Financial Statement Analysis

Appendix ACASE PROBLEM

Introduction

The purpose of this section is to allow you to pull the information together and work with the systems explained earlier today. The problem allows you to use the causal ratios and the DuPont system of ratio analysis and to compare the results from the two systems. You must also use the percent of sales method to forecast the external financial needs of the company. Last, you must prepare pro forma statements under different financing alternatives to see the effect that this type of external financing has on the causal ratios and the DuPont system.

Marine supply company balance sheet

	Year 1	Year 2	Year 3	Year 4
Cash	$12,100	$17,400	$19,500	$17,480
Receivables	31,400	35,600	46,500	53,700
Inventories	64,700	79,000	100,800	97,320
Total current assets	108,200	132,000	166,800	168,500
Net plant	46,200	58,600	68,900	72,020
Miscellaneous assets	10,700	11,900	12,700	15,440
Total assets	$165,100	$202,500	$248,400	$255,960
Liabilities and capital
Accounts payable	$7,000	$15,200	$24,600	$24,530
Other current liabilities	23,500	26,900	35,000	36,750
Total current liabilities	30,500	42,100	59,600	61,280
Long-term debt	12,400	28,700	45,700	46,040
Deferred taxes	2,570	4,580	5,380	7,140
Other liabilities	2,030	1,520	2,570	1,050
Total liabilities	47,500	76,900	113,250	115,510
Net worth	117,600	125,600	135,150	140,450
Total	$165,100	$202,500	$248,400	$255,960

Marine supply company selected income figures