this an accounting assignmentwith all necessary information to do the calculations and answer the questions. can i get a quote for it
Sheet1 Income StatementRatiosCash Flow 200420052006 net Sales1,6241,9162242gross pmOperations COGS1,3041,5351818operting profitnet income Gross Profit320381424pmdepreciation Operating Expenses272307347asset turninc in a/r EBIT487477ROAinc in inv Interest Expense273031ROEinc in a/p EBT214446inc in accrued taxes71516cash coverageCF ops EAT142930Times interest earned Investing Purchase PPE balance sheetCurrentfinancing Cash455323QuickPay LTD A/R187231264NWC/TAissue line Inventory243278379Debt/equitydividend Tot CA475562666CF Financing 87inventory turn PPE187202252Days in Invnet CF Acc Dep(74)(99)(134) PPE, net113103118A/R turnsBeg Cash Total Asssets588665784days in a/r End Cash A/P3642120a/p turns Line149214249days in a/p Acccrued Exp131414 LTD- Current242424 Total CL222294407 LTD182158134 Total Liab404452541 Net Worth184213243 Total Liab and Worth588665784 Sheet2 Income StatementRatiosCash Flow 200420052006 net Sales1,6241,9162242gross marginOperations COGS1,3041,5351818operting profit marginnet income Gross Profit320381424profit margindepreciation Operating Expenses272307347asset turnoverinc in a/r EBIT487477ROAinc in inv Interest Expense273031ROEinc in a/p EBT214446inc in accrued taxes71516cash coverageCF ops EAT142930Times interest earned Investing CurrentPurchase PPE Quick balance sheetNWC/TAfinancing Cash455323Debt/equityPay LTD A/R187231264issue line Inventory243278379inventory turndividend Tot CA475562666Days in InvCF Financing 87 PPE187202252A/R turnsnet CF Acc Dep(74)(99)(134)days in a/r PPE, net113103118Beg Cash Total Asssets588665784a/p turns days in a/pEnd Cash A/P3642120 Line149214249Others? Acccrued Exp131414 LTD- Current242424 Total CL222294407 LTD182158134 Total Liab404452541 Net Worth184213243 Total Liab and Worth588665784 Sheet1 Industry DataFor comparison, calculate the ratios for Jones using the same formulas given here. They may be slightly different from the textbook formula. From RMA annual Statements - Available at MSOE Library Common Size Balance Sheet% of Assets Cash7.4 Accounts Receivable37.4 Inventory 33.6 Other Current Asset2.2 Total Current Asset80.6 Fixed Assets11.7 Intangible Assets3.2 All other Long Term Assets4.5 Total Assets100 Liabilities Note Payable Short term14.2 Current Maturities of Long Term Debt2.4 Accounts Payable23.6 All other current liabilities9.5 Total Current liabilities49.7 Long term Debt10 Other Long term Liabilities5.4 Total Liabilities65.1This is also Debt to Asset ratio Equity ( Both Common Stock and Retained Earnings)34.9This is equity to assets Total Liabilities and Equity100 Common Size Income Statement% of Sales Net Sales100 COGS71.1 Gross Profit28.9This is also gross profit margin Operating Expense24.2 Operating Profit (EBIT)4.7 Other Expense0.5 Profit before tax (EBT)4.2This is also profit margin before tax Ratios Current 1.7 Quick0.9 A/R Turnover7.9 Days Sale Outstanding (Days in A/R)46 Inventory Turnover6.6 Days sales in Inventory55 Accounts Payable Turnover10 Days in Payables36 Times Interest Earned (EBIT/interest)5.1 Debt to Equity1.8 Fixed Asset Turnover (Sales /Fixed Assets)41.1 Total Asset Turnover (Sales/Total Assets)2.9 Return on Equity (EBT/Equity)26.1% Return on Assets (EBT/Total Assets)9.0% Jones Electrical Distribution ________________________________________________________________________________________________________________ HBS Professor Thomas R. Piper and writer Jeffrey DeVolder prepared this case solely as a basis for class discussion and not as an endorsement, a source of primary data, or an illustration of effective or ineffective management. The authors thank John A. Schweig of W. W. Grainger, Inc. (HBS MBA 1983), and Mary A. Noonan of Arrow Electronics (HBS MBA 1990), for their valuable contributions to the development of this case. This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental. There are occasional references to actual companies in the narration. Copyright © 2010 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. T H O M A S R . P I P E R J E F F R E Y D E V O L D E R Jones Electrical Distribution After several years of rapid growth, in the spring of 2007 Jones Electrical Distribution anticipated a further substantial increase in sales. Despite good profits, the company had experienced a shortage of cash and had found it necessary to increase its borrowing from Metropolitan Bank—a local one- branch bank—to $250,000 in 2006. The maximum loan that Metropolitan would make to any one borrower was $250,000, and Jones had been able to stay within the limit only by relying very heavily on trade credit from the manufacturers from whom Jones purchased the electrical products it sold to its customers. Nelson Jones, sole owner and president of the company, was therefore looking elsewhere for a new banking relationship that would allow him to negotiate a larger loan. Jim Lyons, a homebuilder who was a friend of Jones, introduced Jones to Rachel Montrose, Lyons’s relationship officer at the local branch of Southern Bank & Trust—a large, regional bank. Southern had a 7-year relationship with Lyons, including a current loan balance of over $3 million. Jones and Montrose tentatively discussed the possibility that Southern might extend a line of credit to Jones up to a maximum amount of $350,000. Jones thought that a loan of this size would more than meet his needs for at least the next year, and he was eager for the flexibility that a line of credit of this size would provide. After discussion, Montrose had arranged for the credit department of Southern Bank & Trust to investigate Nelson Jones and his company. Background of Jones Electrical Distribution Jones Electrical Distribution was founded in 1999 as a partnership between Nelson Jones and his college roommate, Dave Verden. In 2003, Jones and Verden had a disagreement on how aggressively they should grow the business, and Jones ultimately bought Verden out for $250,000. They agreed that Jones would pay Verden the $250,000 in installments of $2,000 per month plus interest of 8% per year. The business sold electrical components and tools to general contractors and electricians. The products, which included items such as controllers, breakers, signal devices and fuses, were purchased from nearly 100 different suppliers. Jones’s customers used the products in the 4179 A P R I L 6 , 2 0 1 0 4179 | Jones Electrical Distribution 2 BRIEFCASES | HARVARD BUSINESS SCHOOL construction and repair of commercial and residential buildings. To a degree, Jones’s sales followed the seasonality of its customers’ businesses which had their highest activity during the spring and summer when weather was most conducive for construction work. The market in which Jones competed was large, fragmented, and highly competitive. Jones faced significant competition from national distributors, home centers, and other small supply houses. In spite of the competition, Jones had built up sales volume by successfully competing on price and employing an aggressive direct sales force who often visited customers at their job sites. In order to compete on price, Jones maintained tight control over operating expenses, including paying his salesforce primarily on commission and keeping overhead to a minimum. In addition, as part of his expense management effort, Jones had historically paid his suppliers within 10 days of the invoice date in order to take full advantage of the 2% discounts they offered for quick payments. Jones had also proved adept at demand forecasting and inventory management, allowing him to satisfy his customers’ demand with a modest amount of inventory relative to his larger competitors. Jones’s focus and dedication to his business allowed him to build it into a profitable operation. Jones Electrical Distribution had grown to $2.24 million in sales and $30,000 of net income in 2006. Operating statements for years 2004-2006 and for the three months ending March 31, 2007, are given in Exhibit 1. Financing the Business Through Southern Bank & Trust To solve his financing need, Jones wanted to develop a relationship with a larger bank that would not run into issues with maximum loans to a single borrower as he had experienced with Metropolitan Bank. He wanted to build a relationship with a bank that could grow with him, including to more locations if he decided to add additional sites in the future. As part of its customary due diligence of Jones Electrical Distribution, the Southern Bank & Trust’s credit department asked Jones’s friend Jim Lyons for a reference on Jones. Lyons’s reference included the following comments: “Nelson is a businessman of the highest integrity and sharp acumen who is a very hands-on manager of his operation. He has excellent knowledge of the products he sells and provides customers with excellent service. He also lives a modest lifestyle.” The bank also toured Jones Electrical Distribution’s warehouse and office and interviewed the area sales managers for three of the manufacturers from whom Jones bought the products he sold. The managers were unanimous in their favorable opinion of Jones. One of them said: “Nelson has been one of our best performing wholesalers. He really knows how to build relationships and close a sale. He has also been great with his expense management. The guy does not spend a dime unless he absolutely has to. We look forward to building a bigger relationship with him in the future.” In addition to the electrical distribution business, which was Jones’s only source of income, Jones held jointly with his wife an equity in their home. The house had cost $199,000 to build in 1999 and was mortgaged for $117,000. He also held a $250,000 life insurance policy, payable to his wife. Otherwise, they had no sizeable personal investments. Southern Bank & Trust gave particular attention to the debt position and current ratio of the business. It noted the ready market for the company’s products at all times and the fact that sales prospects were favorable. The bank’s investigator reported: “Sales are expected to reach $2.7 million by the end of 2007.” On the other hand, it was recognized that a general economic downturn might slow down the rate of increase in sales. Projections beyond 2007 were difficult to make, but the Jones Electrical Distribution | 4179 HARVARD BUSINESS SCHOOL | BRIEFCASES 3 prospects appeared good for continued growth in the volume of Jones Electrical Distribution’s business over the foreseeable future. The bank also noted the rapid increase in Jones Electrical’s accounts payable and line of credit in the recent past. Jones Electrical’s main suppliers had terms of 30 days net and provided a 2% discount for payments made within 10 days of invoice date. These terms