Financial Statement and Cash Flow Analysis



Financial Statement and Cash Flow Analysis

Free Cash Flow

The free cash flow of the corporation can be given by:

EBIT (1-Tax Rate) + Depreciation - Change in Net Working Capital - Capital Expenditure

In the case of Jaedan industries the FCF is

EBIT (1-Tax Rate) = 9,873,447 (1 - 0.34) +

Depreciation = 800,000

Change in Net Working Capital= Current Assets - Current Liabilities

= 10.535,819 - 3,980,000

= 6555819

Capital Expenditure= 14,811,000 - 11,879,000

= 2932000

Looking at all the above information, the free cash flow of Jaedan is:

FCF= 6,516,475 + 800,000 - 6,555,819 - 2932000

= 7316475 - 3623819

= 3692656

NET WORKING CAPITAL

 

 

 

 

Current Assets

 

 

 

 

$10,535,819

Current Liabilities

 

 

 

 

$3,980,000

 

 

 

 

 

 

The net working capital is:

 

 

 

$ 6,555,819

 

 

 

 

 

 

CURRENT RATIO

 

 

 

 

 

Current Assets

 

 

 

 

$1,233,000

Current Liabilities

 

 

 

 

$620,000

 

 

 

 

 

 

The current ratio is:

 

 

 

 

1.99

 

 

 

 

 

 

QUICK RATIO

 

 

 

 

 

Current Assets

 

 

 

 

$1,223,000

Inventory

 

 

 

 

$289,000

Current Liabilities

 

 

 

 

$620,000

 

 

 

 

 

 

The quick ratio is:

 

 

 

 

1.51

Liquidity RatiosActivity Ratios

 

 

 

 

 

 

INVENTORY TURNOVER

 

 

 

 

Cost of Goods Sold

 

 

 

$27,004,709

Inventory

 

 

 

 

$3,210,000

 

 

 

 

 

 

The inventory turnover is:

 

 

 

8.41

 

 

 

 

 

 

AVERAGE COLLECTION PERIOD

 

 

 

Accounts Receivable

 

 

 

$2,867,500

Annual Sales

 

 

 

 

$38,578,155

 

 

 

 

 

 

The average collection period is:

 

 

26.76

 

 

 

 

 

 

FIXED ASSET TURNOVER

 

 

 

 

Sales

 

 

 

 

$38,578,155

Net Fixed Assets

 

 

 

 

$2,374,000

 

 

 

 

 

 

The fixed asset turnover is:

 

 

 

16.25

 

 

 

 

 

 

TOTAL ASSET TURNOVER

 

 

 

 

Sales

 

 

 

 

$38,578,155

Total Assets

 

 

 

 

$17,254,819

 

 

 

 

 

 

The total asset turnover is:

 

 

 

2.24

Debt Ratio

 

 

 

 

 

 

DEBT RATIO

 

 

 

 

 

Total Liabilities

 

 

 

 

$7,026,000

Total Assets

 

 

 

 

$17,254,819

 

 

 

 

 

 

The debt ratio is:

 

 

 

 

40.7%

 

 

 

 

 

 

DEBT-EQUITY RATIO

 

 

 

 

 

Long-term debt

 

 

 

 

$3,046,000

Stockholders' Equity

 

 

 

 

$10,228,819

 

 

 

 

 

 

The debt-equity ratio is:

 

 

 

29.8%

 

 

 

 

 

 

TIMES INTEREST EARNED RATIO

 

 

 

 

Earnings Before Interest and Taxes

 

 

 

$9,873,447

Interest Expense

 

 

 

 

$375,000

 

 

 

 

 

 

The times interest earned ratio is:

 

 

 

26.33

 

 

 

 

 

 

FIXED PAYMENT COVERAGE RATIO

 

 

 

 

Earnings Before Interest and Taxes

 

 

 

$9,873,447

Interest Expense

 

 

 

 

$375,000

Principal Payments

 

 

 

 

$71,000

Lease Payments

 

 

 

 

$35,000

Total Preferred Dividends

 

 

 

$10,000

Tax Rate

 

 

 

 

34%

 

 

 

 

 

 

The fixed-payment coverage ratio is:

 

 

18.60

Profitability and Marketability Ratios

 

 

 

Gross Profit Margin

 

 

 

 

Sales

 

 

 

$38,578,155

Cost of Goods Sold

 

 

 

$27,004,709

 

 

 

 

 

The gross profit margin is:

 

 

30.0%

 

 

 

 

 

Operating Profit Margin

 

 

 

Operating profit

 

 

 

$11,573,447

Sales

 

 

 

$38,578,155

 

 

 

 

 

The operating profit margin is:

 

 

30.0%

 

 

 

 

 

Net Profit Margin

 

 

 

 

Net Profits After Taxes

 

 

 

$9,498,447

Sales

 

 

 

$38,578,155

 

 

 

 

 

The net profit margin is:

 

 

24.6%

 

 

 

 

 

Return on Assets (ROA)

 

 

 

 

Net Profits After Taxes

 

 

 

$9,498,447

Total Assets

 

 

 

$17,254,819

 

 

 

 

 

The return on assets is:

 

 

 

55.0%

 

 

 

 

 

Return on Equity (ROE)

 

 

 

 

Net Profits After Taxes

 

 

 

$9,498,447

Stockholders' Equity

 

 

 

$10,228,819

 

 

 

 

 

The return on equity is:

 

 

92.9%

 

 

 

 

 

Earnings Per Share (EPS)

 

 

 

Earnings Available to Common Stockholders'

 

 

$4,693,731

Common Shares Outstanding

 

 

1,000,000

 

 

 

 

 

The earnings per share are:

 

 

$4.69

 

 

 

 

 

Price/Earnings (P/E) Ratio

 

 

 

Market Price per Share of Common Stock

 

 

$42.89

Earnings Per Share

 

 

 

$4.69

 

 

 

 

 

The price/earnings ratio is:

 

 

9.1

Strengths of the Business

When one carries out a ratio analysis, it can be seen that there are many things that are working in the favor of Jaedan that makes it financial really strong. Some of these strengths are being looked at and analyzed below

Liquidity Strength

One of the basic weaknesses can be seen that the management of the assets has been done in better manner when one talks about the financial strengths of Jaedan. Even thought the current ratio of 1.99 does not really auger well, but the nature of the business is that there are some liquid assets that are always needed to be looked at. As compared to the industry trends, they are on the other hand placed really well as the asset management that is being done by them is pretty decent to say the least. While it can be seen that some of the competitors are not utilizing their assets properly, but they have kept their asset utilization in check. Some analyst might not be particularly happy with the lower ...