Griffin and Lasky, Inc. (G&L), supplies industrial automation equipment and machine tools to the automotive industry. G&L
Question:
Griffin and Lasky, Inc. (G&L), supplies industrial automation equipment and machine tools to the automotive industry. G&L uses the percentage of completion method for recognizing revenue on its long-term contracts. Customer orders have long lead times because they involve multiyear capital investment programs. Sometimes orders are canceled. Selected items from the companys financial statements follow.
Required: 1. Compute earnings before interest, taxes, depreciation, and amortization (EBITDA) and adjusted EBITDAafter excluding the plant write-downfor each year in the schedule. 2. Are profits at G&L keeping pace with sales? 3. Compute the days receivables outstanding using year-end receivables for each year in the schedule. 4. Why might analysts be concerned about earnings quality atG&L?
Financial Statements Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Transcribed Image Text:
(s in millions) Sales Accounts receivable billed 2012 2013 2014 S571.5 619.5 141.6 104.5 246.1 94.5 249.4 343.9 730.6 147.9 202.7 350.6 Accounts receivable unbilled Total accounts receivable 57.4 74.8 102.3 Earnings before interest and taxes (EBIT) Depreciation and amortization Plant write-down 75.8 15.4 74.8 38.1 19.3 30.3
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Requirement 1 EBITDA 2012 2013 2014 EBIT 748 758 381 Depreciation and amortization 148 154 193 EBITDA 896 912 574 Adjusted EBITDA 2014 EBIT 381 Deprec...View the full answer
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