Problem: Based on my balance sheet and income statement please perform a financial analysis including liquidity and profitability ratios, asset and debt management and substantial growth rate. Identify key strengths and weaknesses of my financial position. What do you recommend to improve future performance?
| Income Statement (millions) |
2001 |
2002 |
2003 est. |
| Net revenues |
$2,649.00 |
$3,288.90 |
$4,043.60 |
| Cost of sales |
$1,112.80 |
$1,350.00 |
$1,657.90 |
| Selling, general and administrative expenses |
$1,091.60 |
$1,414.60 |
$1,728.10 |
| Depreciation expense |
$163.50 |
$205.60 |
$256.80 |
| Earnings before interest and taxes |
$281.10 |
$318.70 |
$400.80 |
| Interest income |
$8.20 |
$7.10 |
$5.10 |
| Interest expense |
$2.70 |
$1.80 |
$1.40 |
| Other income, net |
$2.40 |
$17.40 |
|
| Pre-tax income |
$289.00 |
$341.40 |
$404.50 |
| Income taxes |
$107.80 |
$126.30 |
$149.70 |
| Net income |
$181.20 |
$215.10 |
$254.80 |
| Dividends |
$0.00 |
$0.00 |
$0.00 |
|
|
|
|
| Balance Sheet (millions) |
2001 |
2002 |
2003 est. |
| Assets |
|
|
|
| Cash and equivalents |
$113.20 |
$174.60 |
$222.40 |
| Short-term investments |
$107.30 |
$227.60 |
$158.30 |
| Accounts receivable |
$90.40 |
$97.60 |
$117.40 |
| Inventories |
$221.30 |
$263.20 |
$327.40 |
| Other current assets |
$61.70 |
$84.50 |
$105.10 |
| Total current assets |
$593.90 |
$847.50 |
$930.60 |
| Gross property, plant and equipment |
$1,741.00 |
$2,080.20 |
$2,505.20 |
| Accumulated Depreciation |
$605.20 |
$814.40 |
$1,071.20 |
| Net property, plant and equipment |
$1,135.80 |
$1,265.80 |
$1,434.00 |
| Other non-current assets |
$116.80 |
$179.40 |
$222.40 |
| Total Assets |
$1,846.50 |
$2,292.70 |
$2,587.00 |
| Liabilities & Owners' Equity |
|
|
|
| Accounts payable |
$127.90 |
$136.00 |
$165.80 |
| Notes payable |
$62.00 |
$74.90 |
$0.00 |
| Current maturitites of long-term debt |
$0.70 |
$0.70 |
$0.70 |
| Other current liabilities |
$254.70 |
$325.90 |
$404.40 |
| Total current liabilities |
$445.30 |
$537.50 |
$570.90 |
| Long-term debt |
$5.80 |
$5.10 |
$4.40 |
| Other non-current liabilities |
$19.50 |
$23.50 |
$30.30 |
| Total liabilities |
$470.60 |
$566.10 |
$605.60 |
| Common stock |
$791.60 |
$930.40 |
$930.40 |
| Retained earnings |
$584.30 |
$796.20 |
$1,051.00 |
| Total equity |
$1,375.90 |
$1,726.60 |
$1,981.40 |
| Total liabilities and owner's equity |
$1,846.50 |
$2,292.70 |
$2,587.00 |