Assignment Instructions And Specific Calculations For Financ

Assignment Instructions and Specific Calculations for Financial Analysis

Enter all answers directly in this worksheet. When finished select Save As, and save this document using your last name and student ID as the file name. Upload the data sheet to Blackboard as a .doc, .docx or .rtf file when you are finished. Use the provided balance sheet and income statement from Carver Enterprises to complete parts a and b: a. (15 points) Prepare a common size balance sheet for Carver Enterprises. Complete the common-size balance sheet: (Round to one decimal place.) Common‑Size Balance Sheet 2013 Cash and marketable securities $ 490 % Accounts receivable 5,990 Inventories 9,550 Current assets $ 16,030 % Net property plant and equipment 17,030 Total assets $ 33,060 % Accounts payable $ 7,220 % Short‑term debt 6,800 Current liabilities $ 14,020 % Long‑term liabilities 7,010 Total liabilities $ 21,030 % Total owners’ equity 12,030 Total liabilities and owners’ equity $ 33,060 % b. (15 points) Prepare a common-size income statement for Carver Enterprises. Complete the common-size income statement: (Round to one decimal place.) Common‑Size Income Statement 2013 Revenues $ 30,020 % Cost of goods sold (19,950) Gross profit $ 10,070 % Operating expenses (7,960) Net operating income $ 2,110 % Interest expense (940) Earnings before taxes $ 1,170 % Taxes (425) Net income $ 745 % Use the data table of Campbell Industries liabilities and owners' equity to complete parts a and b: a. (5 points) What percentage of the firm's assets does the firm finance using debt (liabilities)? (Round to one decimal place.) b. (5 points) If Campbell were to purchase a new warehouse for $1.3 million and finance it entirely with long-term debt, what would be the firm's new debt ratio? (Round to one decimal place.) Conduct a liquidity analysis for Airspot Motors, Inc., which has $2,433,200 in current assets and $869,000 in current liabilities: How much can the firm increase its inventory without its current ratio falling below 2.1 (assuming all other assets and current liabilities remain constant)? (Round to one decimal place.) Conduct an efficiency analysis for Baryla Inc., which last year had $93 million sales and a gross profit margin of 45 percent: a. How much inventory can Baryla hold to maintain an inventory turnover ratio of at least 6.3 times? (Round to one decimal place.) b. Currently, Baryla has $2.3 million of non-salable inventory. What inventory ratio must the good inventory maintain to achieve an overall turnover ratio of at least 6.3 (including unsalable items)? (Round to one decimal place.) In profitability and capital structure analysis of Callaway Lighting: with sales of $5,470,000, COGS of $4,460,000, operating expenses of $128,000, and increased retained earnings of $42,000, and 99,000 shares outstanding, paying $4.770 dividend per share, with $1,180,000 debt at 7.7% interest, construct the income statement, calculate operating profit margin and net profit margin, and compute times interest earned ratio. Interpret the firm's ability to service its debt. Determine the firm's return on equity. Conduct a market value analysis for Lei Materials, with total assets of $1.16 billion, current liabilities of $132 million, long-term debt of $415 million, common equity of $613 million, 58 million shares, and a stock price of $52.08. Calculate the market-to‑book ratio. Use DuPont analysis for Bryley, Inc., which earned 5.1% net profit margin, with an equity multiplier of 3.49, total assets of $109 million, and sales of $157 million, to find the return on equity. Use the J. P. Robard Mfg. Company's balance sheet and income statement to compute ratios: current ratio, times interest earned, inventory turnover, total asset turnover, operating profit margin, operating return on assets, debt ratio, average collection period, fixed asset turnover, and return on equity. Fill in all calculations with appropriate rounding and interpret the financial metrics accordingly.

Paper For Above instruction

The above instructions encompass a comprehensive set of financial analysis tasks designed to evaluate various aspects of corporate financial health and valuation. These exercises illustrate key concepts such as vertical and horizontal analysis, ratio analysis, valuation methods including NPV and IRR, and different valuation approaches like P/E and dividend discount models. This array of calculations provides insights into a company's financial stability, liquidity, profitability, asset utilization, and market valuation, which are crucial for making informed managerial and investment decisions.

Beginning with Carver Enterprises, constructing a common-size balance sheet involves expressing each asset, liability, and equity item as a percentage of total assets—$33,060 in this case—to facilitate comparisons over time or between firms of different sizes. For 2013, each line item is divided by total assets, and the result is expressed as a percentage. Similarly, the income statement items are transformed into percentages of total revenues ($30,020), aiding in identifying income and expense structure trends.

Next, Campbell Industries' data requires calculating the percentage of assets financed by liabilities. The debt ratio is obtained by dividing total liabilities by total assets, and the impact of financing a new warehouse entirely with long-term debt on this ratio can be assessed by recalculating based on the increased liabilities and unchanged assets. This measure indicates leverage, which affects financial risk.

For liquidity analysis of Airspot Motors, calculating the maximum increase in inventory without breaching a current ratio of 2.1 involves analyzing current assets and liabilities, maintaining the ratio threshold. This informs decisions about inventory management and liquidity safety.

In efficiency analysis of Baryla Inc., inventory turnover ratios depict how effectively inventory is managed. To maintain a specific turnover ratio, inventory levels are derived from sales and gross profit margin data. Adjustments account for unsalable goods, requiring re-calculation and SWIFT understanding of how non-salable inventory impacts overall turnover performance.

In profitability and capital structure evaluation for Callaway Lighting, constructing an income statement from provided data involves calculating gross profit, operating income, taxable income, net income, and related margins, to assess profitability. The times interest earned ratio reveals the firm's capacity to meet interest obligations, while the return on equity provides profitability from shareholders’ perspective, considering the leverage.

Market value analysis of Lei Materials involves deriving the market-to-book ratio, a measure of market valuation relative to book value, which is informative about investor expectations and growth prospects. Applying DuPont analysis for Bryley, Inc., decomposes ROE into profit margin, asset turnover, and leverage, offering a detailed view of efficiency, profitability, and financial leverage.

Finally, the detailed ratio calculations for J. P. Robard Mfg. encompass liquidity (current ratio), profitability (profit margins, return on assets and equity), leverage (debt ratio), and operational efficiency (inventory turnover, fixed asset turnover, collection period). These ratios should be interpreted along with industry benchmarks to assess overall financial health and operational efficiency, aiding strategic decision-making.

References

• Brigham, E. F., & Ehrhardt, M. C. (2019). Financial Management: Theory & Practice. Cengage Learning.
• Ross, S. A., Westerfield, R. W., & Jaffe, J. (2021). Corporate Finance. McGraw-Hill Education.
• Damodaran, A. (2012). Investment Valuation: Tools and Techniques for Determining the Value of Any Asset. Wiley Finance.
• Fridson, M. S., & Alvarez, F. (2019). Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports. Wiley.
• Gitman, L. J., & Zutter, C. J. (2018). Principles of Managerial Finance. Pearson.
• Higgins, R. C. (2018). Analysis for Financial Management. McGraw-Hill Education.
• Brealey, R. A., Myers, S. C., & Allen, F. (2020). Principles of Corporate Finance. McGraw-Hill Education.
• Penman, S. H. (2013). Financial Statement Analysis and Security Valuation. McGraw-Hill Education.
• Monteiro, A. (2017). Financial Ratio Analysis. Routledge.
• Investopedia. (2023). Financial Ratios. Retrieved from https://www.investopedia.com/terms/f/financial-ratios.asp