...compliance with applicable regula? On Your Mark is preparing to release its first annual stockholder report since the company's recent initial public offering (IPO). Now all the division managers are meeting to help create the written analysis portions for the annual report, keeping in mind all the stakeholders who will be reading this information. (shareholders, regulators, investors, security analysts, and credit rating agencies, and so forth)
create On Your Mark's first annual stockholder report for its' stakeholders. Provide as much detailed analysis as possible to your shareholders for each of the following areas, keeping in mind how the users of this information are likely to use it.
Discuss the competitive position of the firm.
Summarize the financial and accounting control procedures in place to ensure compliance with applicable regulatory agencies.
Stock Price (as of 12/21/06)$6.25
Free Cash Flow/Share$0.36
Dividend/Share (DPS): Dividends/shares outstanding$0.24
Book Value/Share: Shareholders Equity/Shares Outstanding$0.18
Strident Marks, Inc.
Income Statement
For the year ending December 31, 2006
Revenue
Net Sales$8,994,000
COGS (not including depreciation)$3,759,600
Gross Profit $5,234,400
Expenses
SG&A $1,245,900
Depreciation Expense $350,000
Total Operating Expenses $1,595,900
Income Before Interest & Taxes $3,638,500
Interest Expense $250,000
Income Before Taxes $3,388,500
Income Tax Expense$1,016,550
Net Income $2,371,950
Shares Outstanding10,000,000
Earnings Per Share (EPS)$0.24
Beginning RE $1,500,000
Dividends $2,400,000
Ending RE $1,471,950
Strident Marks, Inc.
Balance Sheet
As of December 31, 2006
ASSETS
Cash$1,336,950
Accounts Receivable $900,000
Inventories $7,500,000
Total Current Assets$9,736,950
Property, Plant & Equipment $625,000
less Accumulated Depreciation$111,000
Net Property, Plant, and Equipment $514,000
Total Assets$10,250,950
LIABILITIES & SHAREHOLDER'S EQUITY
Accounts Payable$420,000
Accrued Liabilities$484,000
Interest Payable $2,500,000
Income Taxes Payable $900,000
Dividends Payable$2,400,000
Total Current Liabilities $6,704,000
Long-term debt$1,750,000
Total Liabilities $8,454,000
Common Stock at Par $425,000
Retained Earnings $1,471,950
Treasury Stock - at cost ($100,000)
Total Shareholders equity $1,796,950
Total Liabilities and shareholders equity$10,250,950
Key Ratios:
* Liquidity RatiosIndustry Avg
Current Ratio: Curent Assets/Current Liabilities1.451.25
Quick Ratio: (Current Assets-Inventory)/Current Liabilities0.330.22
Net Working Capital Ratio: Net Working Capital/Total Assets29.6%25.2%
* Profitability Ratios
Return on Assets: Earnings/Total Assets23.1%21.50%
Return on Equity: Earnings/Equity132.0%125%
Net Profit Margin: Earnings/Sales26.4%25%
Operating Profit Margin: Operating Profits/Sales40.5%35%
Gross Profit Margin: Sales-COGS/Sales58.2%55%
* Activity Analysis Ratios
Asset Turnover Ratio: Sales/Total Assets0.880.95
Fixed Asset Turnover Ratio: Sales/Net Fixed Assets17.5015.5
Equity Ratio (Proprietary Ratio): Shareholders Equity/Total Assets0.180.15
Average Collection Period: AR/(Annual Sales/365)36.5240
Average Payment Period: AP/((70%*COGS/365))58.2525
Accounts Receivable Turnover Ratio: 365/Avg Collection Period9.998.8
Inventory Turnover Ratio: COGS/Inventory0.500.4
Average Age of Inventory728.14675.2
* Capital Structure and Debt Ratios
Debt Ratio: Total Liabilities/Total Assets82.5%50%
Debt to Equity Ratio: Long Term Debt/Equity97.4%50%
Interest Coverage Ratio: EBIT/Interest14.5525.5
* Capital Market Ratios
Price / Earnings Ratio: Stock price/EPS26.328.2
Market to Book Ratio: Stock Price/Book Value per Share34.7837.5
Dividend Yield: DPS/Stock Price3.84%2.50%
Dividend Payout Ratio: DPS/EPS101.2%25%
create On Your Mark's first annual stockholder report for its' stakeholders. Provide as much detailed analysis as possible to your shareholders for each of the following areas, keeping in mind how the users of this information are likely to use it.
Discuss the competitive position of the firm.
Summarize the financial and accounting control procedures in place to ensure compliance with applicable regulatory agencies.
Stock Price (as of 12/21/06)$6.25
Free Cash Flow/Share$0.36
Dividend/Share (DPS): Dividends/shares outstanding$0.24
Book Value/Share: Shareholders Equity/Shares Outstanding$0.18
Strident Marks, Inc.
Income Statement
For the year ending December 31, 2006
Revenue
Net Sales$8,994,000
COGS (not including depreciation)$3,759,600
Gross Profit $5,234,400
Expenses
SG&A $1,245,900
Depreciation Expense $350,000
Total Operating Expenses $1,595,900
Income Before Interest & Taxes $3,638,500
Interest Expense $250,000
Income Before Taxes $3,388,500
Income Tax Expense$1,016,550
Net Income $2,371,950
Shares Outstanding10,000,000
Earnings Per Share (EPS)$0.24
Beginning RE $1,500,000
Dividends $2,400,000
Ending RE $1,471,950
Strident Marks, Inc.
Balance Sheet
As of December 31, 2006
ASSETS
Cash$1,336,950
Accounts Receivable $900,000
Inventories $7,500,000
Total Current Assets$9,736,950
Property, Plant & Equipment $625,000
less Accumulated Depreciation$111,000
Net Property, Plant, and Equipment $514,000
Total Assets$10,250,950
LIABILITIES & SHAREHOLDER'S EQUITY
Accounts Payable$420,000
Accrued Liabilities$484,000
Interest Payable $2,500,000
Income Taxes Payable $900,000
Dividends Payable$2,400,000
Total Current Liabilities $6,704,000
Long-term debt$1,750,000
Total Liabilities $8,454,000
Common Stock at Par $425,000
Retained Earnings $1,471,950
Treasury Stock - at cost ($100,000)
Total Shareholders equity $1,796,950
Total Liabilities and shareholders equity$10,250,950
Key Ratios:
* Liquidity RatiosIndustry Avg
Current Ratio: Curent Assets/Current Liabilities1.451.25
Quick Ratio: (Current Assets-Inventory)/Current Liabilities0.330.22
Net Working Capital Ratio: Net Working Capital/Total Assets29.6%25.2%
* Profitability Ratios
Return on Assets: Earnings/Total Assets23.1%21.50%
Return on Equity: Earnings/Equity132.0%125%
Net Profit Margin: Earnings/Sales26.4%25%
Operating Profit Margin: Operating Profits/Sales40.5%35%
Gross Profit Margin: Sales-COGS/Sales58.2%55%
* Activity Analysis Ratios
Asset Turnover Ratio: Sales/Total Assets0.880.95
Fixed Asset Turnover Ratio: Sales/Net Fixed Assets17.5015.5
Equity Ratio (Proprietary Ratio): Shareholders Equity/Total Assets0.180.15
Average Collection Period: AR/(Annual Sales/365)36.5240
Average Payment Period: AP/((70%*COGS/365))58.2525
Accounts Receivable Turnover Ratio: 365/Avg Collection Period9.998.8
Inventory Turnover Ratio: COGS/Inventory0.500.4
Average Age of Inventory728.14675.2
* Capital Structure and Debt Ratios
Debt Ratio: Total Liabilities/Total Assets82.5%50%
Debt to Equity Ratio: Long Term Debt/Equity97.4%50%
Interest Coverage Ratio: EBIT/Interest14.5525.5
* Capital Market Ratios
Price / Earnings Ratio: Stock price/EPS26.328.2
Market to Book Ratio: Stock Price/Book Value per Share34.7837.5
Dividend Yield: DPS/Stock Price3.84%2.50%
Dividend Payout Ratio: DPS/EPS101.2%25%