Question

Joshua & White Technologies: December 31 Balance Sheets

(Thousands of Dollars)

Assets 2010 2009

Liabilities

& Equity 2010 2009

Cash and cash

equivalents $ 21,000 $ 20,000 Accounts payable $ 33,600 $ 32,000

Short-term

investments 3,759 3,240 Accruals 12,600 12,000

Accounts

receivable 52,500 48,000 Notes payable 19,929 6,480

Inventories 84,000 56,000

Total current

liabilities $ 66,129 $ 50,480

Total current

assets $161,259 $127,240

Long-term

debt 67,662 58,320

Net fixed assets 218,400 200,000 Total liabilities $133,791 $108,800

Total assets $379,659 $327,240 Common stock 183,793 178,440

Retained

earnings 62,075 40,000

Total common

equity $245,868 $218,440

Total liabilities

& equity $379,659 $327,240

Joshua & White Technologies December 31 Income Statements

(Thousands of Dollars)

2010 2009

Sales $420,000 $400,000

Expenses excluding depr. & amort. 327,600 320,000

EBITDA $ 92,400 $ 80,000

Depreciation and amortization 19,660 18,000

EBIT $ 72,740 $ 62,000

resource

116 Part 1: Fundamental Concepts of Corporate Finance

2010 2009

Interest expense 5,740 4,460

EBT $67,000 $57,540

Taxes (40%) 26,800 23,016

Net income $40,200 $34,524

Common dividends $18,125 $17,262

Other Data 2010 2009

Year-end stock price $ 90.00 $ 96.00

Number of shares (Thousands) 4,052 4,000

Lease payment (Thousands of Dollars) $20,000 $20,000

Sinking fund payment (Thousands of Dollars) $ 0 $ 0

Answer 1

						2/1/2012
Module 8.  Student Ch08 P 8-15 Build a Model
Joshua   & White Technologies: December 31 Balance Sheets
(Thousands   of Dollars)
Assets			2012	2011
Cash   and cash equivalents			$21,000	$20,000
Short-term   investments			3,759	3,240
Accounts   Receivable			52,500	48,000
Inventories			84,000	56,000
Total current assets			$161,259	$127,240
Net fixed assets			218,400	200,000
Total assets			$379,659	$327,240
Liabilities   and equity
Accounts   payable			$33,600	$32,000
Accruals			12,600	12,000
Notes   payable			19,929	6,480
Total current liabilities			$66,129	$50,480
Long-term   debt			67,662	58,320
Total liabilities			$133,791	$108,800
Common   stock			183,793	178,440
Retained   Earnings			62,075	40,000
Total common equity			$245,868	$218,440
Total   liabilities and equity			$379,659	$327,240
Joshua   & White Technologies December 31 Income Statements
(Thousands   of Dollars)
			2012	2011
Sales			$420,000	$400,000
Expenses   excluding depr. and amort.			327,600	320,000
EBITDA			$92,400	$80,000
Depreciation   and Amortization			19,660	18,000
EBIT			$72,740	$62,000
Interest   Expense			5,740	4,460
EBT			$67,000	$57,540
Taxes (40%)			26,800	23,016
Net Income			$40,200	$34,524
Common   dividends			$18,125	$17,262
Addition   to retained earnings			$22,075	$17,262
Other Data			2012	2011
Year-end   Stock Price			$90.00	$96.00
#   of shares (Thousands)			4,052	4,000
Lease   payment (Thousands of Dollars)			$20,000	$20,000
Sinking   fund payment (Thousands of Dollars)			$0	$0
Ratio   Analysis			2012	2011	Industry Avg
Liquidity   Ratios
Current Ratio			2.44	2.52	2.58
Quick Ratio			1.17	1.41	1.53
Asset   Management Ratios
Inventory Turnover			3.90	5.71	7.69
Days Sales Outstanding			45.63	43.80	47.45
Fixed Assets Turnover			1.92	2.00	2.04
Total Assets Turnover			1.11	1.22	1.23
Debt   Management Ratios
Debt Ratio			35.2%	33.2%	32.1%
Times-interest-earned ratio			12.67	13.90	15.33
EBITDA coverage ratio			4.37	4.09	4.18
Profitability   Ratios
Profit Margin			9.57%	8.63%	8.86%
Basic Earning Power			19.16%	18.95%	19.48%
Return on Assets			10.59%	10.55%	10.93%
Return on Equity			16.35%	15.80%	16.10%
Market   Value Ratios
Earnings per share			$9.92	$8.63	NA
Price-to-earnings ratio			9.07	11.12	10.65
Cash flow per share			$14.77	$13.13	NA
Price-to-cash flow ratio			6.09	7.31	7.11
Book Value per share			$60.68	$54.61	NA
Market-to-book ratio			1.48	1.76	1.72
a.  Has Joshua & White's liquidity position   improved or worsened? Explain.
J&W liquidity has worsened because there ratio has decreased   and is less then IA.  Also NP has   doubled from 2011 to 2012.
b.  Has Joshua & White's ability to   manage  its assets improved or   worsened? Explain.
J&W asset management has worsened. It is taking them longer   in 2012 to collect AR.  But for DOS   they are better than IA.
c.  How has Joshua & White's profitability   changed during the last year?
Yes, their numbers   have gone higher from 2011 to 2012.
d.  Perform an extended Du Pont analysis for   Joshua & White for 2008 and 2009.
	ROE  =	PM     x	TA Turnover    x      Equity Multiplier
2012	16.35%
2011	16.35%
e.  Perform a common size analysis. What has   happened to the composition
(that is, percentage in each category)   of assets and liabilities?
Common   Size Balance Sheets
Assets			2012	2011
Cash   and cash equivalents			5.5%	6.1%
Short-term   investments			1.0%	1.0%
Accounts   Receivable			13.8%	14.7%
Inventories			22.1%	17.1%
Total current assets			42.5%	38.9%
Net fixed assets			57.5%	61.1%
Total assets			100.0%	100.0%
Liabilities   and equity			2012	2011
Accounts   payable			8.9%	9.8%
Accruals			3.3%	3.7%
Notes   payable			5.2%	2.0%
Total current liabilities			17.4%	15.4%
Long-term   debt			17.8%	17.8%
Total liabilities			35.2%	33.2%
Common   stock			48.4%	54.5%
Retained   Earnings			16.4%	12.2%
Total common equity			64.8%	66.8%
Total   liabilities and equity			100.0%	100.0%
Common   Size Income Statements			2012	2011
Sales			100.0%	100.0%
Expenses   excluding depr. and amort.			78.0%	80.0%
EBITDA			22.0%	20.0%
Depreciation   and Amortization			4.7%	4.5%
EBIT			17.3%	15.5%
Interest   Expense			1.4%	1.1%
EBT			16.0%	14.4%
Taxes (40%)			6.4%	5.8%
Net Income			9.6%	8.6%