Fin 3334 Financial Statement Analysis; Financial Reporting, Financial Statement Analysis, and Valuation (7th Edition)

You are to submit an excel spreadsheet showing your step-by-step solution to the question. Presentation, legibility, and ease of navigation will be a factor in the final grade and will represent 20 percent of the question.

3. Do a Penman Decomposition and determine the extent of the Firm's Financial Flexibility

Net Operating Assets
Financial Assets
Interest Bearing Debt
Equity
Net Operating Income
Net Investment Income
Net Interest Expense
Net Income
Other Comprehensive Income
Total
Return on Invested Capital
Return on financial Investments
Net Interest Rate
Gap

X Corporation - 2014 & 2015

2014 2015

Cash 10 15

Marketable securities 210 182

Account receivable 80 65

Inventory 147 192

Net fixed assets 300 353

Total assets 747 807

Accounts payable 95 120

Accrued expense 123 180

Current income

tax payable 10 40

Deferred income tax 35 42

Note payable 69 50

Long-term debt 190 147

Common stock 10 10

Retained earnings 250 270

Treasury stock -30 -42

Accumulated other comp. income -5 -10

Total liabilities and equity 747 807

Year 2015

Operating income 78

Investment income 15

Interest expense -16

Earnings before tax 77

Tax provision -30.8

Net income 46.2

Other comprehensive income -5

Comprehensive income 41.2