Business Finance
FIN 3334 Forecating and Valuation Research Paper

Fin 3334

FIN

Question Description

I don’t understand this Business question and need help to study.

our company is A.O Smith.

i have finished the first report which will give you background. i will upload it to below.

this is the second report.

◼ Excel spreadsheet and written report ( the template.xlsx is a model of excel spreadsheet)

◼ Forecasting financial statements

◼ Stock valuation – current and what could happen following your suggestion

◼ Sensitivity analysis

◼ 6%, no more than 10 pages, single/double space, 10<=font size <= 12, reference to 2019 10-k form

Unformatted Attachment Preview

Running header: A. O. SMITH CORPORATION FIRST REPORT A. O. Smith Corporation First Report Jiuting Zhou, Junru Zhuang, Yaqi Jia, Yujie He Troy University 1 A. O. SMITH CORPORATION FIRST REPORT 2 Introduction A. O. Smith Company was established in Wisconsin, the USA in 1936. In 1936, A.O. Smith developed the "Ginguite inner liner" technology, and then applied it to the field of water heaters and became a well-known manufacturer in the American water heater industry. Today the brand provides global hot water to residents and commercial customers in more than 60 countries, offering some of the industry's most well-known and well-respected brands. The company relies on the characteristics that customers value to provide durable and reliable service. In addition, A. O. Smith also offers the widest range of high-efficiency water heating products to save energy and meet customers' requirements for saving money. In 2019, A. O. Smith 's total assets are 3,058.0 million dollars, and its liabilities are 1391.2 million dollars; stockholders' equity is 1,666.8 million dollars. AOSC's total sales in 2019 are 2,992.7 million dollars; net research is 370 million dollars (A. O. Smith Form 10-K, 2020). Financial Analysis Profitability Analysis EPS represents the return on investment per share of A.O. Smith. From 2014 to 2018, A.O. Smith's EPS showed a growth trend, from $1.14 in 2014 to $2.58 in 2018, with an annual growth of 22.65%. However, in the context of global economic turbulence, A.O. Smith's 2019 EPS is 13.95% lower than that of 2018, from $2.58 in 2018 to $2.22 in 2019 and without shares splitting history, which is of warning sign for investors. EPS cannot effectively reflect the operation status and actual profitability of A.O. Smith, but for actual shareholders and potential investors, this figure is very meaningful. The continuous growth of EPS also shows the improvement of A.O. Smith's profitability. A. O. SMITH CORPORATION FIRST REPORT 3 ROE reflects the decision results of the company's operation, investment, and financing. The ROE of A. O. Smith from 2014 to 2019 is 15.04%, 19.61%, 21.55%, 18.03%, 25.87%, and 22.20%, respectively. Overall, A.O. Smith's ROE has been above 15% in the past six years, which is also higher than the long-term average of S & P 500 14 percent (Hargrave, 2019). It is considered acceptable. Compared with other companies in the same industry, A.O. Smith's return on equity is also excellent. According to data from Aswath Damodaran, professor of finance at New York University, A.O. Smith belongs to the building materials industry. The ROE of A.O. Smith is higher than the average level of the industry in 2019, whose unadjusted ROE is 14.05% and the adjusted ROE is 13.05%. (Damodaran, 2020) The ROA of A. O. Smith in recent six years (2014-2019) is 8.26%, 10.76%, 11.29%, 9.27%, 14.46% and 12.10%, respectively. It can be seen that the ROA of A.O. Smith has fluctuated in recent years. Generally, A.O. Smith's ROA is higher than the industry average. From 2018 to 2019, A.O. Smith's net income and total assets decreased. In detail, A. O. Smith’s assets change from 3,071.5 million dollars in 2018 to 3,058.0 million dollars in 2019. However, the revenue decline is relatively large, down about 6.12%, which leads to the decline of net income. The decrease may be related to the global economic status in 2019. According to the prediction of A.O. Smith's annual report in 2018, "the effects of a global economic downward could have a material adverse effect on our business" (A. O. Smith Annual report, 2018a). The unstable economic environment has a certain negative impact on the purchasing power of consumers and the purchase of materials by A.O. Smith. Risk Analysis Economic and globalization risks A. O. SMITH CORPORATION FIRST REPORT 4 A. O. Smith needs to face many risks in the international market. As A. O. Smith has branches in China, India and other countries, A. O. Smith needs to face foreign exchange rate risk and foreign exchange transaction risk. Because of the trade friction between China and the United States, the continuous devaluation of China's currency has a very negative impact on A. O. Smith's profits. In the 2018 annual report, A. O. Smith emphasized the foreign exchange transaction risk; “The majority of our [A. O. Smith’s] foreign currency transaction risk results from sales of our products in Canada which we manufacture in the U.S.” (A. O. Smith Annual report, 2018b). These risks may affect A. O. Smith's sales and profits and have a negative impact on earnings of converting foreign currency into U.S. dollars. Also, A. O. Smith faces the risk of global economic weakness. In 2018, net sales in China accounted for 34% of the total sales of A. O. Smith. Because A. O. Smith's sales are largely dependent on the real estate industry, the trend of the real estate industry will directly affect A. O. Smith's sales. In addition, the Sino-American trade war also affected Chinese consumers' choice of A. O. Smith products. According to the 2018 annual report of A. O. Smith, "further differentiation in the Chinese economy could advise effectively affect our financial condition, results of operations and cash flows" (A. O. Smith Annual report, 2018c). Short-Term Liquidity Risk In recent years, A. O. Smith's current ratio has been around 2, which is a good performance. Despite the economic downturn, the current ratio of A. O. Smith also remained at 1.96 in 2019. The current ratio greater than 1 means that A. O. Smith has the ability to pay the short-term debt. Compared with other companies in the same industry, the current ratio of A. O. Smith is slightly lower than the industry average. For example, in 2019, A. O. Smith's current ratio was 1.96, which is lower than the industry average of 1.97; in 2018, A. O. Smith's current A. O. SMITH CORPORATION FIRST REPORT 5 ratio was 2.086, while the industry average was 2.09 (Macrotrends, 2019). Too high current ratio indicates that the company has not been able to effectively invest in short-term assets. In conclusion, A. O. Smith's current ratio looks healthy, close to the industry average. From the data in recent years, A. O. Smith's account receipts turnover is not good. The overall receivable turnover (days) fluctuated around 71 days, compared with the industry average of 46 days (Readyratios, 2020). This means that A. O. Smith needs more time to collect accounts receivable. In this situation, A. O. Smith needs to consider the rationality of his credit policy; otherwise, it will lead to a decrease in the liquidity of accounts receivable and the financial liquidity risk. Long-Term Solvency Risk In 2019, A. O. Smith's long term debt to capital ratio is 0.16. A. O. Smith's long term debt to capital ratio is not very high, which means that A. O. Smith is without a long-term debt crisis. The lower long-term debt to capitalization ratio indicates that A. O. Smith has no significant financial difficulties. In 2019, according to WSJ, A. O. Smith's interest coverage ratio is 42.28 (Wall Street Journal, 2020). This is a very healthy financial index, which means A. O. Smith has a good financial status and A. O. Smith has the ability to fulfill its interest obligations based on operating income. Bankruptcy Risk A. O. Smith does not face the risk of bankruptcy in the next few years. In 2019, A.O. Smith's Altman's Z-score is 6.30. This is a good performance. According to Altman Z-score Theory, “Z-scores higher than 3.00 indicated a low probability of bankruptcy” (Wahlen, Baginski, & Bradsaw, 2017). This shows that A.O. Smith does not have the risk of bankruptcy in recent years. A. O. SMITH CORPORATION FIRST REPORT 6 Competition in the industry As A. O. Smith's annual report stated, “Our principal water heating and boiler competitors in North America include Rheem, Bradford White, Rinnai, Aerco and Navient. And in China, its competitors are Haier and Midea” (A. O. Smith Annual report, 2018d). Since some companies are not listed or not American domestic companies, financial data is hard to find. But from A. O. Smith's annual report, “We believe we are the largest manufacturer and marketer of water heaters in North America with a leading share in both the residential and commercial markets” (A. O. Smith Annual report, 2018e). A. O. Smith has enough confidence in the industry competition. In the China market segment, A. O. Smith also has a leading position. “We [A. O. Smith] sell(s) water heaters in more than 9,000 retail outlets in China, of which over 2,800 exclusively sell our products. Our [A. O. Smith’s] water treatment products and air purification products are sold in over 7,500 and 3,500 retail outlets in China, respectively” (A. O. Smith Annual report, 2018f). Leading market position helps A. O. Smith 's sales in China. In 2018, A. O. Smith achieved $3.2 billion in revenue in China. However, according to Margart Naczek, who is the report of Milwaukee Business Journal, "in 2019, A.O. Smith (NYSE: AOS) reported 2019 revenue declined 6% to $3 billion from $3.2 billion” (Naczek, 2020). Conclusion A. O. Smith is a company higher than the industry average level, with strong financial ability and operation ability. However, personally, A. O. Smith needs to face the negative risks of the global economic downturn. And the global spread of coronavirus will affect the sales of products. According to Nasdaq forecast, A. O. Smith’s earning surprise amount in the first quarter of 2020 is expected to be 0.44, the lowest in recent years (Nasdaq, 2020). A. O. SMITH CORPORATION FIRST REPORT 7 References A. O. Smith Annual report. (2018a). Risk Factors. Retrieved from https://www.aosmith.com/About/2018-Annual-Report/ A. O. Smith Annual report. (2018b). Risk Factors. Retrieved from https://www.aosmith.com/About/2018-Annual-Report/ A. O. Smith Annual report. (2018c). Risk Factors. Retrieved from https://www.aosmith.com/About/2018-Annual-Report/ A. O. Smith Annual report. (2018d). Business. Retrieved from https://www.aosmith.com/About/2018-Annual-Report/ A. O. Smith Annual report. (2018e). Business. Retrieved from https://www.aosmith.com/About/2018-Annual-Report/ A. O. Smith Annual report. (2018f). Business. Retrieved from https://www.aosmith.com/About/2018-Annual-Report/ A. O. Smith FORM 10-K. (2020). Financial Statements and Supplementary Data. Retrieved from http://investor.aosmith.com/static-files/60001ded-1f78-422e-a2d4-d7c089ae3e22 Aswath Damodaran. (2020, January). Return on Equity by Sector (US). Retrieved from http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/roe.html Macrotrends. (2020). Foundation Building Materials Current Ratio 2015-2019 | FBM. Retrieved from https://www.macrotrends.net/stocks/charts/FBM/foundation-buildingmaterials/current-ratio Marshall Hargrave. (2019, January). Return on Equity. Investopedia. Retrieved from https://www.investopedia.com/terms/r/returnonequity.asp A. O. SMITH CORPORATION FIRST REPORT 8 Readyratios. (2020). A.O Smith Corporation (AOS) financial analysis and rating. Retrieved from https://www.readyratios.com/sec/AOS_smith-a-o-corp Wahlen, J., Baginski, S & Bradshaw, M. (2017). Financial Reporting, Financial Statement Analysis, And Valuation A Strategic Perspective. 9E. 313. Margart Naczek. (2020, January). A.O. Smith reports sales decline in 2019 driven by weaker demand in China. Milwaukee Business Journal. Retrieved from https://www.bizjournals.com/milwaukee/news/2020/01/28/a-o-smith-reports-sales-decline-in2019-driven-by.html Wall Street Journal. (2020). A.O. Smith Corp. Markets. Retrieved from https://www.wsj.com/market-data/quotes/AOS/financials Nasdaq. (2020). A.O. Smith Corporation Common Stock (AOS) Earnings Report Date. AOS. Retrieved from https://www.nasdaq.com/market-activity/stocks/aos/earnings A.O. Smith Group Members:Yaqi, Jiuting, Yuejie, Junru Time:02/27/2020 CONTENTS 1 2 Why A.O. Smith Economic Characteristics 3 The Position and Strategy 4 Recent Performance Why A.O. Smith Reasons Emotion The water heater brand was first heard in China and found to be widely used in the United States. Weird Business Path It produced a total of 4.5 million aerial bombs. Lazy We have focused on A.O. Smith research, because of other class project. We are lazy! Be practical! Economic CharacteristicsWater Technology Industry Rivalry among Competitors USA Domestic Market & International Market Power of Suppliers Hard to challenge Threat of New Entrants Oligopolistic & Hard to entry Power of Buyers Save is the best Threat of Substitute Products Limited threat of substitute products Five Forces Classification Framework The Position and Strategy Geographical Diversification Industry Diversification Recent Performance Investment Return References: https://www.aosmith.com/uploadedFiles/Web_Assets/Documents/Annual_Report/AOSmith-2018AnnualReport-PagesLoRes.pdf Recent Performance Research & Development Energy Efficient Product Environment friendly, we like! R&D Expenditures (Around 3% of Assets) 2018-$94.0 million; 2017-$86.4 million; 2016$80.1 million. Financial Statement Analysis Package (FSAP): Version 9.0 Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 9th Edition By Jim Wahlen, Steve Baginski and Mark Bradshaw The FSAP User Guides appear in column I to the right. Analyst Name: Company Name: Year (Most recent in far right column.) BALANCE SHEET DATA Assets: Cash and cash equivalents Short-term investments Accounts and notes receivable - net Inventories Prepaid expenses and other current assets Other current assets (1) Other current assets (2) Other current assets (3) Current Assets Long-term investments Equity and cost investments Property, plant, and equipment - at cost Deferred income taxes - noncurrent Other assets Other intangible assets Goodwill Total Assets Liabilities and Equities: Accounts payable Accrued liabilities Notes payable and short-term debt Current maturities of long-term debt Deferred tax liabilities - current Other current liabilities (1) Other current liabilities (2) Other current liabilities (3) Current Liabilities Long-term debt Long-term accrued liabilities Deferred tax liabilities- noncurrent Other noncurrent liabilities (1) Other noncurrent liabilities (2) Total Liabilities Preferred stock Common stock + Additional paid in capital Retained earnings Accum. other comprehensive income and other equity adjustments Total Common Shareholders' Equity Noncontrolling interests Total Equity Total Liabilities and Equities 2014 2015 2016 2017 2018 2019 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 INCOME STATEMENT DATA Revenues Gross Profit Other operating expenses (1) Other operating expenses (2) Income from equity investees Non-recurring operating gains Operating Profit Interest income Income from equity affiliates Other income or gains Income before Tax Income from discontinued operations Extraordinary gains Changes in accounting principles Net Income Net income attributable to noncontrolling interests Net Income attributable to common shareholders Net Income (enter reported amount as a check) Other comprehensive income items Comprehensive Income 2014 2015 2016 2017 2018 2019 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 STATEMENT OF CASH FLOWS DATA Net Income Add back depreciation and amortization expenses Add back stock-based compensation expense Deferred income taxes Decrease in accounts receivable Decrease in inventories Decrease in prepaid expenses Decrease in other current assets Decrease in other noncurrent assets Increase in accounts payable Increase in income taxes payable Increase in other current liabilities Increase in deferred revenues Other addbacks to net income Other operating cash flows Net CF from Operating Activities Proceeds from sales of property, plant, and equipment Decrease in marketable securities Investments sold Payments for acquisitions of intangible assets Other investing transactions Net CF from Investing Activities Increase in short-term borrowing Increase in long-term borrowing Issue of capital stock Proceeds from stock option exercises Other financing transactions (1) Other financing transactions (2) Net CF from Financing Activities Effects of exchange rate changes on cash Net Change in Cash Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year 2014 2015 2016 2017 2018 2019 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 SUPPLEMENTAL DATA Statutory tax rate Average tax rate implied from income statement data After-tax effects of nonrecurring and unusual items on net income Depreciation expense Preferred stock dividends (total, if any) Common shares outstanding Earnings per share (basic) Common dividends per share Share price at fiscal year end FINANCIAL DATA CHECKS Assets - Liabilities - Equities Net Income (computed) - Net Income (reported) Cash Changes 2014 2015 2016 2017 2018 2019 35,0% #DIV/0! 35,0% #DIV/0! 35,0% #DIV/0! 35,0% #DIV/0! 35,0% #DIV/0! 35,0% #DIV/0! 0 0 0 0 0 0 #DIV/0! #DIV/0! 0 0 #DIV/0! 0 0 0 #DIV/0! 0 0 0 #DIV/0! 0 0 0 #DIV/0! 0 0 0 0 0 0 FSAP User Guides: The FSAP user should only enter data in the blue-font cells shaded light green. The Data spreadsheet is designed for up to six years of financial statement data. The user must input the most recent year of financial stateme The user must conform financial statement data to the FSAP template because the spreadsheets within FSAP use the Data spreadsheet as the FSAP automatically computes the amounts of various sub-totals and totals within the Data spreadsheet. These items are shaded in gray and s Insert your name in column B. Enter the name of the company in Column B. This name will appear on the output of all spreadsheets within FSAP. Throughout FSAP, enter amounts for account titles listed in brackets <> as negative numbers. Except for per share amounts, be consistent with Enter Balance Sheet Data: Other current assets (1), (2) and (3) can be renamed and used for different types of current assets for different firms. FSAP automatically computes the amount of total current assets. FSAP automatically computes the amount of total assets. Other current liabilities (1), (2), and (3) can be renamed and used for different types of current liabilities for different firms. FSAP automatically computes the amount of total current liabilities. Other noncurrent liabilities (1) and (2) can be renamed and used for different types of non-current liabilities for different firms. FSAP automatically computes the amount of total liabilitries. The amount for this item appears either on the Balance Sheet or the Statement of Shareholders' Equity. Be sure to enter as a positive or negati Include on this line any treasury stock accounts and any items that do not fall within some other shareholders' equity line. Such items seldom a FSAP automatically computes the amount of total shareholders' equity. FSAP automatically computes the amount of total liabilit ...
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Final Answer

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Financial Statement Analysis Package (FSAP): Version 9.0
Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 9th Edition
By Jim Wahlen, Steve Baginski and Mark Bradshaw

The FSAP User Guides appear in column I to the right.

Analyst Name:
Company Name:
Year (Most recent in far right column.)

BALANCE SHEET DATA
Assets:
Cash and cash equivalents
Short-term investments
Accounts and notes receivable - net
Inventories
Prepaid expenses and other current assets
Other current assets (1)
Other current assets (2)
Other current assets (3)
Current Assets
Long-term investments
Equity and cost investments
Property, plant, and equipment - at cost

Deferred income taxes - noncurrent
Other assets
Other intangible assets
Goodwill
Total Assets
Liabilities and Equities:
Accounts payable
Accrued liabilities
Notes payable and short-term debt
Current maturities of long-term debt
Deferred tax liabilities - current
Other current liabilities (1)
Other current liabilities (2)
Other current liabilities (3)
Current Liabilities
Long-term debt
Long-term accrued liabilities
Deferred tax liabilities- noncurrent
Other noncurrent liabilities (1)
Other noncurrent liabilities (2)
Total Liabilities
Preferred stock
Common stock + Additional paid in capital
Retained earnings
Accum. other comprehensive income
and other equity adjustments
Total Common Shareholders' Equity
Noncontrolling interests
Total Equity
Total Liabilities and Equities

2014

2015

2016

2017

2018

2019

541.900,0
229.100,0
146.445,0
208.300,0

645.200,0
282.500,0
201.700,0
222.900,0

754.600,0
424.200,0
518.700,0
251.100,0

820.000,0
473.400,0
598.400,0
297.000,0

645.000,0
385.300,0
647.300,0
304.700,0

551.400,0
177.400,0
589.500,0
303.000,0

52.900

33.800

37.600

57.200

41.500

56.500

1.178.645

1.386.100

1.986.200

2.246.000

2.023.800

1.677.800

427.700,0
-220.500,0

442.700,0
-200.325,0

31.300,0
437.000
300.300
2.154.445

71.300,0
311.600
400.300
2.411.675

67.300,0
308.300
491.500
3.315.200

76.200,0
308.700
516.700
3.676.500

86.900,0
293.100
513.000
3.456.800

80.900,0
338.400
546.000
3.235.400

405.100
200.100

451.100
202.100

528.600
229.800

535.000
246.000

543.800
241.500

509.600
250.100

7.800

10.500

7.200

7.500

7.500

6.800

613.000
210.100

663.700
236.100

765.600
316.400

788.500
402.900

792.800
221.400

766.500
277.200

154.600

163.400

184.700

307.300

298.400

181.000

977.700

1.063.200

1.266.700

1.498.700

1.312.600

1.224.700

165.045
148.200
1.135.500
-272.000

14.975
296.200
1.350.700
-313.400

522.700
296.000
1.593.000
-363.200

389.000
295.700
1.792.600
-299.500

96.700
295.500
2.102.800
-350.800

359.800
295.400
2.103.800
-748.300

1.011.700

1.333.500

1.525.800

1.788.800

2.047.500

1.650.900

1.176.745
2.154.445

1.348.475
2.411.675

2.048.500
3.315.200

2.177.800
3.676.500

2.144.200
3.456.800

2.010.700
3.235.400

932.500,0 1.060.100,0 1.096.800,0 1.203.800,0
-470.600,0 -531.200,0 -556.800,0 -611.500,0

INCOME STATEMENT DATA
Revenues

Gross Profit




Other operating expenses (1)
Other operating expenses (2)
Income from equity investees
Non-recurring operating gains
Operating Profit
Interest income

Income from equity affiliates
Other income or gains
Income before Tax

Income from discontinued operations
Extraordinary gains
Changes in accounting principles
Net Income
Net income attributable to noncontrolling interests
Net Income attributable to common shareholders
Net Income (enter reported amount as a check)
Other comprehensive income items
Comprehensive Income

2014

2015

2016

2017

2018

2019

2.356.000
-1.496.700
859.300

2.536.500
-1.526.700
1.009.800

2.685.900
-1.566.600
1.119.300

2.996.700
-1.758.000
1.238.700

3.187.900
-1.882.400
1.305.500

2.992.700
-1.812.000
1.180.700

-59.800
-572.100

-63.000
-610.700

-65.100
-658.900

-70.100
-718.200

-79.100
-753.800

-78.300
-715.600

-500
226.900

3.400
339.500

10.800
406.100

11.200
461.600

6.100
478.700

7.000
393.800

-8.200

-9.800

-7.300

-10.100

-8.400

-11.000

6.700
225.400
-78.900
207.800

7.800
337.500
-119.600
282.900

9.400
408.200
-136.000
326.500

10.400
461.900
-224.300
296.500

14.500
484.800
-113.600
444.200

18.000
400.800
-102.100
370.000

354.300

500.800

598.700

534.100

815.400

668.700

354.300
207.800

500.800
282.900

598.700
326.500

534.100
296.500

815.400
444.200

668.700
370.000

354.300

500.800

598.700

534.100

815.400

668.700

STATEMENT OF CASH FLOWS DATA
Net Income
Add back depreciation and amortization expenses
Add back stock-based compensation expense
Deferred income taxes

Decrease in accounts receivable
Decrease in inventories
Decrease in prepaid expenses
Decrease in other current assets
Decrease in other noncurrent assets
Increase in accounts payable
Increase in income taxes payable
Increase in other current liabilities
Increase in deferred revenues
Other addbacks to net income
Other operating cash flows
Net CF from Operating Activities
Proceeds from sales of property, plant, and equipment

Decrease in marketable securities
Investments sold

Payments for acquisitions of intangible assets
Other investing transactions
Net CF from Investing Activities
Increase in short-term borrowing

Increase in long-term borrowing

Issue of capital stock
Proceeds from stock option exercises


Other financing transactions (1)
Other financing transactions (2)
Net CF from Financing Activities
Effects of exchange rate changes on cash
Net Change in Cash
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year

2014

2015

2016

2017

2018

2019

354.300
59.800
11

500.800
63.000
9

598.700
65.100
9

534.100
70.100
10

815.400
79.100
10

668.700
78.300
13

14.600

28.200

45.900

7.700

-1.700

414.111
0

578.409
0
-15.000

692.009
0
-489.800

650.110
0
-127.600

902.210
0
-36.700

745.313
0
-107.000

0

-15.000

-489.800

-127.600

-36.700

-107.000

-99
-54
0

-128
-68
6

-135
-84
6

139
-97
-3

203
-130
-1

-288
-149
-2

-154

-189

-214

40

71

-438

413.957
0
541.900

563.219
541.900
645.200

201.996
645.200
754.600

522.550
754.600
820.000

865.581
820.000
645.000

637.875
645.000
551.400

SUPPLEMENTAL DATA
Statutory tax rate
Average tax rate implied from income statement data
After-tax effects of nonrecurring and unusual items on
net income
Depreciation expense
Preferred stock dividends (total, if any)
Common shares outstanding
Earnings per share (basic)
Common dividends per share
Share price at fiscal year end

FINANCIAL DATA CHECKS
Assets - Liabilities - Equities
Net Income (computed) - Net Income (reported)
Cash Changes

2014

2015

2016

2017

2018

2019

35,0%
35,0%

35,0%
35,4%

35,0%
33,3%

35,0%
48,6%

35,0%
23,4%

35,0%
25,5%

211.830
62.100
54
182.000
1,14
0,00
24,70

290.180
63.000
68
179.000
1,58
0,00
34,24

339.630
65.100
84
177.000
1,85
0,00
42,64

310.540
70.100
97
175.000
1,70
0,00
55,11

457.590
71.900
130
172.000
2,58
0,00
58,03

386.250
78.300
149
167.000
2,22
0,00
48,35

0
146.500

0
217.900
459.919

0
272.200
92.596

0
237.600
457.150

0
371.200
1.040.581

0
298.700
731.475

FSAP User Guides:
The FSAP user should only enter data in the blue-font cells shaded light green.

The Data spreadsheet is designed for up to six years of financial statement data. The user must input the most recent year of financial stateme
The user must conform financial statement data to the FSAP template because the spreadsheets within FSAP use the Data spreadsheet as the
FSAP automatically computes the amounts of various sub-totals and totals within the Data spreadsheet. These items are shaded in gray and s
Insert your name in column B.
Enter the name of the company in Column B. This name will appear on the output of all spreadsheets within FSAP.
Throughout FSAP, enter amounts for account titles listed in brackets as negative numbers. Except for per share amounts, be consistent with

Enter Balance Sheet Data:

Other current assets (1), (2) and (3) can be renamed and used for different types of current assets for different firms.
FSAP automatically computes the amount of total current assets.

FSAP automatically computes the amount of total assets.

Other current liabilities (1), (2), and (3) can be renamed and used for different types of current liabilities for different firms.

FSAP automatically computes the amount of total current liabilities.

Other noncurrent liabilities (1) and (2) can be renamed and used for different types of non-current liabilities for different firms.
FSAP automatically computes the amount of total liabilitries.

The amount for this item appears either on the Balance Sheet or the Statement of Shareholders' Equity. Be sure to enter as a positive or negati
Include on this line any treasury stock accounts and any items that do not fall within some other shareholders' equity line. Such items seldom a
FSAP automatically computes the amount of total shareholders' equity.

FSAP automatically computes the amount of total liabilities plus shareholders' equity.

Enter Income Statement Data:
When entering income statement data, enter amounts that increase income (revenues, gains, income) as positive amounts, and enter amounts

FSAP automatically computes the amount of gross profit.

Other operating expenses (1), (2), and (3) can be renamed and used for different types of recurring operating expenses for different firms.
Other operating income (1) and (2) can be renamed used for different sources of recurring operating income for different firms.

The FSAP user must decide whether particular operating gains or losses are non-recurring - infrequent and unusual given the firm's business a
FSAP automatically computes the amount of operating profit.

Enter any amounts of income (or ) from equity or noncontrolled affiliates.
Enter income or gain amounts (or expense or loss amounts as negative numbers) that are unusual and non-recurring and outside of normal bus
FSAP automatically computes the amount of income before tax.
Enter the amount of income tax expense that appears on the income statement in the section for income from continuing operations. If income
Enter any amount reported in the separate section of the income statement labeled Discontinued Operations. The amount is reported net of tax
Enter any amount reported in the separate section of the income statement labeled Extraordinary Items. The amount is reported net of taxes. E
Enter any amount reported in the separate section of the income statement labeled Changes in Accounting Principles. The amount is reported n
FSAP automatically computes the amount of net income using the above data for revenues, expenses, gains and losses.
Enter the amount of net income attributable to noncontrolling interests. Enter amount as a negative number. If the firm reports a net loss attribu

Enter the amount of reported net income on this line. It will be used by FSAP to provide a mathematical check on the amounts of all revenues a
This amount usually appears in the Statement of Comprehensive Income. Enter as a positive or negative number as appropriate.
FSAP automatically computes the amount of comprehensive income.

Enter Statement of Cash Flows Data:
In the Statement of Cash Flows Data, enter amounts reported on the firm's statement of cash flows. Enter amounts that increase (decrease) ca
FSAP automatically enters the Net Income amount computed above.

FSAP automatically computes the amount of cash flow from operations.

FSAP automatically computes the amount of cash flow from investing activities.

FSAP automatically computes the amount of cash flow from financing activities.
FSAP automatically computes the net change in cash.
Enter the beginning balance in cash and cash equivalents for the first year of data.

Enter Supplemental Data:

Enter the statutory income tax rate applicable to ordinary income and deductions (such as the deduction for interest expense). The Federal corp
This rate is computed by FSAP as the ratio of the income tax expense to income before tax.

This row automatically sums the pre-tax amounts of unusual and nonrecurring items and the after-tax amounts of discontinued operatons, extra
Enter the amount of depreciation expense on property, plant and equipment. These amounts (if any) are usually disclosed either in the property
Enter the total amount of preferred stock dividends paid, if any.
Enter the number of common shares outstanding at the end of each year. Be sure to reduce the number of shares issued by the number of any
Enter the amount that appears on the firm's income statement.
This cell computes common dividends per share by dividing the dividend payments from the cash flow statement by the number of outstanding
This should be the closing market price per share on the last day of the firm's accounting period (usually December 31 of each year). If stock m

FSAP checks for an equality between total assets and total liabilities plus shareholders' equity. A non-zero amount in this row indicates a likely d
FSAP checks that the inputted amounts of revenues and expenses equal the reported amount of net income. A non-zero amount on this row lik
FSAP checks that the change in cash on the statement of cash flows equals the change in cash on the balance sheet. A non-zero amount indic

n FSAP use the Data spreadsheet as their base. The user can, however, rename account titles as necessary to match the account titles of the particular firm. FSAP con
t. These items are shaded in gray and serve in checking the mathematical accuracy of inputted amounts. FSAP checks to ensure that total assets equal total liabilities a

holders' equity line. Such items seldom appear in balance sheets of U.S. firms. Amounts that increase (decrease) total shareholders' equity should be entered as positive

t and unusual given the firm's business and operating environment. If so, enter the amounts on the appropriate rows. Enter expense and loss amounts as negative numb

nter amounts that increase (decrease) cash as positive (negative) numbers. The row headings help indicate whether amounts should be positive or negative.

n for interest expense). The Federal corporate income tax rate is currently 35 percent in the United States. Alternatively, one can enter a statutory tax rate that captures

amounts of discontinued operatons, extraordinary items and changes in accounting principles from the income statement above. The analyst must then adjust the items th
re usually disclosed either in the property, plant and equipment note or in a supplemental inforrmation note. If depreciation expense is not disclosed separately from amor

er of shares issued by the number of any shares held as treasury stock to arrive at the number of common shares outstanding. The number of common shares outstand

statement by the number of outstanding shares. This assumes the firm pays immaterial preferred dividends. If that assumption does not hold, enter the amount of commo
ly December 31 of each year). If stock markets are closed on the last day of the accounting period, use the closing price on the most recent trading day following the end

e balance sheet. A non-zero amount indicates either a data input error on one or more rows of the cash flow statement or the use of a different definition of cash on the tw

f the particular firm. FSAP contains a number of general purpose accounts that can be renamed to fit the accounts of the particular firm (for example, Other Current Asse
al assets equal total liabilities and shareholders’ equity, that total revenues and gains minus total expenses and losses equal reported net income, and that cash flows fro

statutory tax rate that captures the combined effects of Federal, state, and foreign income taxes. These rates are commonly disclosed in the tax note.

st must then adjust the items that are stated in pre-tax amounts to an after-tax basis either by adjusting for the specific amounts of applicable tax (or tax savings) as disclo

er of common shares outstanding should be expressed in the same numerical units (for example, thousands or millions) as the financial statement amounts entered in th

ncome, and that cash flows from operating, investing, and financing activities equal the change in cash on the balance sheet. These financial data checks appear at the b

cial data checks appear at the bottom of the Data spreadsheet. Any material non-zero amounts (that are not due to rounding) on these rows require the user to re-check

ws require the user to re-check amounts inputted to identify and correct the error.

Financial Statement Analysis Package (FSAP): Version 9.0
Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 9th Edition
By James Wahlen, Steve Baginski and Mark Bradshaw

The FSAP User Guides appear in column J to the right.

Analyst Name:
Company Name:

0
0

DATA CHECKS
Assets - Liabilities - Equities
0
0
0
Net Income (computed) - Net Income (reported)
146500
217900
272200
Cash Changes
459919
92596
In the computations below, a #DIV/0! message indicates that a ratio denominator is zero.

PROFITABILITY FACTORS:
Year

0
237600
457150

0
371200
1040581

2015

2016

2017

2018

2019

RETURN ON ASSETS (based on reported amounts):
Profit Margin for ROA
20,0%
x Asset Turnover
1,1
= Return on Assets
22,2%

22,5%
0,9
21,1%

18,0%
0,9
15,5%

25,7%
0,9
23,0%

22,6%
0,9
20,2%

RETURN ON ASSETS (excluding the effects of nonrecurring items):
Profit Margin for ROA
8,6%
9,8%
x Asset Turnover
1,1
0,9
= Return on Assets
9,5%
9,2%

7,7%
0,9
6,6%

11,4%
0,9
10,2%

9,7%
0,9
8,7%

17,8%
0,9
2,1
32,2%

25,6%
0,9
1,9
42,5%

22,3%
0,9
1,8
36,2%

7,5%
0,9
2,1
13,5%

11,2%
0,9
1,9
18,6%

9,4%
0,9
1,8
15,3%

RETURN ON COMMON EQUITY (based on reported amounts):
Profit Margin for ROCE
19,7%
x Asset Turnover
1,1
x Capital Structure Leverage
1,9
= Return on Common Equity
42,7%

22,3%
0,9
2,0
41,9%

RETURN ON COMMON EQUITY (excluding the effects of nonrecurring items):
Profit Margin for ROCE
8,3%
9,6%
x Asset Turnover
1,1
0,9
x Capital Structure Leverage
1,9
2,0
= Return on Common Equity
18,0%
18,1%

OPERATING PERFORMANCE:
Gross Profit / Revenues
Operating Profit / Revenues
Net Income / Revenues
Comprehensive Income / Revenues

39,8%
13,4%
19,7%
19,7%

41,7%
15,1%
22,3%
22,3%

41,3%
15,4%
17,8%
17,8%

41,0%
15,0%
25,6%
25,6%

39,5%
13,2%
22,3%
22,3%

PERSISTENT OPERATING PERFORMANCE (excluding the effects of nonrecurring items):
Persistent Operating Profit / Revenues
13,3%
14,7%
15,0%
Persistent Net Income / Revenues
8,3%
9,6%
7,5%

14,8%
11,2%

12,9%
9,4%

GROWTH RATES:
Revenue Growth
Net Income Growth
Persistent Net Income Growth

7,7%
41,3%
47,8%

5,9%
19,5%
23,0%

11,6%
-10,8%
-13,7%

6,4%
52,7%
60,1%

-6,1%
-18,0%
-21,1%

OPERATING CONTROL:
Gross Profit Control Index
Operating Profit Contol Index
Net Profit Contol Index

109,2%
139,0%
131,3%

104,7%
113,0%
112,9%

99,2%
101,9%
80,0%

99,1%
97,5%
143,5%

96,3%
87,6%
87,4%

Profit Margin Decomposition:
Gross Profit Margin
Operating Profit Index
Leverage Index
Tax Index
Net Profit Margin

39,8%
33,6%
99,4%
148,4%
19,7%

41,7%
36,3%
100,5%
146,7%
22,3%

41,3%
37,3%
100,1%
115,6%
17,8%

41,0%
36,7%
101,3%
168,2%
25,6%

39,5%
33,4%
101,8%
166,8%
22,3%

Comprehensive Income Performance:
Comprehensive Income Index
Comprehensive Income Margin

100,0%
19,7%

100,0%
22,3%

100,0%
17,8%

100,0%
25,6%

100,0%
22,3%

RISK FACTORS:
Year
LIQUIDITY:
Current Ratio
Quick Ratio
Operating Cash Flow to Current Liabilities
ASSET TURNOVER:
Cash Turnover
Days Sales Held in Cash
Accounts Receivable Turnover
Days Receivables Held
Inventory Turnover
Days Inventory Held
Accounts Payable Turnover
Days Payables Held
Net Working Capital Days
Revenues / Average Net Fixed Assets
CAPEX Index
Expected Useful Life of PPE for Depreciation
Expected Remaining Useful Life of PPE

SOLVENCY:
Total Liabilities / Total Assets
Total Liabilities / Total Equity
LT Debt / LT Capital
LT Debt / Total Equity
Operating Cash Flow to Total Liabilities
Interest Coverage Ratio (reported amounts)
Interest Coverage ratio (recurring amounts)
RISK FACTORS:
Bankruptcy Predictors:
Altman Z Score
Bankruptcy Probability
Earnings Manipulation Predictors:
Beneish Earnings Manipulation Score
Earnings Manipulation Probability
DIVIDEND and STOCK MARKET-BASED RATIOS:
Stock Returns
Price-Earnings Ratio (reported amounts)
Price-Earnings Ratio (recurring amounts)
Market Value to Book Value Ratio
Common Dividends per Share
$
Common Dividend Payout (% of Net Income)
Common Dividend Yield (% of Share Price)

2015

2016

2017

2018

2019

2,09
1,70
90,6%

2,59
2,22
96,8%

2,85
2,40
83,7%

2,55
2,12
114,1%

2,19
1,72
95,6%

4,3
85,4
14,6
25
7,1
52
3,6
101
-25
11,3
0,2
6,9
3,8

3,8
95,1
7,5
49
6,6
55
3,3
112
-8
7,6
7,5
10,6
7,1

3,8
95,9
5,4
68
6,4
57
3,4
108
17
6,0
1,8
14,2
7,5

4,4
83,9
5,1
71
6,3
58
3,5
104
25
6,0
0,5
15,0
7,5

5,0
73,0
4,8
75
6,0
61
3,4
106
30
5,3
1,4
14,7
7,6

44,1%
78,8%
14,9%
17,5%
56,7%
35,4
34,3

38,2%
61,8%
13,4%
15,4%
59,4%
56,9
54,2

40,8%
68,8%
15,6%
18,5%
47,0%
46,7
44,6

38,0%
61,2%
9,4%
10,3%
64,2%
58,7
56,3

37,9%
60,9%
12,1%
13,8%
58,7%
37,4
35,2

6,13
0,00%

5,91
0,00%

6,26
0,00%

7,23
0,00%

6,55
0,00%

38,6%
21,7
-832,6
4,6
0,00 $
0,0%
0,0%

24,5%
23,0
-619,6
4,9
0,00 $
0,0%
0,0%

29,3%
32,4
-739,6
5,4
0,00 $
0,0%
0,0%

5,3%
22,5
-721,7
4,9
0,00 $
0,0%
0,0%

-16,7%
21,8
-520,6
4,9
0,00
0,0%
0,0%

INCOME STATEMENT ITEMS AS A PERCENT OF REVENUES:
Year
2015
Revenues
100,0%

-60,2%
Gross Profit
39,8%



-2,5%

-24,1%
Other operating expenses (1)
Other operating expenses (2)
Income from equity investees
Non-recurring operating gains
0,1%
Operating Profit
13,4%
Interest income

-0,4%
Income from equity affiliates
Other income or gains
0,3%
Income before T...

chemtai (23916)
University of Maryland

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