You have been provided the following financial statements for SPI-Windsor Inc. (SPIW): Revenues Costs and Expenses:...

 

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You have been provided the following financial statements for SPI-Windsor Inc. (SPIW): Revenues Costs and Expenses: Cost of Goods Sold SPI-Windsor Inc. Statement of Earnings (in thousands) $ $ Selling and Administrative $ Interest $ Other expenses (income) $ Total Costs and Expenses Income before taxes Income Taxes Net Income $ $ $ $ Year Ended September 30 2020 2021 2019 5,198,256 $ 3,956,781 $3,281,791 2,859,041 $ 2,311,560 $1,904,561 1,027,412 $ 753,966 $ 698,236 33,794 $ 42,596 $ 29,891 3,500 $ 4,890 $ (1,020) 3,923,747 $ 3,113,012 $2,631,668 1,274,509 $ 843,769 $ 650,123 382,353 $ 210,942 $ 162,531 892,156 $ 632,827 $ 487,592 SPI-Windsor Inc. Statement of Financial Position (in thousands) ASSETS Current Assets Cash and cash equivalents Accounts Receivable (note 1) Inventories Deffered Income Taxes Prepaid Expenses Total Current Assets. Property, Plant, Equipment Less Accumulated Depreciation Net PPE Goodwill Other Assets Total Assets LIABILITIES AND SHAREHOLDERS' Current Liabilities. Current Portion of LT Debt Notes Payable Accounts Payable Accrued Liabilities Income Taxes Payable Total Current Liabilities Long-term Debt Noncurrent deffered income tax Other non current liabilities Redeemable Preferred Shares Total Liabilities Shareholders' Equity Common Shares Contributed Surplus Retained Earnings Year Ended September 30 2021 2020 $501,695 $ 421,950 $ 795,500 $ 701,560 648,000 $ 550,200 $ $ $ 25,125 $ 21,600 63,250 $ 47,980 $2,033,570 $1,743,290. $ 785,000 $ 715,000 $ 290,450 $393,250 $ 494,550 $ 321,750 203,500 $ 203,500 39,150 $ 33,150 $ $ $2,770,770 $2,301,690 EQUITY $ $ 83,169 $ 15,500 185,500 $ 135,600 $ 189,400 $ 195,005 172,500 $164,900 38,500 $ 51,000 669,069 $ 562,005 24,950 $ $ 35,000 $ 61,500 $ 200 $ 790,719 $ $ $ $ $ $ $ 1 $ $ 25,700 $ AS 85,125 31,000 39,400 200 717,730 1 8,954 $1,954,350 $1,575,005 Total Shareholders' Equity $1,980,051 $1,583,960 Total Liabilities and Shareholders' Equ $2,770,770 $2,301,690 SPI-Windsor Inc. Notes to Financial Statements September 30, 2021 1. The account receivables are net an allowance for doubtful accounts where $39,4632 andd $28,724. The following two table provides additional information for you to review regarding SPI-Windsor Inc.: Average number of common shares outstanding Accounts Receivable Inventories Total Assets Shareholders' Equity 2021 25.25% 39.75% 2.10x 2021 2020 56,001 54,125 795,500 701,650 2019 54,001 605,125 648,000 550,200 500,175 2,770,770 2,301,690 2,100,500 1,980,051 1,583,960 1,150,000 780,520 485,100 395,100 695,000 305,000 71,850 41,500 0.95 0.55 Share Repurchases Cash Flow from operating activities Common Dividends Paid Dividends per common share Market Price per share: High 101.25 Low 65.25 Close 99.60 *Please note all are amounts above are in thousands except for costs per share information provided. The following are the industry averages: Industry Averages Return on Assets Gross Profit Margin Asset Turnover Times Interest Earned Debt-to-Equity 29.84x 0.44 580,000 51,500 0.81 88.25 44.25 71.25 2020 28.75% 41.25% 2.45x 27.55x 0.51 69.25 31.25 48.75 You have been recently hired by SPI-Windsor Inc. (SPIW) as the assistant to the controller and the Controller has provided you with the following tasks for you to complete as indicated below. Tasks: a) A full analysis using the following ratio's: (20 marks) i) Current Ratio ii) Operating Cash Flow iii) Times Interest Earned. Debt-to-Equity Ratio iv) v) Inventory Turnover Ratio vi) Asset Turnover Ratio vii) Gross Profit Percentage viii) Return on Assets ix) Earnings per share x) Price/Earnings Ratio b) Based on the information provided and your analysis do you feel that SPIW is profitable, provide a brief explanation. (4 marks) c) In reviewing the asset efficiency ratios for SPIW, what could be said in general and compared to the industry average, provide a brief explanation. (4 marks) d) Do you feel that the bank and or other creditors perceive SPIW as a high-risk firm? Provide a brief explanation for your reasons. (4 marks) e) In reviewing the company do you feel that SPI-Windsor Inc., has adequate liquidity in the short-term. Provide a brief explanation (4 marks) f) When reviewing the statement of earnings, what two (2) items would you note about the results for the past two years. (2 marks) g) When reviewing the statement of financial position what two (2) items would you note about the results for the past two years? (2 marks] You have been provided the following financial statements for SPI-Windsor Inc. (SPIW): Revenues Costs and Expenses: Cost of Goods Sold SPI-Windsor Inc. Statement of Earnings (in thousands) $ $ Selling and Administrative $ Interest $ Other expenses (income) $ Total Costs and Expenses Income before taxes Income Taxes Net Income $ $ $ $ Year Ended September 30 2020 2021 2019 5,198,256 $ 3,956,781 $3,281,791 2,859,041 $ 2,311,560 $1,904,561 1,027,412 $ 753,966 $ 698,236 33,794 $ 42,596 $ 29,891 3,500 $ 4,890 $ (1,020) 3,923,747 $ 3,113,012 $2,631,668 1,274,509 $ 843,769 $ 650,123 382,353 $ 210,942 $ 162,531 892,156 $ 632,827 $ 487,592 SPI-Windsor Inc. Statement of Financial Position (in thousands) ASSETS Current Assets Cash and cash equivalents Accounts Receivable (note 1) Inventories Deffered Income Taxes Prepaid Expenses Total Current Assets. Property, Plant, Equipment Less Accumulated Depreciation Net PPE Goodwill Other Assets Total Assets LIABILITIES AND SHAREHOLDERS' Current Liabilities. Current Portion of LT Debt Notes Payable Accounts Payable Accrued Liabilities Income Taxes Payable Total Current Liabilities Long-term Debt Noncurrent deffered income tax Other non current liabilities Redeemable Preferred Shares Total Liabilities Shareholders' Equity Common Shares Contributed Surplus Retained Earnings Year Ended September 30 2021 2020 $501,695 $ 421,950 $ 795,500 $ 701,560 648,000 $ 550,200 $ $ $ 25,125 $ 21,600 63,250 $ 47,980 $2,033,570 $1,743,290. $ 785,000 $ 715,000 $ 290,450 $393,250 $ 494,550 $ 321,750 203,500 $ 203,500 39,150 $ 33,150 $ $ $2,770,770 $2,301,690 EQUITY $ $ 83,169 $ 15,500 185,500 $ 135,600 $ 189,400 $ 195,005 172,500 $164,900 38,500 $ 51,000 669,069 $ 562,005 24,950 $ $ 35,000 $ 61,500 $ 200 $ 790,719 $ $ $ $ $ $ $ 1 $ $ 25,700 $ AS 85,125 31,000 39,400 200 717,730 1 8,954 $1,954,350 $1,575,005 Total Shareholders' Equity $1,980,051 $1,583,960 Total Liabilities and Shareholders' Equ $2,770,770 $2,301,690 SPI-Windsor Inc. Notes to Financial Statements September 30, 2021 1. The account receivables are net an allowance for doubtful accounts where $39,4632 andd $28,724. The following two table provides additional information for you to review regarding SPI-Windsor Inc.: Average number of common shares outstanding Accounts Receivable Inventories Total Assets Shareholders' Equity 2021 25.25% 39.75% 2.10x 2021 2020 56,001 54,125 795,500 701,650 2019 54,001 605,125 648,000 550,200 500,175 2,770,770 2,301,690 2,100,500 1,980,051 1,583,960 1,150,000 780,520 485,100 395,100 695,000 305,000 71,850 41,500 0.95 0.55 Share Repurchases Cash Flow from operating activities Common Dividends Paid Dividends per common share Market Price per share: High 101.25 Low 65.25 Close 99.60 *Please note all are amounts above are in thousands except for costs per share information provided. The following are the industry averages: Industry Averages Return on Assets Gross Profit Margin Asset Turnover Times Interest Earned Debt-to-Equity 29.84x 0.44 580,000 51,500 0.81 88.25 44.25 71.25 2020 28.75% 41.25% 2.45x 27.55x 0.51 69.25 31.25 48.75 You have been recently hired by SPI-Windsor Inc. (SPIW) as the assistant to the controller and the Controller has provided you with the following tasks for you to complete as indicated below. Tasks: a) A full analysis using the following ratio's: (20 marks) i) Current Ratio ii) Operating Cash Flow iii) Times Interest Earned. Debt-to-Equity Ratio iv) v) Inventory Turnover Ratio vi) Asset Turnover Ratio vii) Gross Profit Percentage viii) Return on Assets ix) Earnings per share x) Price/Earnings Ratio b) Based on the information provided and your analysis do you feel that SPIW is profitable, provide a brief explanation. (4 marks) c) In reviewing the asset efficiency ratios for SPIW, what could be said in general and compared to the industry average, provide a brief explanation. (4 marks) d) Do you feel that the bank and or other creditors perceive SPIW as a high-risk firm? Provide a brief explanation for your reasons. (4 marks) e) In reviewing the company do you feel that SPI-Windsor Inc., has adequate liquidity in the short-term. Provide a brief explanation (4 marks) f) When reviewing the statement of earnings, what two (2) items would you note about the results for the past two years. (2 marks) g) When reviewing the statement of financial position what two (2) items would you note about the results for the past two years? (2 marks]

Answer rating: 100% (QA)

a 1 The current ratio for SPIW is 147 which is lower than the industry average of 210 This means that SPIW may have difficulty meeting its shortterm obligations with its current assets 2 The operating ... View the full answer