In 2015, 2016 and 2017, how did IPG Photonics (IPGP) generate most of its cash flow?...

Question

Question

In 2015, 2016 and 2017, how did IPG Photonics (IPGP) generate most of its cash flow?...

In 2015, 2016 and 2017, how did IPG Photonics (IPGP) generate most of its cash flow?

a. through operations (by doing what it is in the business of doing)

b. by selling off its building and equipment, which could indicate it was in financial trouble

c. by obtaining bank loans, which could indicate either it was a startup company, or it was in financial trouble

d. by issuing stock, which could indicate it was a startup company

Calculator

Calculate the dollar amount of increase or decrease in IPGP’s working capital from the end of 2016 to the end of 2017.

Remember to check the financial statements to see if the numbers are in thousands or millions (or neither). Include all the zeros in your answer. Do not type commas in the numbers.

$

Calculate the percent of increase or decrease in IPGP’s working capital from the end of 2016 to the end of 2017.

Round your answer to one decimal place.

%

At the end of the 2017 fiscal year, based on the liquidity measures of Working Capital, Current Ratio and Quick Ratio, how does IPGP’s ability to pay current liabilities and pay them on time compare to the same measures for its closest competitor, Coherent, Inc. and other companies in the same industry?

Remember, Coherent’s ratios (and industry averages) are on the right of the Ratios worksheet you completed in Step 2.

At the end of the 2017 fiscal year, IPGP was in a position than its competitors to pay current liabilities and pay them on time.

Which company will probably have an easier time obtaining a short-term loan?

Remember that “net” means something has been subtracted. What has been subtracted from IPGP’s Accounts Receivable on the balance sheet?

a. The cumulative amount of depreciation recorded in the past

b. The amount of refunds IPGP received from its vendors because of defective products IPGP returned

c. The amount of discounts IPGP received from vendors because of paying invoices early

d. The estimated amount of money IPGP will not be able to collect from customers who owe IPGP for poducts and services already delivered to those customers

e. The amount of inventory shrinkage

How many days, on average in 2017, did it take IPGP to collect payments from customers for products and services IPGP had sold to them?

Round your answer to one decimal place.

days

Given the data you have, which of the following statements is (are) true regarding IPGP’s management of accounts receivable?

Hint: When asked about IPGP's competition, remember to look on the Ratios worksheet at Coherent and the industry averages.

a. Comparing 2017 to 2016, the percent increase in IPGP’s Net Sales was larger than the percent increase in its Accounts Receivable.

b. If IPGP’s typical credit terms are 2/10, n/30, receivables need to be further analyzed to find out why they are taking longer to collect than they should be.

c. If IPGP's credit terms are typically something such as 2/20, n/60, the company's collection of receivables is on track.

d. In 2017 and 2016, on average, IPGP collected its receivables more slowly than its competitors collected their receivables.

e. A, B, and C are true.

f. B and C are true.

g. B, C, and D are true.

h. A, B, C and D are true.

What method of inventory valuation does IPGP use for accounting purposes? (Refer to Note 1 in the Notes to the Financial Statements.)

a. FIFO

b. LIFO

c. Average Cost

How many days, on average, in 2017 did it take IPGP to sell its inventory?

Round your answer to one decimal place.

days

Given the data you have, which of the following statements is (are) true regarding IPGP's management of inventory?

a. The ratios indicate IPGP has been managing its inventory less efficiently than Coherent, but more efficiently than the industry on average.

b. Comparing 2017 to 2016, the percent increase in IPGP's Cost of Sales was larger than the percent increase in its Inventory.

c. It took IPGP more days to sell its inventory in 2017 than it took in 2016.

d. In 2017, IPGP took longer than Coherent to sell its inventory.

e. A, B, and D are true.

f. B, C, and D are true.

g. C and D are true.

h. A, B, C, and D are true.

Looking at IPGP’s and Coherent, Inc.’s Statements of Cash Flows, which of the following statements is (are) true regarding the companies’ cash investment in property, plant, and equipment in 2015, 2016, and 2017?

a. IPGP brought in more money from selling property and equipment than it spent buying and/or improving property and equipment.

b. Each year, IPGP invested more cash in new property and equipment than that year's depreciation and amortization on existing assets. (See the top section of the Statement of Cash Flows to find "Depreciation and Amortization" for each year.)

c. Each year, as compared to the previous year, IPGP steadily decreased the amount of money it invested in property, plant, and equipment.

d. Each year, IPGP invested more money in property, plant, and equipment than Coherent, Inc. invested in property and equipment.

e. A and C are true.

f. B and D are true.

To answer the questions, you will need the two IPG Photonics worksheets you completed in Steps 1 and 2 of this assignment. You will also need the IPG Photonics 12/31/2017 financial statements from the Form 10-K filed 2/28/2018 and the Coherent, Inc. 9/30/2017 financial statements from the Form 10-K filed 11/28/2017. If you have not already printed those worksheets and financial statements, see the Canvas module for information.