Assignment: Financial Management- Annual Report Analysis
1) Profitability/Net Income Margins
a. What are the after-tax net income margins (i.e., net profit margins) for both companies?
Mohawk net margin in FY2019 is 7% and Dixie is -4%
How do they compare?
Mohawk net margin is significantly better because Dixie's net margin is in the negative
b. Who achieves the higher net income margin? Why? Mohawk achieves the higher net income margin based on the COGS $7,294.63, SG&A 19% sales and net profit 744, the cost structure items are higher compared with Dixie cost of sales 288, 22%
Tip: Analyze the major cost structure line items in the income statement (COGS, SG&A, interest, other, and taxes) as percentages of net sales, so you can identify reasons for better net income margins. Identify and comment on the differences. You may not know why a particular cost item like COGS is higher or lower, and that's okay. Your CEO only wants to know which cost-structure items are higher or lower for each company.
2) Inventory Management
a. Who does a better job managing their inventory (Inventory Days on Hand ratio)?
b. What are their respective 3-year trends for Inventory DOH?
c. What options could the company consider improving inventory management?
3) Cash Is King
a. How much net cash from operations did each company generate last year?
b. Which company has done a better job generating cash from operations?
c. In layman's terms, how is each company spending their cash with respect to reinvestments in the business, changes in debt, and returning money to shareholders?
4) Liquidity
a. How do the companies compare in terms of the current ratio, and what are their respective 3- year trends?
b. Do their current ratios indicate that either of these companies could go bankrupt soon? Explain.
Format your assignment according to the following formatting requirements:
(1) The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
(2) The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
(3) Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.
Format your assignment according to the following formatting requirements:
(1) The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
(2) The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
(3) Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.