Question

Case Analysis #1 Financial Statements Analysis Part #1 1-One the right side of the Excel Sheet, there are key financial ratios for this particular industry for 2016. Calculate those same ratios for the company given in this file for years 2012 to 2016 based on the income statement and balance sheet information provided 2-Calculate the amount of Dividends that this company paid and the payout ratio over 2012 to 2016 3-Calculate the FCFF for years 2013 to 2016. 5 6 7 8 9

Answer 1

Solution for 1 & 3 has been worked as under:-

Sol 1	Key Financial Ratios	Formula	2012	2013	2014	2015	2016
	Current Ratio	Total Current Assets / Total Current Liabilities	2.22	2.34	2.68	2.52	2.56
	Cash Ratio	All Cash or Cash Equivalent / Total Current Liabilities	0.54	0.58	0.75	0.63	0.60
	Parts Inventory Turnover in Days	Avg. Part Inventories / COGS per Day	70	50	57	47	46
	WIP Inventory Turnover in Days	Avg. WIP Inventories / COGS per Day	7	4	4	3	3
	FG Inventory Turnover in Days	Avg FG Inventory / COGS per day	99	77	87	71	69
	A/R Turnover in Days	Avg A/R / Sales per day	54	36	41	38	38
	A/P Turnover in Days	Avg A/P / COGS per day	117	84	84	65	63
	Cash Conversion Cycle	Total Inventory turnover in Days + A/R Turnover in Days - A/P Turnover in Days	114	84	106	94	94
	Fixed Assets Turnover	Net Sales / Net Fixed Assets	2.63	4.42	4.61	4.22	3.46
	Total Assets Turnover	Net Sales / Avg Total Assets	1.03	1.67	1.52	1.59	1.50
	Debt Ratio	Total Liabilities other than Net Worth / Total Assets	0.63	0.70	0.71	0.65	0.63
	Times Interest Earned	Operating Profit / Interest	6.32	6.87	4.84	5.73	4.63
	Gross Profit Margin	Gross Profit / Sales	38.21%	42.37%	41.97%	35.22%	34.33%
	Operating Profit Margin	Operating Profit/ Sales	15.70%	18.46%	16.13%	13.06%	11.19%
	Net Profit Margin	Net Profit / Sales	8.59%	10.25%	8.32%	7.01%	5.70%
	Return on Assets	Net Income/ Avg Total Assets	8.84%	17.17%	12.67%	11.14%	8.53%
	Return on Equity	Net Income / Share Holders Equity	23.85%	41.85%	35.22%	29.41%	21.17%
Sol 3	FCFF	Net Income (with Interest) +Depreciation-Capex-Change in Net Working Capital
		Net Income add Interest		70,05,75,599	1,01,01,86,301	1,13,07,74,100	1,10,91,77,151
		Depreciation		12,24,65,588	18,79,29,165	28,82,16,088	39,44,40,051
		Capex		41,05,11,590	65,46,35,773	1,00,28,69,228	1,06,22,39,638
		Net Working Capital=Current Assets - Current Liabilities	69,67,60,110	1,80,87,60,917	3,20,43,62,874	3,27,78,92,644	3,66,33,33,120
		Change in NWC		1,11,20,00,807	1,39,56,01,957	7,35,29,770	38,54,40,476
		FCFF		-69,94,71,210	-85,21,22,264	34,25,91,190	5,59,37,088

Note: Assumption for calculating Turnover Ratios for Year 2012 was that instead of Average the Closing Inventories, A/R, A/P and other amounts were taken as opening figures are not available for averaging.

For Solution 2: The Dividend information cannot be deduced from the Financials thus for Dividend payout some information about retained earnings should have been provided.