Cisco Systems is an American multinational corporation

headquartered in San Jose, California, that designs manufactures,

and sells networking equipment. Some of the areas focused by the
group are education, healthcare, economic empowerment, critical
human needs, environment governance and politics, supply chain
and others.

VERTICAL ANALYSIS
The company’s income statement comprises of different accounts that affect its economic
status. It is evident that 83% of the company’s net sales are coming from its products while the
17% is from the services it provides.
In Cisco Systems’ industry, the average profit margin (of its competitors) is 18.20% (PR
Newswire, 2014). Clearly, the company is doing well amongst its competitors by having a gross
margin of 69% for the year ended.
Of the company’s operating expenses, the sales and marketing has the largest portion of 23%
which is almost 51% of the total operating expenses. It is not surprising that this is the largest
part of the expenses since it is the process of getting the products famous and known to
potential buyers (Lorette, 2014).
It appears that the company is losing a significant 9% of its sales in issuance of stocks or
common shares to the public. The company could work on this issue since it performs well in
the other aspects of the accounts in the income statement.
Cisco Systems
Common-Size Income Statement
For Year Ended 2003
NET SALES Percentage of Sales
Product $ 4,013,000.00 83%
Service $ 832,000.00 17%
Total Net Sales $ 4,845,000.00 100%
COST OF SALES
Product $ 1,237,000.00 26%
Service $ 250,000.00 5%
Total Cost of Sales $ 1,487,000.00 31%

GROSS MARGIN $ 3,358,000.00 69%

OPERATING EXPENSES
Research & development $ 789,000.00 16%
Sales and Marketing $ 1,093,000.00 23%
General and Administrative $ 151,000.00 3%
Payroll tax on stock option exercises $ - 0%
Amortization of deferred stock-based compensation $ 43,000.00 1%
Amortization of purchased intabgible assets $ 114,000.00 2%
In-process research and development $ - 0%
Total Operating Expenses $ 2,190,000.00 45%

OPERATING INCOME $ 1,168,000.00 24%

Loss on public equity investments $ (412,000.00) -9%

Interest Income $ 179,000.00 4%
Other income/(loss), net $ (63,000.00) -1%
0%
INCOME (LOSS) BEFORE PROVISION FOR
(BENEFIT FROM) INCOME TAXES $ 872,000.00 18%

Provision for (benefit from) income taxes $ 254,000.00 5%

NET INCOME (LOSS) $ 618,000.00 13%

 Apple is an American multinational corporation headquartered in
Cupertino, California, that designs, develops, and sells consumer
electronics, computer software, online services, and personal
computers. Its best known products are Mac, iPhone, iPod, iTunes
Store, iCloud, OS X and iOS. It was founded by Steve Jobs and is
now managed by Tim Cook. The current year has been tough for
Apple as it moved down from first to second largest information
technology company by revenue after Samsung Electronics.
VERTICAL ANALYSIS
Upon observation of the common-size comparative balance sheet of Apple Inc., it appears that
a largest portion of the liquid assets are marketable securities. It means that the company is
generating more assets from short-term debts, government bonds, common stock, and
certificates of deposit. The company may sustain well despite the high portion of this account in
the balance sheet since Apple Inc. is a financial company. Marketable securities should be as
low as possible for nonfinancial companies (Invensting Answers Inc., 2014).
It is also found in the balance sheet that long-term marketable securities occupy a very large
percentage of the company’s total assets. The company should look into this matter in order to
reduce debts which may or may not turn into bad debts in the future.
It is observed that cash and cash equivalents lowered from 15% to 12% for the last quarter of
the year. The match can be found in the liabilities section: when deferred revenue and accrued
expenses decreased.
A struggle can be found in the shareholders’ equity section pertaining to retained earnings. It
appeared that this entry is 0% compared to total assets. It is alarming since retained earnings
are used for other investing purposes for future uses of the company.
Apple Inc.

Common-Sized Comparative Balance Sheets

For the Month of September to December

Percentage of Total Assets

ASSET
S 25-Dec-10 25-Sep-10 25-Dec-10 25-Sep-10

Current Assets:

Cash and cash equivalents $ 10,734,000 $ 11,261,000 12% 15%

Short-term marketable securities $ 16,243,000 $ 14,359,000 19% 19%

Accounts receivable $ 6,027,000 $ 5,510,000 7% 7%

Inventories $ 885,000 $ 1,051,000 1% 1%

Deferred tax assets $ 1,724,000 $ 1,636,000 2% 2%

Vendor non-trade receivables $ 4,847,000 $ 4,414,000 6% 6%

Other current assets $ 3,467,000 $ 3,447,000 4% 5%

Total Current Assets $ 43,927,000 $ 41,678,000 51% 55%

Long-term marketable securities $ 32,730,000 $ 25,391,000 38% 34%

Property, plant and equipment, net $ 5,868,000 $ 4,768,000 7% 6%

Goodwill $ 741,000 $ 741,000 1% 1%

Acquired intangible assets, net $ 522,000 $ 342,000 1% 0%

other assets $ 2,954,000 $ 2,263,000 3% 3%

Total Assets $ 86,742,000 $ 75,183,000 100% 100%

LIABILITIES AND SHAREHOLDERS'

EQUITY

Current liabilities:

Accrued payable $ 14,301,000 $ 12,015,000 16% 16%

Accrued expenses $ 5,953,000 $ 5,723,000 7% 8%

Deferred revenue $ 3,541,000 $ 2,984,000 4% 4%

Total current liabilities $ 23,795,000 $ 20,722,000 27% 28%

deferred revenue-non current $ 1,216,000 $ 1,139,000 1% 2%

other non-current liabilities $ 7,065,000 $ 5,531,000 8% 7%

Total liabilities $ 32,076,000 $ 27,392,000 37% 36%

Commitments and contingencies

Shareholders' Equity

Common Stock $ 11,502,000 $ 10,668,000 13% 14%

Retained Earnings $ 43,050,000 $ 37,169,000 50% 49%

Accumulated comprehensive income (loss) $ 114,000 $ (46,000) 0% 0%

Total shareholders' equity $ 54,666,000 $ 47,791,000 63% 64%

0%

Total liabilities and $ 86,742,000 $ 75,183,000 100% 100%

shareholders' equity
 Springfield Psychological is a company that comprises experienced
and licensed therapist in order to provide people a full range of
mental health services. They provide therapy, psychological
evaluations, and testing to families, groups and individuals of all
ages. The services includes Psychotherapy, Child & Adolescent
Services, Psychiatry Medication, Assessment and Training,
Professional Medication, and Resources.

FINANCIAL RATIO ANALYSIS

Liquidity Ratio
Current Ratio = = = 1.90
Quick Ratio = = = 1.90
Asset Management Ratios
Day Sales Outstanding = = = 2.28 or 3 days
Fixed Assets Turnover = = = 5.11x
Total Assets Turnover = = = 3.80x
Debt Management Ratios
Debt Ratio = = = 0.50
Profitability Ratios
Profit Margin = = = 0.12 or 12%
ROA = = = 0.47
BEP = = = 0.23
ROE = = = 1.50
Springfield Psychological Services
Balance Sheets
As of December 31, 2004
ASSETS 2004
Current Assets
Cash $ 12,597
Short-term investments $ 5,003
Accounts Receivable $ 2,315
Prepaid Rent $ 3,000
Total current assets $ 22,915

Property, plant and equipment

Land and building $ 65,553
Machinery and equipment $ 5,000
$ 70,553
Less accumulated depreciation $ (5,775)
Property and equipment, net $ 64,778
Long-term investments $ 1,353
Other Assets $ 283
Total Assets $ 89,329

LIABILITES AND SHAREHOLDERS' EQUITY

Current liabilities:
Note payable $ 4,200
Accounts payable $ 375
Accrued wages $ 1,579
Taxes payable $ 5,386
Total current liabilities $ 11,540

Long-term debt $ 50,000

Total liabilities $ 61,540

Owner's Equity
Total owner's equity $ 27,789

Total liabilities and $ 89,329

owner's equity
Springfield Psychological Services
Income Statement
31 December, 2004
SALES
Client Service Revenue $ 279,156
Book Sales $ 3,410
Professional Consultation $ 56,924
Total Sales $ 339,490

EXPENSES
Wages $ 197,000
Marketing and advertising $ 25,000
Rent $ 24,750
Utilities $ 4,000
Membership and Publications $ 1,300
Insurance $ 3,500
Consultants $ 5,700
Office Supplies $ 950
Total expenses $ 262,200

OPERATING INCOME $ 77,290

Non-Operating Gains (Losses)

Interest income, net $ (417)
Loss on sale of assets $ (5,000)
Donations (gift) $ 750
Total non-operating gains (losses) $ (4,887)
Provision for income taxes $ 30,916

NET INCOME (LOSS) $ 41,707

 The Expansion of the Williams
The Williams 5 and 10 is a discount retail chain,
selling a variety of goods at low prices. Business has
been very good lately and the Williams 5 & 10
Company is considering opening one more retail
outlet in a neighboring town at the end of 1999. They
figure that it would be about five years before a large
national chain of discount stores moves into that
town to compete with its store. So it is looking at this expansion as a five-year prospect. After
five years, it would most likely retreat from this town.
Williams’ managers have researched the expansion and determined that the building needed
could be built for $400,000 and it would cost $100,000 to buy the cash registers, shelves, and
other equipment necessary to start up this outlet. Under MACRS, the building would be
classified as 31.5 year- property and depreciated using straight-line method, with no salvage
value. This means that 1/31.5 of 400,000 is depreciated each year. Also under MACRS, the
equipment would be classified as 5-year property. The Williams 5 & 10 expects to be able to sell
the building for $350,000 and the equipment for $50,000 after five years.
The Williams extends no credits on its sales and pays for all its purchases immediately. The
projections for sales and expenses for the new store for the next five years are:
YEAR SALES EXPENSES
2000 200,000 100,000
2001 300,000 100,000
2002 300,000 100,000
2003 300,000 100,000
2004 50,000 20,000
The new store requires 50,000 of additional inventory. Since all sales are in cash, there is no
expected increase in accounts receivable. However, the firm anticipates no other changes in
working capital. The tax rate is flat 30% and there are no investment tax credits associated with
this expansion. Also, capital gains are taxed at the ordinary tax rate.
Solution:
The depreciation expense are computed as follows:

YEAR BUILDING EQUIPMENT TOTAL

1 12, 698 20,000 32,698
2 12, 698 32,000 44,698
3 12, 698 19,000 31,898
4 12, 698 11,520 24,218
5 12, 698 11,520 21,218
TOTAL 63, 490 94,240
Conclusion:
Investing $550,000 initially is expected to result cash inflows during the following five years as
shown in the figure.
 The Maersk Group has five core businesses, which include
Maersk Line, APM Terminals, Maersk Oil, Maersk Drilling
and APM Shipping Services. The last business area is
comprised of Maersk Supply Service, Maersk Tankers,
Damco and Svitzer.
The Maersk Group currently has a $20 million, 12 percent
debenture issue outstanding, and the issue still has 20
years to final maturity. Because current interest rates are
significantly lower than at the time of the original offering,
the company can now sell a $20 million issue of 20-year
bonds at a coupon rate of 10 percent that will net it
$19,600,000 after the underwriting spread.
For federal income tax purposes, the unamortized (not-yet-written-off ) issuing expense of the
old bonds, the call premium, and the unamortized discount of the old bonds, if they were sold at
a discount, are deductible as expenses in the year of the refunding. The old bonds were sold 5
years ago at a $250,000 discount from par value, so the unamortized portion now is $200,000.
Moreover, the legal fees and other issuing expenses involved with the old bonds have an
unamortized balance of $100,000. The call price on the old bonds is 109 ($1,090 per $1,000-
face-value bond); issuing expenses on the new bonds are $150,000; the income tax rate is 40
percent; and there is a 30-day period of overlap. The period of overlap is the lag between the
time the new bonds are sold and the time the old bonds are called. This lag occurs because
most companies wish to have the proceeds from the new issue in hand before they call the old
issue. Otherwise, there is a certain amount of risk associated with calling the old issue and
being at the “mercy” of the bond market in raising new funds. During the period of overlap, the
company pays interest on both bond issues.
Framework for Analysis. With this rather involved background information in mind, we can
calculate the initial cash outflow and the future cash benefits. The net cash outflow at the time of
the refunding is as follows:

For ease of presentation, we ignore any interest that might be earned by investing the refunding
bond proceeds in marketable securities during the 30-day period of overlap. The annual net
cash benefits may be determined by calculating the difference between the net cash outflow
required on the old bonds and the net cash outflow required on the new or refunding bonds. We
assume for simplicity that interest is paid but once a year, at year end. The annual net cash
outflow on the old bonds is

For the new bonds, the bond discount as well as the issuing costs may be amortized for tax
purposes in the same manner as were the old bonds. The annual net cash outflow on the new
bonds is as follows:

Discounting. Thus, for an initial net cash outflow of $1,630,000, Maersk Group can achieve
annual net cash benefits of $1,434,000 − $1,189,000 = $245,000 over the next 20 years.
Because the net cash benefits occur in the future, they must be discounted back to present
value. But what discount rate should be used? Certain individuals advocate the use of the cost
of capital. However, a refunding operation differs from other investment proposals. Once the
new bonds are sold, the net cash benefits are known with certainty. From the standpoint of
the corporation, the refunding operation is essentially a riskless investment project. The only
risk associated with the cash flows is that of the firm’s defaulting in the payment of principal
or interest. Because a premium for default risk is embodied in the market rate of interest the
firm pays, a more appropriate discount might be the after-tax cost of borrowing on the
refunding bonds. Using this cost, (0.10) × (1 − 0.40) = 6%, as our discount factor, the refunding
operation would be worthwhile if the net present value were positive. The net present value is
$1,180,131, indicating that the refunding operation is worthwhile. The internal rate of return is
13.92 percent, indicating again that the refunding is worthwhile, because the internal rate of
return exceeds the required rate of 6 percent.
 Starting from a humble vision to break the beer monopoly in 1982,
Asia Brewery Inc. (ABI) is now a major player in the country's
beverage and industrial packaging industry. ABI offers high quality
beverages at prices the average Filipino can afford, and is one of the
largest alcoholic, as well as non-alcoholic beverage players in the
Philippines today.

Suppose that Asia Brewery, Inc., wants to acquire a piece of equipment costing
$148,000 for use in the fabrication of microprocessors. A leasing company is willing to finance
the equipment with a 7-year “true” lease. The terms of the lease call for an annual payment
of $26,000. The lease payments are made in advance – that is, at the beginning of each of the
seven years. At the end of seven years, the equipment is expected to have a residual value of
$30,000. The lessee is responsible for maintenance of the equipment, insurance, and taxes; in
short, it is a net lease.

Embodied in the lease payments is an implied interest rate to the lessor. The before-tax
return to the lessor can be found by solving the following for R:

Because these lease payments are made in advance, we need to find for the internal rate of
return, R, that equates the cost of the asset with one lease payment at time 0, plus the present
value of
an annuity consisting of six lease payments at the end of each of the next six years, plus the
present value of the residual value at the end of year 7. When we solve for R, we find it to be
11.61 percent. If, instead of this return, the lessor wishes a before-tax return of 13 percent, it
would need to obtain annual lease payments of X in the following equation:

Therefore the annual lease payment would be $27,061.

If the asset is purchased, McNabb Electronics would finance it with a seven-year term loan at 12
percent. The company is in a 40 percent tax bracket. The asset falls in the five-year property
class for modified accelerated cost recovery (depreciation) purposes.

The cost of the asset is then depreciated at these rates, so that first-year depreciation is 0.20 ×
$148,000 = $29,600 and so forth. At the end of the seven years, the equipment is expected to
have a salvage value of $30,000. Asia Brewery is entitled to this residual value, as it would be
the owner of the asset under the purchase alternative. A potential lessee will find it useful to first
calculate the before-tax return to the lessor, as we did earlier. This allows you to make a quick
comparison with interest rates for other methods of financing. Only if the before-tax return to the
lessor is lower than the before-tax cost of borrowing is it usually worthwhile to go on to after-tax
calculations. In our example, because the imputed return to the lessor is less than the lessee’s
borrowing rate (11.61 versus 12 percent), it is appropriate to bring in tax effects and consider
alternative discounted after-tax cash flows.
Acme Plumbing Company sells plumbing fixtures on terms of 2/10, net 30. Its financial
statements over the last three years are as follows:

Analyze the company’s financial condition and

performance over the last three years. Are there any problems?
The company’s profitability has declined steadily over the period. As only $50,000 is added
to retained earnings, the company must be paying substantial dividends. Receivables are
growing at a slower rate, although the average collection period is still very reasonable relative
to the terms given. Inventory turnover is slowing as well, indicating a relative buildup
in inventories. The increase in receivables and inventories, coupled with the fact that
shareholders’ equity has increased very little, has resulted in the total­debt­to­equity ratio
increasing to what would have to be regarded on an absolute basis as quite a high level.
The current and acid­test ratios have fluctuated, but the current ratio is not particularly
inspiring. The lack of deterioration in these ratios is clouded by the relative buildup in both
receivables and inventories, evidencing a deterioration in the liquidity of these two assets.
Both the gross profit and net profit margins have declined substantially. The relationship
between the two suggests that the company has reduced relative expenses in 20X3 in particular.
The buildup in inventories and receivables has resulted in a decline in the asset
turnover ratio and this, coupled with the decline in profitability, has resulted in a sharp
decrease in the return on assets ratio.

NESTLE PHILIPPINES, INC.

COMPARATIVE BALANCE SHEET
YEAR ENDED : DEC 31, 2013 AND DEC 31,2012
2013 2012 Differenc PercentDifferen
e ce
ASSETS
Current Assets
Cash 507,619 593,724 86,105 14.50%
Receivable 6,735,382 9,238,141 2,502,759 27.09%
Inventories 14,429,723 13,148,734 1,280,989 9.74%
Derivative Assets 430,957 47,997 382,960 797.88%
Other Current Assets 659,717 803,737 144,020 17.92%
Total Current Assets 22,763,398 23,823,333 1,068,935 4.49%
Noncurrent Assets
Availble-for-sale financial Assets 68,978 127,852 58,874 46.05%
Investment in share of stock 575,267 575,267 0 0%
Property, plant and equipment 16,566,930 16,437,503 129,427 0.79%
Deferred income tax assets-net 1,072,182 1,297,171 224,989 17.34%
Other Noncurrent Assets 416,341 384,912 31,429 8.17%
Total Noncurrent Assets 18,699,698 18,822,705 123,007 0.65%
TOTAL ASSETS 41,463,096 42,655,038 1,191,942 2.79%

LIABILITIES AND EQUITIY

Current Liabilities
Short-term loans 8,923,059 7,282,509 1,640,550 22.53%
Acct. payable and accrued 22,128,791 20,851,340 1,277,451 6.13%
expenses
Derivative liabilities 440,990 412,616 28,374 6.88%
Income tax payable 901,898 1,968,865 (1,066,96 (54.19%)
7)
Total Current Liabilities 32,394,738 30,515,330 1,879,408 6.16%
Noncuurent Liabilities
Installment payable- net of current
portion 74,934 86,385 (11,451) (13.26%)
Other noncurrent liabilities 1,534,179 1,787,963 (253,757) (14.19%)
Total Noncurrent Liabilities 1,609,113 1,874,321 (265,208) (14.15%)
TOTAL LIABILITIES 34,003,851 32,389,651 1,614,200 4.98%
Equity
Capital stock P100 par value
Authorized- 30,000,000 shares
Issued – 23,009,274 shares 2,300,927 2,300,927 0 0%
Reserves for fluctuations in fair
value for:
Available-for-sale financial 76,589 80,811 4,222 (5.22%)
assets
Cash flow hedges (69,055) (335,574) 266,519 (79.42%)
Retained earnings 5,150,784 8,219,223 (3,068,43 (37.33%)
9)
Total Equity 7,459,245 10,265,387 (2,806,14 (27.34%)
2)
TOTAL LIABILITIES AND EQUITY 41,463,096 42,655,038 (1,191,94 (2.79%)
2)
NESTLE PHILIPPINES, INC.
COMPARATIVE Income Statement
YEAR ENDED : DEC 31, 2013 AND DEC 31,2012
2013 2012 Differen PercentDifferen
ce ce
NET SALES 105,968,52 103,926,08 2,042,43 1.97%
5 8 7
COST OF GOODS SOLD 66,691,690 64,952,855 1,738,83 2.68%
5
GROSS PROFIT 39,276,835 38,973,233 303,602 0.78%

Expenses 21,116,773 21,674271 557,498 (2.57%)

Financing charges 373,088 248,715 124,373 50.01%
Interest income 86,766 133,997 36,231 (29.46%)
Dividend income 471,159 207,720 263,439 126.82%
Foreign exchange gain (loss)- net 384,619 351,831 736,450 -
Gain (loss) on sale and disposal of 112,527 24,334 146,861 -
Property and equipment
Other - net 45,768 15,148 30,620 202.14%

INCOME BEFORE INCOME TAX 17,883,521 17,772,277 111,244 0.63%

PROVISION FOR INCOME TAX 4,836,936 5,196,669 359,733 (6.92%)

NET INCOME 13,046,585 12,575,608 470,977 3.75%

Overview:
Nestle a worldwide leading Nutrition, Health and Wellness Company.
Nestle Philippines Inc categorized under food processing or food and beverage manufacturing.
This industry grown expotential over the few years, with real growth of 4.8% per year.
Exports amounted to 51.6billion with growth of 11.6% per annum.
Key markets are US, Southeast Asian countries and Middle east.
Major country suppliers are New Zealand,Australia, US, India, Thailalnd and Ireland.
Vision: “at nestle, we believe that research can help us make better food so that people live a
better life.
Good Food for Good Life.”
Mission: nestle strive to be a leader in nutrition, health and wellness.

ANALYSIS:

Current Assets Current Current Ratio

Liabilities
2013 22,763,398 32,394,738 0.70268
2012 23,832,333 30,515,330 0.78099
The current ratio in 2012 is higher than 2013 by 0.08, small difference.
But in both year the current ratio is lower than the norm of the industry which is at least 1.
 Current Assets Inventories Current Quick Ratio
Liabilities
2013 22,763,398 14,429,723 32,394,738 0.25725
2012 23,832,333 13,148,734 30,515,330 0.35011
There is 0.10 difference in the ratio, in 2013 they have less ability to pay off the short term
obligation than 2012.

Receivable Ave Sales (365) Ave. Collecting

Period
2013 6,735,382 290,324.726 23.19947
2012 9,238,141 284,729.008 32.44538
The average collecting period is much lower in 2013 compare on 2012. This is good because
the length of time the company must wait after making sale is much shorter.

Sales Inventories Inventory

turnover
2013 105,968,525 14,429,723 7.43653
2012 103,926,088 13,148,734 7.90388
The inventory turnover decrease in 2013 compare to 2012, it means that the salability of the
company’s product is slower than its last year.

Sales Total Assets T. Asset turnover

2013 105,968,525 41,463,096 2.55573
2012 103,926,088 42,655,038 2.43643
In 2013, the ability of the company to generate sales with the use of its total assets increase.

Sales Fixed assets F. Asset turnover

2013 105,968,525 16,566,930 6.39638
2012 103,926,088 16,437,503 6.32249
The year 2013, the company use their plant, equipment and other fixed assets effectively,
compare in 2012 by 0.07

Net Income Sales Profit Margin on

Sales
2013 13,046,585 105,968,525 0.12312
2012 12,575,608 103,926,088 0.12101
The profit margin on sales in 2013 and 2012 are almost the same.
 Net Income Total Assets Return on Asset
2013 13,046,585 41,463,096 0.31466
2012 12,575,608 42,655,038 0.29482
The company, in 2013, efficiently uses the assets to generate earning compare to 2012.

Net Income Common Equity Return on

Common Equity
2013 13,046,585 2,300,927 5.67014
2012 12,575,608 2,300,927 5.46545
The return on common equity in 2013 increases, the amount of the share of common stocks is
higher than in 2012

Sapple Inc., is an Filipino manufacturer of personal computers, computer peripherals, mobile

phones and computer software.
Its headquarters are located in Laguna, Manila.
Apple was founded by Rosamyl Celiz, Aico Juarez, and Krizia Cereno on April 1, 1976, to
develop and sell personal computers.
Sapple is the world's second-largest information technology company by revenue after
Samsung Electronics, and the world's third-largest mobile phone maker.
The company’s worldwide annual revenue in 2013 totalled $170 billion.
On September 2012, Sapple reached a record share price of more than $705 and closed at
above 700. With 936,596,000 outstanding shares, it had a market capitalization of about $660
billion. At the time, this was the highest nominal market capitalization reached by a publicly
traded company ever.
ANALYSIS:

Current Assets Current Current Ratio

 Liabilities
2013 73,286,000 43,658,000 1.67863
2012 57,653,000 38,542,000 1.49584
2011 44,988,000 27,970,000 1.60843
2010 41,678,000 20,722,000 2.01129
Sapple Inc.'s current ratio deteriorated from 2011 to 2012 but then improved from 2012 to 2013
exceeding 2011 level.

Current Assets Inventories Current Quick Ratio

Liabilities
2013 73,286,000 1,764,000 43,658,000 1.63823
2012 57,653,000 791,000 38,542,000 1.47532
2011 44,988,000 776,000 27,970,000 1.58069
2010 41,678,000 1,051,000 20,722,000 1.96057
Sapple Inc.'s current ratio deteriorated from 2011 to 2012 but then improved from 2012 to 2013
exceeding 2011 level.

Receivable Ave Sales (365) Ave. Collecting

Period
2013 24,094,000 468,246.5753 51.45579
2012 21,275,000 428,789.0411 49.61647
2011 13,731,000 296,572.6027 46.23825
2010 11,560,000 178,698.6301 64.68991
Sapple Inc.'s Average collecting period improved significantly in 2011 but then deteriorated
continuously in 2012 and 2013.

Sales Inventories Inventory

turnover
2013 170,910,000 1,764,000 96.88775
2012 156,508,000 791,000 197.86093
2011 108,249,000 776,000 139.49613
2010 65,225,000 1,051,000 62.05994
Sapple Inc.'s Inventory turnover improved significantly from 2010 of 62.05994 to 2011 of
139.049613 and continue until 2012 which is the highest at 197.86093 but then deteriorated
significantly from 2012 to 2013

Sales Total Assets T. Asset turnover

2013 170,910,000 207,000,000 0.82565
2012 156,508,000 176,064,000 0.88892
2011 108,249,000 116,371,000 0.93020
2010 65,225,000 75,183,000 0.86754

Sales Fixed assets F. Asset turnover

2013 170,910,000 16,597,000 10.29764
2012 156,508,000 15,452,000 10.12865
2011 108,249,000 7,777,000 13.91912
2010 65,225,000 4,768,000 13.67973
Sapple Inc.'s Fixed Asset Turnover improved slightly from 2010 to 2011but then deteriorated
significantly in2012 the slightly improved again in 2013.

Net Income Sales Profit Margin on

Sales
2013 37,037,000 170,910,000 0.21670
2012 41,733,000 156,508,000 0.26665
2011 25,922,000 108,249,000 0.23946
2010 14,013,000 65,225,000 0.21484
Sapple Inc.'s net profit margin improved from 2010 to 2012 but then deteriorated significantly from
2012 to 2013

Net Income Total Assets Return on Asset

2013 37,037,000 207,000,000 0.17892
2012 41,733,000 176,064,000 0.23703
2011 25,922,000 116,371,000 0.22275
2010 14,013,000 75,183,000 0.18638
Sapple Inc.'s ROA improved from 2011 to 2012 but then deteriorated significantly from 2012 to 2013 .

Net Income Common Equity Return on

Common Equity
2013 37,037,000 19,764,000 1.87396
2012 41,733,000 16,422,000 2.54128
2011 25,922,000 13,331,00 1.94449
2010 14,013,000 10,668,000 1.31355
Sapple Inc.'s ROE improved from 2011 to 2012 but then deteriorated significantly from 2012 to 2013
At December 31, the balance sheet of Rodriguez Malting Company was the following (in
thousands):
The company has received a large order and anticipates the need to go to its bank to
increase its borrowings. As a result, it needs to forecast its cash requirements for January,
February, and March.
Typically, the company collects 20 percent of its sales in the month of sale, 70 percent
in the subsequent month, and 10 percent in the second month after the sale. All sales are
credit sales.
Purchases of raw materials to produce malt are made in the month prior to the sale and
amount to 60 percent of sales in the subsequent month. Payments for these purchases
occur in the month after the purchase. Labor costs, including overtime, are expected to be
$150,000 in January, $200,000 in February, and $160,000 in March. Selling, administrative,
tax, and other cash expenses are expected to be $100,000 per month for January through
March. Actual sales in November and December and projected sales for January through
April are as follows (in thousands):

(It should be noted that the company
maintains a safety stock of inventory and that depreciation for the three­month period
is expected to be $24,000.)

Cash budget (in thousands)
Forecast balance sheet at March 31 (in thousands)

The amount of financing peaks in February owing to the need to pay for purchases
made the previous month and higher labor costs. In March, substantial collections are
made on the prior month’s billings, causing a large net cash inflow sufficient to pay off
the additional borrowings.