This is a group assignment. Please go to People > Groups > Case Study #2 to sign up for a group. One group consists of no more than THREE people. All group members will receive the same grade. If someone in the group didn't contribute, the other group members will need to email me to explain the situation.
Your submission should clearly list the financial ratios and their calculation detail. More importantly, you are expected to provide analysis on how to interpret the ratio results and how they are compared with the industry benchmarks.
Please give a detailed analysis of the financial statements given below for Joshua & White Technologies. Your analysis should include answers to the questions as follows (not limited to these questions):
· Has the company’s liquidity position improved or worsened? How’s it compared with the industry average?
· Has the company’s ability to manage its assets improved or worsened? How’s it compared with the industry average?
· How has the company’s profitability changed during the last year? How’s it compared with the industry average?
Note: you may need to research on the industry average on financial ratios for Information Technology companies.
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Joshua & White Technologies: December 31 Balance Sheets |
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(Thousands of Dollars) |
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Assets |
2019 |
2018 |
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Cash and cash equivalents |
$21,000 |
$20,000 |
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Short-term investments |
3,759 |
3,240 |
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Accounts Receivable |
52,500 |
48,000 |
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Inventories |
84,000 |
56,000 |
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Total current assets |
$161,259 |
$127,240 |
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Net fixed assets |
223,097 |
200,000 |
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Total assets |
$384,356 |
$327,240 |
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Liabilities and equity |
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Accounts payable |
$33,600 |
$32,000 |
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Accruals |
12,600 |
12,000 |
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Notes payable |
19,929 |
6,480 |
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Total current liabilities |
$66,129 |
$50,480 |
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Long-term debt |
67,662 |
58,320 |
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Total liabilities |
$133,791 |
$108,800 |
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Common stock |
178,440 |
178,440 |
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Retained Earnings |
72,125 |
40,000 |
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Total common equity |
$250,565 |
$218,440 |
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|
Total liabilities and equity |
$384,356 |
$327,240 |
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Joshua & White Technologies December 31 Income Statements |
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(Thousands of Dollars) |
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|
2019 |
2018 |
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Sales |
$420,000 |
$400,000 |
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COGS except excluding depr. and amort. |
300,000 |
298,000 |
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|
Depreciation and Amortization |
19,660 |
18,000 |
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|
Other operating expenses |
27,600 |
22,000 |
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EBIT |
$72,740 |
$62,000 |
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Interest Expense |
5,740 |
4,460 |
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EBT |
$67,000 |
$57,540 |
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Taxes (25%) |
16,750 |
14,385 |
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Net Income |
$50,250 |
$43,155 |
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|
Common dividends |
$18,125 |
$17,262 |
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|
Addition to retained earnings |
$32,125 |
$25,893 |
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Other Data |
2019 |
2018 |
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Year-end Stock Price |
$90.00 |
$96.00 |
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# of shares (Thousands) |
4,052 |
4,000 |
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Lease payment (Thousands of Dollars) |
$20,000 |
$20,000 |
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Sinking fund payment (Thousands of Dollars) |
$5,000 |
$5,000 |
