Students will analyze financial statements ratios and the relevance of the ratios for benchmarking,
Instructions
This assignment uses Case Study #2.
This is a group assignment. Please go to People > Groups > Case Study #2 to sign up for a group. One group consists of no more than FOUR people. All group members will receive the same grade. If someone in the group didn’t contribute, the other group members will need to email me to explain the situation.
Your submission should clearly list the financial ratios and their calculation detail. More importantly, you are expected to provide analysis on how to interpret the ratio results and how they are compared with the industry benchmarks.
Each group may choose the group discussion panel or email as a tool to communicate with each other.
Please give a detailed analysis of the financial statements given below for Joshua & White Technologies. Your analysis should include answers to the questions as follows (not limited to these questions):
· Has the company’s liquidity position improved or worsened? How’s it compared with the industry average?
· Has the company’s ability to manage its assets improved or worsened? How’s it compared with the industry average?
· How has the company’s profitability changed during the last year? How’s it compared with the industry average?
Note: you may need to research on the industry average on financial ratios for Information Technology companies.
Joshua & White Technologies: December 31 Balance Sheets
(Thousands of Dollars)
Assets
2019
2018
Cash and cash equivalents
$21,000
$20,000
Short-term investments
3,759
3,240
Accounts Receivable
52,500
48,000
Inventories
8
4,000
56,000
Total current assets
$161,259
$127,240
Net fixed assets
223,097
200,000
Total assets
$384,356
$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
178,440
178,440
Retained Earnings
72,125
40,000
Total common equity
$250,565
$218,440
Total liabilities and equity
$384,356
$327,240
Joshua & White Technologies December 31 Income Statements
(Thousands of Dollars)
2019
2018
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 (25%)
16,750
14,385
Net Income
$50,250
$43,155
Common dividends
$18,125
$17,262
Addition to retained earnings
$32,125
$25,893
Other Data
2019
2018
Year-end Stock Price
$90.00
$96.00
# of shares (Thousands)
4,052
Lease payment (Thousands of Dollars)
$20,000
$20,000
Sinking fund payment (Thousands of Dollars)
$5,000
$5,000
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