Solution 7/16/2015 Chapter: 3 Problem: 15 Joshua & White Technologies: December

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Solution 7/16/2015 Chapter: 3 Problem: 15 Joshua & White Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets 2016 2015 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) 2016 2015 Sales $420,000 $400,000 COGS except excluding depr. and amort. 300,000 298,000 Depreciation and Amortization 19,660 18,000 Other operating expenses 27,600 22,000 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 2016 2015 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) $5,000 $5,000 Ratio Analysis 2016 2015 Industry Avg Liquidity Ratios    Current Ratio 2.58    Quick Ratio 1.53 Asset Management Ratios    Inventory Turnover (Total COGS/Inventories) 7.69    Days Sales Outstanding 47.45    Fixed Assets Turnover 2.04    Total Assets Turnover 1.23 Debt Management Ratios    Debt Ratio (Total debt-to-assets) 20.0%    Liabilities-to-assets ratio 32.1%    Times-interest-earned ratio 15.33    EBITDA coverage ratio 4.18 Profitability Ratios    Profit Margin 8.86%    Basic Earning Power 19.48%    Return on Assets 10.93%    Return on Equity 16.10% Market Value Ratios    Earnings per share NA    Price-to-earnings ratio 10.65    Cash flow per share NA    Price-to-cash flow ratio 7.11    Book Value per share NA    Market-to-book ratio 1.72 Hello, we are supposed to solve for 2015 & 2016's Liquidity Ratios all the way down to market-to-book ratios of both years. It is one large question, but , if you cannot answer all of them, can I at least get help with the Market Value Ratios. Formulas and answers in order to check my answers. Thank you! Solution 7/16/2015 Chapter: 3 Problem: 15 Joshua & White Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets 2016 2015 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) 2016 2015 Sales $420,000 $400,000 COGS except excluding depr. and amort. 300,000 298,000 Depreciation and Amortization 19,660 18,000 Other operating expenses 27,600 22,000 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 2016 2015 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) $5,000 $5,000 Ratio Analysis 2016 2015 Industry Avg Liquidity Ratios    Current Ratio 2.58    Quick Ratio 1.53 Asset Management Ratios    Inventory Turnover (Total COGS/Inventories) 7.69    Days Sales Outstanding 47.45    Fixed Assets Turnover 2.04    Total Assets Turnover 1.23 Debt Management Ratios    Debt Ratio (Total debt-to-assets) 20.0%    Liabilities-to-assets ratio 32.1%    Times-interest-earned ratio 15.33    EBITDA coverage ratio 4.18 Profitability Ratios    Profit Margin 8.86%    Basic Earning Power 19.48%    Return on Assets 10.93%    Return on Equity 16.10% Market Value Ratios    Earnings per share NA    Price-to-earnings ratio 10.65    Cash flow per share NA    Price-to-cash flow ratio 7.11    Book Value per share NA    Market-to-book ratio 1.72 Hello, we are supposed to solve for 2015 & 2016's Liquidity Ratios all the way down to market-to-book ratios of both years. It is one large question, but , if you cannot answer all of them, can I at least get help with the Market Value Ratios. Formulas and answers in order to check my answers. Thank you!

Explanation / Answer

As per rules I will answer the first 4 subparts of the question:

1: EPS= Earnings available to equity shareholders/ shares outstanding

2016 = 40200,000/ 4052,000 = $9.92

2015 = 34524,000/ 4000,000 = $8.63

2: PE Ratio = Price/ EPS

2016 = 90/9.92= 9.07

2015 = 96/8.63 = 11.12

3: Cash flow per share=Operating Cash flow/ Number of shares

2016 = (40200000+19660000)/ 4052000= $14.77

2015 = (34524,000+ 18000,000)/ 4000,000= $13.13

4: Price to cash flow ratio= Price/ Cash flow per share

2016 = 90/14.77 = 6.09

2015 = 96/ 13.13 = 7.31

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