Question

The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.

Balance Sheet (Millions of $) Assets 2016 Cash and securities $ 1,554.0

Accounts receivable 9,660.0

Inventories 13,440.0

Total current assets $24,654.0

Net plant and equipment 17,346.0

Total assets $42,000.0

Liabilities and Equity Accounts payable $ 7,980.0

Notes payable 5,880.0

Accruals 4,620.0

Total current liabilities $18,480.0

Long-term bonds 10,920.0

Total liabilities $29,400.0

Common stock 3,360.0

Retained earnings 9,240.0

Total common equity $12,600.0

Total liabilities and equity $42,000.0

Income Statement (Millions of $) 2016 Net sales $58,800.0

Operating costs except depreciation $54,978.0

Depreciation $ 1,029.0

Earnings bef int and taxes (EBIT) $ 2,793.0

Less interest 1,050.0

Earnings before taxes (EBT) $ 1,743.0

Taxes $ 610.1

Net income $ 1,133.0

Other data: Shares outstanding (millions) 175.00

Common dividends $ 509.83

Int rate on notes payable & L-T bonds 6.25%

Federal plus state income tax rate 35% Year-end stock price $77.69.

What is the firm's days sales outstanding? Assume a 360-day year for this calculation.
What is the firm's ROE?
What is the firm's dividends per share?
What is the firm's cash flow per share?
What is the firm's EPS?

Answer 1

Day sales outstanding = accounts receivable/ Net sales*360

= 9,660/58,800*360

= 59 days

Return on equity = Net income/shareholders Equity

= 1,133/12,600

=8.99%

Dividend per share = Dividend/no.of shares

= 509.83/175

=2.91

Cash flow per share = EBIT*(1-tax rate)+depreciation/shares Outstanding

= 1,743*(1-0.35)+1,029/175

=12.35

EPS = Net income/shares Outstanding

= 1,133/175

=6.47