In: Finance
Use the financial statements of Heifer Sports Inc. to find the information below for Heifer. (Use 365 days a year. Round all answers to 2 decimal places except $ amounts.)
Income Statement |
2017 |
||
Sales |
$ |
5,670,000 |
|
Cost of goods sold |
2,967,000 |
||
Depreciation |
293,200 |
||
Selling & admin. expenses |
1,570,000 |
||
EBIT |
$ |
839,800 |
|
Interest expense |
151,000 |
||
Taxable income |
$ |
688,800 |
|
Taxes |
310,500 |
||
Net income |
$ |
378,300 |
|
Balance Sheet, Year-End |
2017 |
2016 |
|||||
Assets |
|||||||
Cash |
$ |
46,200 |
$ |
67,000 |
|||
Accounts receivable |
632,000 |
1,159,200 |
|||||
Inventory |
469,200 |
806,300 |
|||||
Total current assets |
$ |
1,147,400 |
$ |
2,032,500 |
|||
Fixed assets |
2,993,000 |
4,737,000 |
|||||
Total assets |
$ |
4,140,400 |
$ |
6,769,500 |
|||
Liabilities and Stockholders' Equity |
|||||||
Accounts payable |
$ |
329,500 |
$ |
796,000 |
|||
Short-term debt |
498,000 |
975,300 |
|||||
Total current liabilities |
$ |
827,500 |
$ |
1,771,300 |
|||
Long-term bonds |
2,097,800 |
3,901,400 |
|||||
Total liabilities |
$ |
2,925,300 |
$ |
5,672,700 |
|||
Common stock |
$ |
315,200 |
$ |
315,200 |
|||
Retained earnings |
899,900 |
781,600 |
|||||
Total stockholders' equity |
$ |
1,215,100 |
$ |
1,096,800 |
|||
Total liabilities and stockholders' equity |
$ |
4,140,400 |
$ |
6,769,500 |
|||
c. |
Cash flow from operating activities in 2017 |
g. |
Operating profit margin |
h. |
Return on equity |
j. |
Compound leverage ratio |
k. |
Net cash provided by operating activities |
Answer of Part c:
Cash Flow from Operating Activities = EBIT + Depreciation –
Taxes
Cash flow from Operating Activities = $839,800 + $293,200 -
$310,500
Cash flow from Operating Activities 2017 = $822,500
Answer of Part g:
Operating Profit Margin = EBIT / Sales
Operating Profit Margin = $839,800 / $5,670,000
Operating Profit Margin = 14.81%
Answer of Part h:
Average Stockholders Equity = (Beginning Stockholders Equity +
Ending stockholders Equity) / 2
Average Stockholders Equity = ($1,096,800 + $1,215,100) / 2
Average Stockholders Equity = $2,311,900 / 2
Average Stockholders Equity = $1,155,950
Return on Equity = Net Income / Average Stockholder’s
Equity
Return on Equity = $378,300 / $1,155,950
Return on Equity = 32.73%
Answer of Part j:
Interest Burden = Pretax Profit / EBIT
Interest Burden = $688,800 / $839,800
Interest Burden = 0.82
Leverage = Assets / Equity
Leverage = $4,140,400 / $1,215,100
Leverage = 3.41
Compound Leverage Ratio = Interest Burden * Leverage
Compound Leverage Ratio = 0.82 * 3.41
Compound Leverage Ratio = 2.80