金融学原理
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2023年3月17日发(作者：红色休假黑色婚礼)⾦融学原理（英⽂）第七单元课后答案
CHAPTER7
ANSWERS
7-1Thefourfinancialstatementscontainedinmostannualreportsarethebalancesheet,incomestatement,statementof
retainedearnings,and
statementofcashflows.
7-2No,becausethe$ainedearningsfigure
representsthereinvestment
uently,the$20millionwouldbean
investmentinalloftheassetsofthefirm.
7-3Liquidatingassets,borrowingmorefunds,singassets,
payingoffdebt,andstock
,thefollowinggeneralrulescanbeusedtodeterminewhatchangesin
balancesheetaccounts
representsourcesandusesoffunds:
Sourcesofcash:UsesofCash:
inaliabilityorequityaccountinaliabilityofequityaccount
inanassetaccountinanassetaccount
7-4Theempmentisinterestedinall
typesofratiosfortworeasons.
First,theratiospointoutweaknessesthatshouldbestrengthened;second,
managementrecognizesthattheotherpartiesareinterestedinallthe
ratiosandthatfinancialappearancesmustbekeptupifthefirmisto
investors
areinterestedprimarilyinprofitability,buttheyexaminetheother
-termcreditorsaremoreinterestedinthedebtratio,TIE,
andfixedcharge
coverageratios,-termcreditors
emphasizeliquidityandlookmostcarefullyattheliquidityratios.
7-5Themostimportantaspectofratioanalysisisthejudgmentusedwheninterpretingtheresultstoreachanoverall
conclusionconcerningafirm's
lystshouldbeawareof,andincludeinthe
interpretation,thefactthat:(1)largefirmswithmanydifferent
divisionsaredifficulttocategorizeinasingleindustry;(2)financial
statementsarereportedathistoricalcosts;(3)seasonalfactorscan
distorttheratios;(4)somefirmstryto"windowdress"theirfinancialstatementstolookgood;(5)firmsusedifferent
accountingprocedurestocomputeinventoryvalues,depreciation,andsoon;(6)theremightnot
existasinglevaluethatcanbeusedforcomparingfirms'ratios(e.g.,
acurrentratioof2.0mightnotbegood);and(7)conclusionsconcerning
theoverallfinancialpositionofafirmshouldbebasedonarepresentative
numberofratios,notasingleratio.
7-6Differencesintheamountsofassetsnecessarytogenerateadollarofsalescauseassetturnoverratiostovaryamong
mple,
asteelcompanyneedsagreaternumberofdollarsinassetstoproduce
,
profitmarginsandturnoverratiosmightvaryduetodifferencesinthe
mple,onewouldexpect
agrocerystorechainlikeSafewaytospendmoreperdollarofsalesthan
,alargeturnoverwillbeassociatedwithalowprofitmargin,andviceversa.
7-7ROEcanbewritten
Totalassetsdividedbyowners'equity,whichistermedtheequitymultiplier,isameasureofdebtutilization;themoredebt,
,usingmoredebtwillincreasetheequitymultiplier,resultinginahigherROE.
,receivables,andinventories,aswellascurrentliabilities,varyovertheyearforfirmswithseasonalsales
ore,
thoseratiosthatexaminebalancesheetfigureswillvaryunless
averages(monthlyonesarebest)areused.
equityisdeterminedatapointintime,say,December31,2002.
Profitsareearnedovertime,say,misgrowingrapidly,year-endequitywillbemuchlargerthanbeginning-
of-yearequity,sothecalculatedrateofreturnonequitywillbedifferentdependingonwhetherend-of-year,beginning-of-
year,ecommonequityisconceptuallythebestfiguretouse.
Inpublicutilityratecases,peoplearereportedtohavedeliberatelyusedend-of-yearorbeginning-of-yearequitytomake
rproblemscanarisewhenafirmisbeingevaluated.
7-9Source(+)
20022001orUse(-)?
Cash$400$500+
Accountsreceivable250300+
Inventory450400-
Currentassets1,1001,200
Netproperty&equipment1,000950-a
Totalassets$2,100$2,150
Accountspayable$200$400-
Accruals300250+
Notespayable400200+
Currentliabilities900850
Long-termdebt800900-Totalliabilities1,7001,750
Commonstock250300-
Retainedearnings150100+b
Totalliabilities$2,100$2,150
andequity
aThebookvalueofproperty&equipmentisstatednetofdepreciation.
Becausethebookvalueoffixedassetsincreased,anddepreciationisanadjustmentthatreducestheaccountbalance,
Batelanmusthavepurchasedadditionalfixedassets;but,withoutmoreinformationwecannotdeterminetheamountofthe
purchase.
bTheretainedearningbalanceincreasedin2002,soBatelanmusthave
,withoutadditionalinformation(i.e.
theamountofnetincome),wecannottellwhetherdividendswerepaidin2002.
7-10TotalEffect
CurrentCurrentonNet
AssetsRatioIncome
acquiredthroughissuance
ofadditionalcommonstock.++0
ndiseissoldforcash.+++
(Whenmerchandiseissold,itspriceisgreaterthanitscost.)
lincometaxduefor
thepreviousyearispaid.─+0
(Bothcurrentassetsandcurrentliabilitiesdecreasebythesame
,becausethecurrentratioisgreaterthan1.0,
itincreasesasaresultofthepayment.)
assetissoldfor
lessthanbookvalue.++─
assetissoldfor
morethanbookvalue.+++
ndiseissoldoncredit.+++
tismadetotrade
creditorsforpreviouspurchases.─+0
ividendisdeclared
andpaid.──0
obtainedthroughshort-
termbankloans.+─0
-termnotesreceivable
aresoldatadiscount.───
ablesecuritiesare
soldbelowcost.───
esaremadetoemployees.000
(Thereisnochangeincurrentassetsorthecurrentratiobecause
cashdecreasesbythesameamountprepaidexpensesincreases.)
toperatingexpenses
arepaid.───
totradecreditorsinexchange
forpastdueaccountspayable.000
-yearnotesareissuedto
payoffaccountspayable.0+0
depreciatedasset
isretired.000
tsreceivablearecollected.000
entispurchasedwith
short-termnotes.0─0
ndiseispurchasedoncredit.+─0
imatedtaxespayable
areincreased.0──
SOLUTIONS
7-1
a.
Dollaramountsareinmillions.
Poor
9.9%7.7%376$8
.28$assetsTotalincomeNetaverage
Near4.6%4.1%700$8
.28$SalesincomeNetMarginal
45.0%48.1%376$181
$assetsTotaldebtTotalAverage
4.14.0175$700
$assetsFixedSalesBad
7.25.5101$560
$sInventoriesoldgoodsofCostPoor
days33.5days41.1)360/700($80
$360/SalesreceivableAccountsAverage
3.98.353$201
$sliabilitieCurrentassetsCurrentCommentAverageArgileIndustry
======??==??====??==
b.
r,Argiledoeshavealowinventoryturnover,higherthannormal
dayssalesoutstanding,ingtoits2001ratios,itappearsArgilehasliquidityproblems.
c.
Ratio2002
2001Trend
Currentratio3.6?
3.8?WorseDayssalesoutstanding43.2days41.1daysWorseInventoryturnover
4.4?
5.5?WorseFixedassetsturnover3.9?4.0?SameDebtratio
51.1%48.1%Worse
Profitmarginonsales3.6%4.1%WorseReturnonassets6.3%
7.7%
Worse
TheabovecomparisonshowsthatArgile'sfinancialpositionworsenedfrom2001to2002.
dbehelpfultoknowthefutureplansArgilehaswithrespecttoimprovingitscurrent
financialposition,introducingnewproducts,liquidatingunprofitableinvestments,sthefixedassets
turnoverratioandreturnonassetsfiguresarelowbecausethefirmhasexpandeditsproductdistribution,andthisprocess
hasalargecost"upfront"withsignificantpayoffsbeginningintwoorthreeyears.
7-2a.
60.0%
61.90%500
,947$500
,586$assetsTotaldebtTotal9.0%
7.56%000,361$300
,27$equityCommonincomeNet3.6%
2.88%500
,947$300
,27$assetsTotalincomeNet1.2%
1.70%500,607,1$300
,27$SalesincomeNet3.01.70500,947$500
,607,1$assetsTotalSales5.65.60500,241$000
,353,1$sInventoriesoldgoodsofCostdays
35.0days24.7528.465,4$000
,336$360/SalesreceivableAccounts2.098.1000,330$000
,655$sliabilitieCurrentassetsCurrentAverageCampseyIndustry========?
==
====
==
b.
ForCampsey,ROA=PM?TAturnover=1.7%?1.7=2.89%.
Fortheindustry,ROA=1.2%?3.0=3.6%.
c.
Campsey'sdayssalesoutstandingismorethantwiceaslongastheindustryaverage,indicatingthatthefirmshouldtighten
alassetsturnoverratioiswellbelowtheindustryaveragesosales
shouldbeincreased,assetsdecreased,ampsey'sprofitmarginishigherthantheindustryaverage,itsother
profitabilityratiosarelowcomparedtotheindustry--netincomeshouldbehighergiventheamountofequityandassets.
However,thecompanyseemstobeinanaverageliquiditypositionandfinancialleverageissimilartoothersintheindustry.
d.
If2002representsaperiodofsupernormalgrowthforCampsey,ratiosbasedonthisyearwillbedistortedandacomparison
ialinvestorswholookonlyat2002ratioswillbemisled,
andareturntonormalconditionsin2003couldhurtthefirm'sstockprice.
7-3
(1)Totalliabilitiesandequity=Totalassets=$300,000.
(2)Debt=(0.50)(Totalassets)=(0.50)($300,000)=$150,000.(3)Accountspayable=Debt─Long-termdebt=$150,000─
$60,000
=$90,000.
(4)(5)
Sales=(1.5)(Totalassets)=(1.5)($300,000)=$450,000.
(6)
Costofgoodssold=Sales(1-0.25)=$450,000(.75)=$337,500
(7)
Inventory=(CGS)/5=$337,500/5=$67,500.
(8)
Accountsreceivable=(Sales/360)(DSO)
=($450,000/360)(36)=$45,000.
(9)(Cash+Accountsreceivable)/(Accountspayable)=0.80?Cash+Accountsreceivable=(0.80)(Acctspayable)Cash+
$45,000=(0.80)($90,000)Cash=$72,000─$45,000
=$27,000.
(10)Fixedassets=Totalassets─(Cash+AcctsRec.+Inventories)=$300,000─($27,000+$45,000+$67,500)=
$160,500.
$52,500
=$97,500$150,000$300,000=earningsRetained-Debt-equityandsliabilitieTotal=stockCommon??????????
BalanceSheetCash
$27,000Accountspayable$90,000
Accountsreceivables45,000Long-termdebt60,000Inventories67,500Commonstock52,500Fixedassets160,500
Retainedearnings97,500Totalassets
$300,000
$300,000
7-4a.
12.9%
8.57%315$27$equityTotalincomeNetequity
totalonReturn9.0%
6.00%450$27$assetsTotalincomeNetassetstotalon
Returned3.0%
3.40%795
$27
$SalesincomeNetmarginProfit3.01.77450$795$assetsTotalSalesTurnoverassetsTotal6.05.41147$795$assets
FixedSalesTurnover
assetsFixeddays
24.0days29.89360
/795$66
$360/SalesreceivableAccounts
DSO8.54.15159$660$sInventoriesoldgoodsofCostturnover
Inventory
7.011.005.4$5.49$InterestEBITearnedinterest
Times30.0%
30.00%450$135$assetsTotalDebtassets
totaltoDebt2.02.73111$303
$sliabilitieCurrentassetsCurrentratioCurrentAverageFinnertyIndustry
=========
=========
===
=========
=Profitmargin?Totalassetsturnover
=
NetincomeSalesSalesTotalassets=3.4%1.77=6.0%
=
$27$795$795
$450
FinnertyIndustryCommentProfitmargin3.4%3.0%GoodTotalassetsturnover1.77?3.0?PoorReturnontotalassets6.0%
9.0%Poor
isoftheDuPontequationandthesetofratiosshowsthattheturnoverratioofsalesto
salesshouldbeincreasedatthepresentlevelofassets,orthecurrentlevelofassetsshouldbe
,theproblemappearstobeinthebalancesheetaccounts.
parisonofinventoryturnoverratiosshowsthatotherfirmsintheindustryseemtobe
gerty'sinventorycouldbereducedthis
wouldgeneratefundsthatcouldbeusedtoretiredebt,thusreducinginterestchargesandimprovingprofits,and
ightalsobesomeexcessinvestmentinfixedassets,perhapsindicativeofexcess
capacity,r,thisisnotnearlyasclear-cutasthe
over-investmentininventory.
ertyhadasharpseasonalsalespattern,orifitgrewrapidlyduringtheyear,manyratios
involvingcash,receivables,inventories,andcurrentliabilities,aswellasthosebasedonsales,
profits,andcommonequity,ssibletocorrectforsuchproblemsbyusingaverageratherthanend-of-
periodfigures.
eCary'sbasecaseratiosandotherdataascomparedtotheindustry:
CaryIndustryCommentQuick0.85?1.0?WeakCurrent2.332.7?WeakInventoryturnover4.00?5.8?Poor
Dayssalesoutstanding37days32daysPoorFixedassetsturnover10.0?13.0?PoorTotalassetsturnover2.34?2.6?Poor
Returnonassets5.9%9.1%BadReturnonequity13.07%18.2%BadDebtratio54.8%50.0%HighProfitmarginonsales
2.5%3.5%BadEPS$4.71n.a.--StockPrice$23.57n.a.--P/Eratio5.0?6.0?PoorM/Bratio0.65n.a.--
Caryappearstobebadlymanaged--allofitsratiosareworsethantheindustryaverages,andtheresultislowearnings,a
lowP/E,alowstockprice,andalowM/panyneedstodosomethingtoimprove.
b.
Adecreaseintheinventorylevelwouldimprovetheinventoryturnover,totalassetsturnover,andROA,allofwhicharetoo
dhavesomeimpactonthecurrentratio,
lowerinventorylevelallowedCarytoreduceitscurrentliabilities,ercostof
goodssoldwouldimprovealloftheprofitabilityratiosand,ifdividendswerenotincreased,wouldlowerthedebtratio
hisshouldleadtoahighermarket/book
7-6
WearegivenROA=3%andSales/Totalassets=1.5?.
FromDuPontequation:ROA=Profitmargin?Totalassetsturnover3%=Profitmargin(1.5)Profitmargin=3%/1.5=2%.
WecanalsocalculateZumwalt'sdebtratioinasimilarmanner,
givenROA,whichisNI/AandROE,whichisNI/Equity;ifweusethereciprocalofROEwehavethefollowingequation:
Debt/Assets=1-Equity/A=1-0.60=0.40=40.0%
Thus,Zumwalt'snetprofitmargin=2%anditsdebtratio=40%.
7-7Presentcurrentratio=$1,312,500/$525,000=2.5
Minimumcurrentratio=$1,312,500+NP
$525,000+NP??=2.0
$1,312,500+ΔNP=$1,050,000+2ΔNP
ΔNP=$262,500.
Short-termdebtcanincreasebyamaximumof$262,500withoutviolatinga2-to-1currentratio,assumingthattheentire
eweassumedthattheadditionalfundswouldbeused
toincreaseinventory,theinventoryaccountwillincreaseto$637,500,andcurrentassetswilltotal$1,575,000.
Quickratio=($1,575,000─$637,500)/$787,500=$937,500/$787,500=1.19?7-8(1)
Currentliabilities=$270,000.(2)
Inventories=$432,000.
=?=0.3sliabilitieCurrent000,810$0.3s
liabilitieCurrentassets
Current?
=-?=4.1$270,000sInventorie$810,0004.1s
liabilitieCurrents
Inventorie-assetsCurrent
(3)Currentassets=Cash&Marketablesecurities
+Accountsreceivable+Inventories
$810,000=$120,000+Accountsreceivable+$432,000
Accountsreceivable=$258,000.
(4)?=?=0.5$432,000
CGS
0.5InventorysoldgoodsofCost
CGS=$2,160,000.
(5)CGS=0.86(Sales)628,511,2$86
.0000
,160,2$Sales==
(6)
7-9
TIE=EBIT/INT,st=$500,000?0.1=$50,000.
Netincome=$2,000,000?0.05=$100,000.
Taxableincome(EBT)=$100,000/(1-T)=$100,000/0.8=$125,=$125,000+$50,000=$175,=
$175,000/$50,000=3.5?.
7-10
ROE=NI/Equity
Nowweftwesetupanincome
statement,andweputnumbersinitontheright:
Sales(given)$10,000
-CostnaEBIT(given)$1,000-INT(given)(300)EBT$700-Taxes(30%)(210)NI$490
Nowwecanusesomeratiostogetsomemoredata:
Totalassetsturnover=2=S/TA;TA=S/2=$10,000/2=$5,000.
D/TA=60%;soE/TA=40%;therefore,equity=TA?E/TA
=$5,000?0.40=$2,000
days
37360/628,511,2$$258,000360/Salesreceivable
AccountsDSO===
ROE=NI/E=$490/$2,000=24.5%,andROA=NI/TA=$490/$5,000=9.8%.
tly,ROEisROE1=$15,000/$200,000=7.5%.
Thecurrentratiowillbesetsuchthat2.5=CA/$50,000,anditwillnotchange,sowe
cansolvetofindthenewlevelofcurrentassets:CA=2.5(CL)=2.5($50,000)=$125,
isthelevelofcurrentassetsthatwillproduceacurrentratioof2.5?.
Atpresent,currentassetsamountto$210,000,sotheycanbereducedby$210,000─$125,000=
$85,000.
Ifthe$85,000generatedisusedtoretirecommonequity,thenthenewcommonequitybalance
willbe$200,000─$85,000=$115,000.
Assumingthatnetincomeisunchanged,thenewROEwillbeROE2=$15,000/$115,000=
13.04%.Therefore,ROEwillincreaseby13.04%─7.50%=5.54%.
b.(1)Doublingthedollaramountswouldnotaffecttheanswer;theROEincreasewouldstillbe
5.54%.
(2)Currentassetswouldincreaseby$25,000,whichwouldmeananewROEof
$15,000/$140,000=10.71%,whichwouldmeanadifferenceof10.71%─7.50%=
3.21%.
(3)Ifthecompanyhad10,000sharesoutstanding,thenitsEPSwouldbe$15,000/10,000=
$ckhasabookvalueof$200,000/10,000=$20,sothesharesretired
wouldbe$85,000/$20=4,250,leaving10,000─4,250=5,EPS
wouldbe$15,000/5,750=$2.6087,sotheincreaseinEPSwouldbe$2.6087─$1.50=
$1.1087,whichisa73.91%increase,thesameastheincreaseinROE.
(4)Ifthestockwassellingfortwicebookvalue,or2?$20=$40,thenonlyhalfasmany
sharescouldberetired($85,000/$40=2,125),sotheremainingshareswouldbe10,000
─2,125=7,875,andthenewEPSwouldbe$15,000/7,875=$1.9048,foranincreaseof
$1.9048─$1.5000=$0.4048.
dhavestartedwithlowerinventoriesandhigheraccountsreceivable,thenhadyou
calculatetheDSO,thenmovetoalowerDSOthatwouldrequireareductioninreceivables,and
rly,wecould
fthesecases,wecouldhavehad
youusethefundsgeneratedtoretiredebt,whichwouldhaveloweredinterestchargesand
consequentlyincreasednetincomeandEPS.
Ifwehadtoincreaseassets,thenwewouldhavehadtofinancethisincreasebyaddingeither
debtorequity,whichwouldhaveloweredROEandEPS,otherthingsheldconstant.
Finally,notethatwecouldhaveaskedsomeconceptualquestionsabouttheproblem,eitherasa
mple,"Iffundsaregenerated
byreducingassets,andifthosefundsareusedtoretirecommonstock,willtheeffectonEPS
and/orROEbeaffectedbywhetherornotthestocksellsabove,at,orbelowbookvalue?"
sandUsesofFundsAnalysis:
LloydLumberCompany
BalanceSheets(millionsofdollars)
Jan.1Dec.31SourceUse
Cash$7$15$8
Marketablesecurities01111
Netreceivables3022$8
Inventories537522
Grossfixedassets$75$12550Less:depreciation(25)(35)10
Netfixedassets$50$90
Totalassets$140$213
Accountspayable$18$153Notespayable31512
Othercurrentliabilities1578Long-termdebt82416Commonstock295728Retainedearnings679528
Totalliabilities
andequity$140$213$102$102
umberCompany
StatementofCashFlows,2002
(millionsofdollars)
OperatingActivities:
Netincome$33
Otheradditions(sourcesofcash):
Depreciation$10
Decreaseinaccountsreceivable8
Subtractions(usesofcash):
Increaseininventories($22)
Decreaseinaccountspayable(3)
Decreaseinothercurrentliabilities(8)
Netcashflowfromoperations$18
Long-termInvestingActivities:
Acquisitionoffixedassets($50)
FinancingActivities:
Increaseinnotespayable$12
Saleoflong-termdebt16
Saleofcommonstock28
Paymentofdividends(5)
Netcashflowfromfinancing$51
Netincreaseincashandmarketable
securities$19
Cashandmarketablesecuritiesat
beginningofyear7
Cashandmarketablesecuritiesat
endofyear$26
erealsoutilizedtoreduce
accountspayableandothercurrentliabilitiesandtoincreasethecashandmarketable
ndswereobtainedbyincreasinglong-termdebt,selling
commonstock,ainderwasobtainedfromincreasing
checkoftheratiosshowsthatthe
company'scredithasnotdeteriorated--thecurrentandquickratioshaveincreased,and
nalysisandthesourcesanduses
statementbothindicateahealthysituation.
sareinmillions.
IncomeCash
StatementFlows
Salesrevenues$12.0$12.0
Costs,exceptdepreciation*(9.0)(9.0)
Depreciation(1.5)---
Totaloperatingcosts(10.5)(9.0)(Cashcosts)
Earningsbeforetaxes$1.5$3.0(Pre-taxCF)
Taxes(40%)(0.6)(0.6)(Cashtaxes)
Netincome(NI)$0.9
Addbackdepreciation1.5
Netcashflow=NI+DEP$2.4$2.4
*Costs,exceptdepreciation=0.75$12.0=$9.0
iationdoubles.
IncomeCash
StatementFlows
Salesrevenues$12.0$12.0
Costs,exceptdepreciation(9.0)(9.0)
Depreciation(3.0)---
Totaloperatingcosts(12.0)(9.0)(Cashcosts)
Earningsbeforetaxes$0.0$3.0(Pre-taxCF)
Taxes(40%)(0.0)(0.0)(Cashtaxes)
Netincome(NI)$0.0
Addbackdepreciation3.0
Netcashflow=NI+DEP$3.0$3.0
iationhalves.
IncomeCash
StatementFlows
Salesrevenues$12.00$12.00
Costs,exceptdepreciation(9.00)(9.00)
Depreciation(0.75)---
Totaloperatingcosts(9.75)(9.00)(Cashcosts)
Earningsbeforetaxes$2.25$3.00(Pre-taxCF)
Taxes(40%)(0.90)(0.90)(Cashtaxes)
Netincome(NI)$1.35
Addbackdepreciation0.75
Netcashflow=NI+DEP$2.10$2.10
er-taxcashflowsaregreaterifCongressincreasestheallowancefor
depreciation,soyoushouldprefergreaterdepreciation.
7-14ThesolutionisgivenintheInstructor'sManual,SolutionstoIntegrativeProblems.
7-17Computer-RelatedProblem
iseddataandratiosareshownbelow:
INPUTDATA:KEYOUTPUT:
2000CaryIndustry
Cash$84,527Quick1.21.0
A/R395,000Current3.02.7
Inventories700,.6.15.8
Landandbldg238,000DSO3332
Machinery132,.8.313.0
OtherF.A.150,.2.52.6
ROA10.5%9.1%Accts&NotesPay.$275,000ROE19.9%18.2%
Accruals120,000TD/TA47.0%50.0%
Long-termdebt404,290PM4.2%3.5%
Commonstock575,000EPS$7.78n.a.
Retainedearnings325,237StockPrice$46.68n.a.
__________P/Eratio6.06.0
Totalassets$1,699,527M/B1.19n.a.
Totalclaims$1,699,527
Incomestatement
Sales$4,290,000
CostofG.S.3,450,000
Adm.&salesexp.248,775
Depreciation159,000
Misc.134,000
Netincome$178,935
P/Eratio6
es23,000
Cashdividend$0.95
Underthesenewconditions,noverratios
arestilllow,butitsROAandROEareabovetheindustryaverage,itsestimatedP/E
ratioisbetter,sstillroomfor
improvement,butthecompanyisinmuchbettershape.
ancialstatementsandratiosforthescenarioinwhichthecostofgoodssold
decreasesbyanadditional$125,ansee,theprofitratiosarequitehighandthe
stockpricehasrisento$66.24.
INPUTDATA:KEYOUTPUT:
2000CaryIndustry
Cash$159,527Quick1.41.0
A/R395,000Current3.22.7
Inventories700,.4.85.8
Landandbldg238,000DSO3332
Machinery132,.8.313.0
OtherF.A.150,.2.42.6
ROA14.3%9.1%Accts&NotesPay.$275,000ROE26.0%18.2%
Accruals120,000TD/TA45.0%50.0%
Long-termdebt404,290PM5.9%3.5%
Commonstock575,000EPS$11.04n.a.
Retainedearnings400,237StockPrice$66.24n.a.
__________P/Eratio6.06.0
Totalassets$1,774,527M/B1.56n.a.
Totalclaims$1,774,527
Incomestatement
Sales$4,290,000
CostofG.S.3,325,000
Adm.&salesexp.248,775
Depreciation159,000
Misc.134,000
__________
Netincome$253,935
P/Eratio6
es23,000
Cashdividend$0.95
ancialstatementsandratiosforthescenarioinwhichthecostofgoodssold
increasesby$125,ansee,profitswoulddeclinesharply.
TheROEwoulddropto12.6%,EPSwould
fallto$4.52,thestockpricewoulddropto$27.11,andtheM/Bratiowouldbeonly
0.76.
INPUTDATA:KEYOUTPUT:
2000CaryIndustry
Cash$9,527Quick1.01.0
A/R395,000Current2.82.7
Inventories700,.5.15.8
Landandbldg238,000DSO3332
Machinery132,.8.313.0
OtherF.A.150,.2.62.6
ROA6.4%9.1%
Accts&NotesPay.$275,000ROE12.6%18.2%
Accruals120,000TD/TA49.2%50.0%
Long-termdebt404,290PM2.4%3.5%
Commonstock575,000EPS$4.52n.a.
Retainedearnings250,237StockPrice$27.11n.a.
__________P/Eratio6.06.0
Totalassets$1,624,527M/B0.76n.a.
Totalclaims$1,624,527
Incomestatement
Sales$4,290,000
CostofG.S.3,575,000
Adm.&salesexp.248,775
Depreciation159,000
Misc.134,000
__________
Netincome$103,935
P/Eratio6
es23,000
Cashdividend$0.95
ermodelsallowustoanalyzequicklytheimpactofoperatingandfinancial
decisionsonthefirm'ananalyzeitsfinancialratiosunderdifferentscenariostoseewhatmight
happenifadecision,suchasthepurchaseofanewasset,vesthemanagers
someideaaboutwhatmighthappenunderthebestandworstcasesandhelpsthemtomakebetterdecisions.