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BUST08029 Introduction To Financial Markets

tag 0 Download 10 Pages / 2,336 Words tag 24-09-2020

Questions:

1.

The balance sheet and income statement of Company X are given below:  

   

   

 

 

 

Balance Sheet(s)  Company X (2013-17)  

 

 

 

 

(all figures in '000)

 

2017

2016

2015

2014

2013

Assets

Cash & Equivalents

 

$425,689

 

$421,365

 

$413,025

 

$359,624

 

$359,624

Trade Accounts Receivable

$166,019

$164,332

$161,080

$147,446

$140,253

Inventory

$15,750

$15,169

$14,869

$12,587

$12,587

Other Current Assets

$144,734

$143,264

$140,429

$122,272

$122,272

Total Current Assets

$752,192

$744,131

$729,402

$641,929

$634,736

Long-Term Investments

$102,165

$101,128

$99,126

$86,310

$86,310

Net Fixed Assets

$493,799

$488,783

$479,109

$417,164

$417,164

Intangible Assets

$76,624

$75,846

$74,345

$64,732

$64,732

Other Non-Current Assets

$97,908

$96,914

$94,996

$82,714

$82,714

Total Assets

$1,522,690

$1,506,801

$1,476,977

$1,292,848

$1,285,656

Liabilities  

Accounts Payable

$34,779

 

$34,468

 

$36,346

 

$29,417

 

$29,370

Notes Payable

$94,844

$93,796

$91,857

$80,987

$79,908

Accrued Liabilities

$446,973

$446,647

$441,937

$388,394

$388,394

Other taxes Payable

$25,541

$21,068

$16,521

$13,666

$10,789

Current Portion of Long-Term Debt

$97,908

$101,128

$103,256

$93,502

$93,502

Total Current Liabilities

Long-Term Debt

$700,046 $404,765

$697,106 $404,765

$689,917

$605,966

$601,964

$404,765

$320,065

$320,065

Other Long-Term Liabilities

$92,956

$101,357

$101,383

$85,903

$82,714

Total Long-Term Liabilities

$497,721

$506,122

$506,148

$405,968

$402,779

Total Liabilities

$1,197,766

$1,203,228

$1,196,064

$1,011,935

$1,004,743

Share capital (Book Value of 50,000 shares)

$190,000

$190,000

$190,000

$190,000

$190,000

Retained Earnings

$134,923

$113,573

$90,913

$90,913

$90,913

Total Equity

$324,923

$303,573

$280,913

$280,913

$280,913

Total Liabilities and Equity

$1,522,690

$1,506,801

$1,476,977

$1,292,848

$1,285,656   

Income Statement(s)  

Sales

$1,079,445

 

 

$1,060,879

 

Cost of goods sold

$507,339

$500,970

$553,755

$657,745

$609,047

Gross Profit

$572,106

$481,325

$417,745

$403,134

$373,287

Operating Expenses

$485,750

$432,210

$378,885

$339,481

$383,110

Operating Profit

$86,356

$49,115

$38,860

$63,653

-$9,823 

Other Income

$205,095

$216,105

$174,870

$127,305

$127,703

Other Expenses

$126,835

$100,194

$83,063

$131,549

$121,809

Earnings Before Interest and Taxes

$164,615

$165,026

$130,667

$59,409

-$3,929 

Interest Expense

$99,544

$101,224

$101,230

$81,194

$80,556

Earnings Before Taxes

$65,071

$63,801

$29,437

-$21,784 

-$84,485 

Income [email protected]%

$19,521

$19,140

$8,831

-$6,535 

-$25,346 

Net Income

$45,550

$44,661

$20,606

-$15,249 

-$59,140 

Additional Information

 

 

 

 

 

Owners Compensation

$213,730

$190,172

$166,709

$166,346

$187,724

Depreciation Expense

$123,450

$122,196

$119,777

$104,291

$104,291

Selling Expenses

$135,612

$133,909

$148,019

$175,815

$162,798

Lease Expenses

$4,857.50

$4,322.10

$3,788.85

$3,394.81

$3,831.10

Dividend paid per year  

$0.48

$0.44

$0.40

$0.00

$0.00

Annual opportunity cost of capital

11%

11%

11%

11%

11%

Company X (2013-17)  

 (These 3 amounts that are here below are the amount of sales )

Address the following issues in your answers:

(a). Prepare a performance analysis report of Company X using necessary ratios techniques to analyse (interpret and explain) the performance of the company over

the 5 years period. 

Hints: You should follow the seminar questions on ratio analysis and at least calculate all those ratios (except beta calculation) shown in that seminar. However, I would expect you to do research on ratio analysis and performance analysis and add additional ratios/graphs/charts/trend analysis/pie diagram/or any other (use all or some of them) to improve your analysis.

(b). Calculate the Par value and the Market value of Company X’s share for 2015,

2016 and 2017. Comment on their differences.   

(c). Company Y is the main competitor of Company X in the market. The industry refers to about 20 companies including Company X and Y who are producing similar products and operating in the same market space. Comment on Company X’s performances compared to its competitor and the industry in specific references to the ratios provided below.

Key Ratios

 

 

Company Y

 

 

Industry 

 

2017

2016

2015

2014

2013

2017

2016

2015

2014

2013

Debt ratio

0.50

0.52

0.53

0.53

0.54

0.58

0.59

0.57

0.58

0.56

Current ratio

2.36

2.31

2.25

2.45

2.42

1.89

1.74

1.65

1.78

1.74

Liquid ratio

1.23

1.25

1.21

1.29

1.41

1.01

1.05

1.1

1.08

1.05

Interest cover

3.012

3.05

2.98

3.26

3.41

2.35

2.78

2.14

2.56

2.31

EPS

1.52

1.45

1.36

1.87

1.45

0.90

0.92

0.91

0.90

0.91

ROE

20.48

20.54

21.23

23.14

20.16

18.56

18.25

18.01

17.98

18.11

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