Question

Consider the following scenario: Your boss has come to you for advice on the current finances of the company and needs you to create an extended DuPont analysis, common size analysis, and percentage change analysis. Your boss wants you to fill out the attached Excel file because he/she has no idea what she is talking about and is going to use your report as her work. Remember to answer all the questions in the attached document. Has J&W's liquidity position improved or worsened? Explain Has J&W's ability to manage its assets improved or worsened? Explain How has J&W's profitability changed during the last year? Perform an extended DuPont analysis for J7W for 2015 and 2016. What do these results tell you? Perform a common size analysis. What has happened to the composition (That is, the percentage in each category) of assets and liabilities? Perform a percentage change analysis. What does this tell you about the change in profitability and asset utilization?

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
a. Has Joshua & White's liquidity position improved or worsened? Explain.
							b. Has Joshua & White's ability to manage its assets improved or worsened? Explain.
							c. How has Joshua & White's profitability changed during the last year?
d. Perform an extended Du Pont analysis for Joshua & White for 2008 and 2009.
	ROE =	PM     x	TA Turnover    x    Equity Multiplier
2016
2015
							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			2016	2015
Cash and cash equivalents
Short-term investments
Accounts Receivable
Inventories
Total current assets
Net fixed assets
Total assets
Liabilities and equity			2016	2015
Accounts payable
Accruals
Notes payable
Total current liabilities
Long-term debt
Total liabilities
Common stock
Retained Earnings
Total common equity
Total liabilities and equity
Common Size Income Statements			2016	2015
Sales
COGS except excluding depr. and amort.
Depreciation and Amortization
Other operating expenses
EBIT
Interest Expense
EBT
Taxes (40%)
Net Income
							f. Perform a percent change analysis. What does this tell you about the change in profitability
and asset utilization?
Percent Change Balance Sheets				Base
Assets			2016	2015
Cash and cash equivalents
Short-term investments
Accounts Receivable
Inventories
Total current assets
Net fixed assets
Total assets
				Base
Liabilities and equity			2016	2015
Accounts payable
Accruals
Notes payable
Total current liabilities
Long-term debt
Total liabilities
Common stock
Retained Earnings
Total common equity
Total liabilities and equity
				Base
Percent Change Income Statements			2016	2015
Sales
COGS except excluding depr. and amort.
Depreciation and Amortization
Other operating expenses
EBIT
Interest Expense
EBT
Taxes (40%)
Net Income

Answer 1

	Comparative Balance Sheet of Company for the past two years are as follows:
	Year	2016	2015
	Cash & Cash equivalents	$                              21,000.00	$                               20,000.00
	Accounts Receivable	$                              52,500.00	$                               48,000.00
	Inventories	$                              84,000.00	$                               56,000.00
	Short Term Investments	$                                 3,759.00	$                                 3,240.00
	Total Current Assets	$                            161,259.00	$                            127,240.00
	Net Fixed Assets	$                            218,400.00	$                            200,000.00
	Total Assets	$                            379,659.00	$                            327,240.00
	Accounts Payable	$                              33,600.00	$                               32,000.00
	Accruals	$                              12,600.00	$                               12,000.00
	Notes Payable	$                              19,929.00	$                                 6,480.00
	Total Current Liabilities	$                              66,129.00	$                               50,480.00
	Long Term Debts	$                              67,662.00	$                               58,320.00
	Common stock	$                            183,793.00	$                            178,440.00
	Retained Earnings	$                              62,075.00	$                               40,000.00
	Total Stockholder's Equity	$                            245,868.00	$                            218,440.00
	Total Liabilities & Stockholder's Equity	$                            379,659.00	$                            327,240.00
Ans)	Year	%of Total Assets(2016)	% of Total assets (2015)
	Cash & Cash Equivalents	(21000/379659)	(20000/327240)
	Accounts Receivable	(52500/379659)	(48000/327240)
	Inventories	(84000/379659)	(56000/327240)
	Short Term Investments	(3759/379659)	(3240/327240)
	Total Current Assets	(161259/379659)	(127240/327240)
	Net Fixed Assets	(218400/379659)	(200000/327240)
	Total Assets	(379659/379659)	(327240/327240)
	Accounts Payable	(33600/379659)	(20000/802000)
	Accruals	(12600/379659)	(12000/327240)
	Notes Payable	(19929/379659)	(6480/327240)
	Total Current Liabilities	(66129/379659)	(50480/327240)
	Long Term debts	(67662/379659)	(58320/327240)
	Common stock	(183793/379659)	(178440/327240)
	Retained Earnings	(62075/379659)	(40000/327240)
	Total Stockholder's Equity	(245868/379659)	(218440/327240)
	Total Liabilities & Stockholder's Equity	(379659/379659)	(327240/327240)
	Common Size Balance Sheet
Ans)	Year	%of Total Assets(2016)	% of Total assets (2015)
	Cash & Cash Equivalents	6%	6%
	Accounts Receivable	14%	15%
	Inventories	22%	17%
	Short Term Investments	1%	1%
	Total Current Assets	42%	39%
	Net Fixed Assets	58%	61%
	Total Assets	100%	100%
	Accounts Payable	9%	2%
	Accruals	3%	4%
	Notes Payable	5%	2%
	Total Current Liabilities	17%	15%
	Long Term debts	18%	18%
	Common stock	48%	55%
	Retained Earnings	16%	12%
	Total Stockholder's Equity	65%	67%
	Total Liabilities & Stockholder's Equity	100%	100%
	Year	2016	2015
	Sales	420000	400000
	COGS	300000	298000
	Gross Profit	120000	102000
	Depreciation	19660	18000
	Other Operating Expenses	27600	22000
	EBIT	72740	62000
	Interest Expense	5740	4460
	EBT	67000	57540
	Taxes(40%)	26800	23016
	Net Income	40200	34524
	Year	2016	2015
	Sales	(420000/420000)	(400000/400000)
	COGS	(300000/420000)	(298000/400000)
	Gross Profit	(120000/420000)	(102000/400000)
	Depreciation	(19660/420000)	(18000/400000)
	Other Operating Expenses	(27600/420000)	(22000/400000)
	EBIT	(72740/420000)	(62000/400000)
	Interest Expense	(5740/420000)	(4460/400000)
	EBT	(67000/420000)	(57540/400000)
	Taxes(40%)	(26800/420000)	(23016/400000)
	Net Income	(40200/420000)	(34524/400000)
	Common Size Income Statement
	Year	2016	2015
	Sales	100.00%	100.00%
	COGS	71.43%	74.50%
	Gross Profit	28.57%	25.50%
	Depreciation	4.68%	4.50%
	Other Operating Expenses	6.57%	5.50%
	EBIT	17.32%	15.50%
	Interest Expense	1.37%	1.12%
	EBT	15.95%	14.39%
	Taxes(40%)	6.38%	5.75%
	Net Income	9.57%	8.63%