current Ratio | 2.2 times | ||
| Quick Ratio | 1.1 times | ||
| Cash Ratio | 0.35 times | ||
| Inventory Turnover | 2 times or 1 time | ||
| Days' sales in inventory | 135 days or 335 days | ||
| Average payment period | 110 days | ||
| Sales to working capital | 3 times | ||
| total asset turnover | 0.6 times | ||
| debt to equity | 1.1 times | ||
| profit margin | 16.5% | ||
| gross profit margin | 48.13% | ||
| ROA | 8.78% | ||
| ROE | 19.45% | ||
| Dividend payout | 32% |
A. Use the information found in Worldwide Widget Manufacturingâs financial statements to calculate all of the listed financial ratios in the above table for your company. Then, for each ratio, provide a comparison of the companyâs result with the industry standards, indicating if your companyâs results are lower than, higher than, slower than, or faster than the industry standards.
B. Calculate your companyâs internal and sustainable growth rates.
Fill in the remaining boxes and write short response toquestion.
| Company Name | McDonald's | Wendy's | YUM! | Industry | |
| Average | |||||
| Market Price of Common Stock (Stock Price) | $35.0 | $31.0 | $45.0 | $37.0 | |
| Revenue (Sales) | $22,151.0 | $3,550.0 | $8,380.0 | $11,360.3 | |
| Cost of Goods Sold | $7,384.1 | $2,299.6 | $3,940.0 | $4,541.2 | |
| Gross Profit | $14,766.9 | $1,250.4 | $4,440.0 | $6,819.1 | |
| SG&A Expense | $5,776.0 | $261.1 | $3,005.0 | $3,014.0 | |
| Depreciation + amortization | $1,148.2 | $167.8 | $401.0 | $572.3 | |
| Operating Income (EBIT) Earnings before interest and taxes | $7,842.7 | $821.5 | $1,034.0 | $3,232.7 | |
| Interest Expense | $467.1 | $48.5 | $164.5 | $226.7 | |
| Net Profits After Tax | $1,675.0 | $236.0 | $617.0 | $842.7 | |
| 3-5 Year Growth Rate In Earnings | 15.00 | 8.00 | 7.00 | 10.00 | |
| Cash | $492.8 | $171.2 | $192.0 | $285.3 | |
| Accounts Receivables | $734.5 | $124.0 | $169.0 | $342.5 | |
| Inventory | $129.4 | $54.4 | $67.0 | $83.6 | |
| Total Current Assets | $6,500.0 | $1,235.0 | $1,485.0 | $3,073.3 | |
| Total Assets | $28,524.0 | $3,164.0 | $6,500.0 | $12,729.3 | |
| Short Term Debt | $388.0 | $50.9 | $10.0 | $149.6 | |
| Total Current Liabilities | $2,485.8 | $528.5 | $1,461.0 | $1,491.8 | |
| Long Term Debt | $9,342.5 | $692.6 | $2,056.0 | $4,030.4 | |
| Total Liabilities (Total Debt) | $11,828.3 | $1,221.1 | $3,517.0 | $5,522.1 | |
| Stockholders Equity | $16,695.7 | $1,942.9 | $2,983.0 | $7,207.2 | |
| Annual Dividends paid to common stock | $578 | $54.0 | $125 | $252 | |
| Preferred Dividends | $0.0 | $0.0 | $0.0 | $0.0 | |
| # of Common Shares Outstanding | 1,154.0 | 114.7 | 292.0 | 520.2 | |
| Financial Ratio's | McDonald's | Wendy's | YUM! | Average | |
| Liquidity | |||||
| Current Ratio | 2.61 | 2.34 | 1.02 | 1.99 | |
| Quick Ratio | 2.56 | 2.23 | 0.97 | 1.92 | |
| Asset Activity | |||||
| Accounts Rec. Turnover | |||||
| Inventory Turnover | |||||
| Total Asset Turnover | |||||
| Debt | |||||
| Total Debt to Equity | |||||
| Equity Multiplier | |||||
| Times Interest Earned | |||||
| Profitability | |||||
| Gross Profit Margin | |||||
| Operating Profit Margin | |||||
| Net Profit Margin | |||||
| (ROA) Return On Assets | |||||
| (ROE) Return On Equity | |||||
| Market Value | |||||
| EPS | |||||
| P/E | |||||
| PEG Ratio | |||||
| Dividends Per Share | |||||
| Dividend Payout Ratio | |||||
| Book Value Per Share | |||||
| Price to Book Value | |||||
| Market Capitalization | |||||
| Cash Per Share | |||||
| Revenue Per Share |
Based on the Financial Ratio's, which company do you fell is thebest investment?
(enter answer in this textbox) (must be 100 words or more)
