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C. Net Cash Flow From Operating Activities in 2009: Income Statement 2009

The document provides financial statements and ratios for two companies, Heifer Sports Corporation and an unnamed company, for the years 2006-2009 and 2008-2009 respectively. It asks to: 1) Calculate 11 financial ratios for Heifer Sports from the 2009 financial statements. 2) Use the DuPont method to calculate ROE for Heifer Sports in 2006 and 2009 and discuss the impact of changes in asset turnover and leverage. 3) Calculate 8 financial ratios for the unnamed company from its 2009 financial statements.

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70 views

C. Net Cash Flow From Operating Activities in 2009: Income Statement 2009

The document provides financial statements and ratios for two companies, Heifer Sports Corporation and an unnamed company, for the years 2006-2009 and 2008-2009 respectively. It asks to: 1) Calculate 11 financial ratios for Heifer Sports from the 2009 financial statements. 2) Use the DuPont method to calculate ROE for Heifer Sports in 2006 and 2009 and discuss the impact of changes in asset turnover and leverage. 3) Calculate 8 financial ratios for the unnamed company from its 2009 financial statements.

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© © All Rights Reserved
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1.

Analyse the financial statements as in the following Table to calculate the company financial
ratios:
a. Inventory turnover ratio in 2009
b. Debt/equity ratio in 2009
c. Net cash flow from operating activities in 2009
d. Average collection period
e. Asset turnover ratio
f. Interest coverage ratio
g. Operating profit margin
h. Return on equity
i. P/E ratio. Market price of share is $1.
j. Leverage ratio

Financial statement of Heifer Sports Corporation


Income statement 2009
Sales 5.500.000
Cost of goods sold 2.850.000
Depreciation and Amortisation 280.000
Administration and selling 1.500.000
expenses
EBIT 870.000
Interest expense 130.000
EBT 740.000
Tax 330.000
EAT 410.000
Balance sheet, at the end of 2009 2008
year
Assets
Cash 50.000 40.000
Account receivables 660.000 690.000
Inventories 490.000 480.000
Total current assets 1.200.000 1.210.000
Net fixed assets 3.100.000 2.800.000
Total assets 4.300.000 4.010.000
Liabilities and equity
Account payable 340.000 450.000
Short-term debt 480.000 550.000
Total current liability 882.000 1.000.000
Long-term bond 2.520.000 2.200.000
Total liabilities 3.340.000 3.200.000
Common stock 310.000 310.000
Retained earnings 650.000 500.000
Total equity 960.000 810.000
Total liability and equity 4.300.000 4.010.000

1
2. Use DuPont method to determine the return on equity as a function of these following components
o Operating margin
o Asset turnover
o Interest burden
o Financial leverage
o Income tax rate
Only use the number in the following table:
a. Calculate each component of DuPont method for the years 2006 and 2009, and calculate ROE for
both years using these 5 components.
b. Give a short discussion about the impact of the change in the asset turn over and leverage to the
return on equity for the year 2006 and 2009.

2006 2009
Numbers from Income statement
Sales 542 979
Operating income 38 76
Depreciation and 3 9
amortisation
Interest expenses 3 0
EBT 32 67
Tax expenses 13 37
EAT 19 30
Numbers from Balance Sheet
Fixed assets 41 70
Total assets 245 291
Working capital 123 157
Total liabilities 16 0
Total equity 159 220

3. Analyse the financial statements as in the following Table to calculate the company financial ratios
from the a to h for the year 2009
a. Quick ratio
b. Return on asset
c. Return on equity
d. Earning per common share
e. Operating margin
f. Interest coverage ratio
g. Inventory turn over
h. Leverage

2
Assets 2008 2009
Cash 683 325
Account receivables 1490 3599
Inventory 1415 2423
Prepaid expenses 15 13
Total current assets 3603 6360
Net plant and equipment 1066 1541
Other assets 123 157
Total assets 4792 8058
Liabilities
Bank loans 875
Current loans 38 115
Account payables 485 933
Estimated tax 588 472
Other expenses 576 586
Customers payables 34 963
Total current liabilities 1721 3945
Long-term loans 122 179
Other liabilities 81 131
Total liabilities 1924 4255
Equity
Common stock, nominal value 550 829
1 USD, in which 1.000.000
listed shares, circulated shares
550.000 (2008) and 829.000
(2009)
Preference stock, nominal value 500 450
25 USD paying 10 % dividend,
in which 25.000 listed shares,
circulated shares 20.000 (2008)
and 18.000 (2009)
Additional capital 450 575
Retained earnings 1368 1949
Total equity 2868 3803
Total liabilities and equity 4792 8058

3
2008 2009
Net sales 7570 12065
Other net income 261 345
Total sales 7831 12410
Cost of goods sold 4850 8048
Administration and marketing 1531 2025
expenses
Interest expenses 22 78
Total expenses 6403 10151
EBT 1428 2259
Tax expenses 628 994
EAT 800 1265

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