Lan & Chen Technologies: Income Statements for Year Ending December 31 (Thousands of Dollars) 2018 2017 Sales $945,000 $900,000 Expenses excluding depreciation and amortization 812,700 774,000 EBITDA $132,300 $126,000 Depreciation and amortization 33,100 31,500 EBIT $99,200 $94,500 Interest Expense 10,470 8,600 EBT $88,730 $85,900 Taxes (40%) 35,492 34,360 Net income $53,238 $51,540 Common dividends $43,300 $41,230 Addition to retained earnings $9,938 $10,310 Lan & Chen Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets 2018 2017 Cash and cash equivalents $47,250 $45,000 Short-term investments 3,800 3,400 Accounts Receivable 283,500 269,000 Inventories 141,750 136,000 Total current assets $476,300 $453,400 Net fixed assets 330,750 315,000 Total assets $807,050 $768,400 Liabilities and equity Accounts payable $94,500 $89,800 Accruals 47,250 45,000 Notes payable 26,262 9,000 Total current liabilities $168,012 $143,800 Long-term debt 94,500 90,000 Total liabilities $262,512 $233,800 Common stock 444,600 444,600 Retained Earnings $99,938 90,000 Total common equity $544,538 $534,600 Ratio Analysis 2018 2017 Industry Avg Profitability Ratios Profit Margin 6.25% Basic Earning Power 10.25% Return on Assets 6.75% Return on Equity 9.46% Market Value Ratios Earnings per share NA Price-to-earnings ratio 15.65 Cash flow per share NA Price-to-cash flow ratio 10.11 Book Value per share NA Market-to-book ratio 1.72 How has Lan & Chen's LIQUIDITY changed from 2017 to 2018 and in comparision to the industry average? How has Lan & Chen's ASSET MANAGEMENT changed from 2017 to 2018 and in comparision to the industry average? How has Lan & Chen's DEBT MANAGEMENT changed from 2017 to 2018 and in comparision to the industry average?
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Please help on ratio analysis
Lan & Chen Technologies: Income Statements for Year Ending December 31
(Thousands of Dollars) 2018 2017
Sales $945,000 $900,000
Expenses excluding depreciation and amortization 812,700 774,000
EBITDA $132,300 $126,000
Depreciation and amortization 33,100 31,500
EBIT $99,200 $94,500
Interest Expense 10,470 8,600
EBT $88,730 $85,900
Taxes (40%) 35,492 34,360
Net income $53,238 $51,540
Common dividends $43,300 $41,230
Addition to
Lan & Chen Technologies: December 31 Balance Sheets
(Thousands of Dollars)
Assets 2018 2017
Cash and cash equivalents $47,250 $45,000
Short-term investments 3,800 3,400
Accounts Receivable 283,500 269,000
Inventories 141,750 136,000
Total current assets $476,300 $453,400
Net fixed assets 330,750 315,000
Total assets $807,050 $768,400
Liabilities and equity
Accounts payable $94,500 $89,800
Accruals 47,250 45,000
Notes payable 26,262 9,000
Total current liabilities $168,012 $143,800
Long-term debt 94,500 90,000
Total liabilities $262,512 $233,800
Common stock 444,600 444,600
Retained Earnings $99,938 90,000
Total common equity $544,538 $534,600
Ratio Analysis 2018 2017 Industry Avg
Profitability Ratios
Profit Margin 6.25%
Basic Earning Power 10.25%
Market Value Ratios
Earnings per share NA
Price-to-earnings ratio 15.65
Cash flow per share NA
Price-to-cash flow ratio 10.11
Book Value per share NA
Market-to-book ratio 1.72
How has Lan & Chen's LIQUIDITY changed from 2017 to 2018 and in comparision to the industry average?
How has Lan & Chen's ASSET MANAGEMENT changed from 2017 to 2018 and in comparision to the industry average?
How has Lan & Chen's DEBT MANAGEMENT changed from 2017 to 2018 and in comparision to the industry average?
How has Lan & Chen's PROFITABILITY changed from 2017 to 2018 and in comparision to the industry average?
How do Lan & Chen's MARKET VALUE ratios compare to the industry average?
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