Start with the partial model in the file Ch03 P15 Build a Model.xls from the textbook's

Web site. Joshua & White (J&W) Technologies's financial statements are also shown

below. Answer the following questions. (Note: Industry average ratios are provided in

Ch03 P15 Build a Model.xls.)

a. Has J&W's liquidity position improved or worsened? Explain.

b. Has J&W's ability to manage its assets improved or worsened? Explain.

c. How has J&W's profitability changed during the last year?

d. Perform an extended Du Pont analysis for J&W for 2009 and 2010. What do

these results tell you?

e. Perform a common size analysis. What has happened to the composition (that is,

percentage in each category) of assets and liabilities?

f. Perform a percentage change analysis. What does this tell you about the change

in profitability and asset utilization?

Joshua & White Technologies: December 31 Balance Sheets

(Thousands of Dollars)

Assets 2010 2009

Liabilities

& Equity 2010 2009

Cash and cash

equivalents $ 21,000 $ 20,000 Accounts payable $ 33,600 $ 32,000

Short-term

investments 3,759 3,240 Accruals 12,600 12,000

Accounts

receivable 52,500 48,000 Notes payable 19,929 6,480

Inventories 84,000 56,000

Total current

liabilities $ 66,129 $ 50,480

Total current

assets $161,259 $127,240

Long-term

debt 67,662 58,320

Net fixed assets 218,400 200,000 Total liabilities $133,791 $108,800

Total assets $379,659 $327,240 Common stock 183,793 178,440

Retained

earnings 62,075 40,000

Total common

equity $245,868 $218,440

Total liabilities

& equity $379,659 $327,240

Joshua & White Technologies December 31 Income Statements

(Thousands of Dollars)

2010 2009

Sales $420,000 $400,000

Expenses excluding depr. & amort. 327,600 320,000

EBITDA $ 92,400 $ 80,000

Depreciation and amortization 19,660 18,000

EBIT $ 72,740 $ 62,000

resource

116 Part 1: Fundamental Concepts of Corporate Finance

2010 2009

Interest expense 5,740 4,460

EBT $67,000 $57,540

Taxes (40%) 26,800 23,016

Net income $40,200 $34,524

Common dividends $18,125 $17,262

Other Data 2010 2009

Year-end stock price $ 90.00 $ 96.00

Number of shares (Thousands) 4,052 4,000

Lease payment (Thousands of Dollars) $20,000 $20,000

Sinking fund payment (Thousands of Dollars) $ 0 $ 0