MGMT 2620 – Spring 2023 Business Analysis and Valuation
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MGMT 2620 – Spring 2023
Business Analysis and Valuation
Case Assignment Guidelines
Hello everyone!
Please see below the case assignment. It is important to plan and manage your time wisely. Submissions must be made to Canvas by April 2, 2023, at 11:59 PM EST and late submissions will not be accepted. The assignment is worth 100 points, or 10% of the total course grade.
In order to gain credit for this assignment, you must submit one PDF and one Excel file. Your calculations should be included in the Excel file, so be sure to include them.
If you have any questions or need help with the assignment, please don't hesitate to reach out to your TA. With careful planning and dedication, I'm sure you can all do well on this assignment!
Good luck, everyone!
Sincerely,
Dr. Gandevani
Tech-USA Inc. is a provider of data storage technology and solutions. The company designs and markets electronic storage devices like hard disk drives or solid-state hybrid drives. The company just closed Fiscal Year 2022 ending March 31st and completed the balance sheet and income statement. You are hired as a Financial Analyst and asked to perform the following tasks:
1-Prepare a forecasted income statement, balance sheet and cash flow statement for the company for 2023. (50 pts)
2-a- Calculate the listed financial ratios for 2022 (13 points)
b- Using the past three years data for the company, perform financial ratio analysis. (17 points) 3-Compare and contrast the company’s 2022 ratios with the industry. (10 points)
Forecasting assumptions for 2023:
1- Revenue will grow by 5% and the tax rate will be 21%.
2- The CAPEX will be 5.8% of Revenue and Depreciation expense will be 5.4% of Property, equipment, and leasehold improvements gross at the start of the year which was $9,835 million.
3- The company issues $99 million of stock-based compensation, and it is fully vested. Additional paid-in capital will increase by the same amount. The company includes this form of compensation in operating expenses.
4- The company has a dividend payout ratio of 35.4% of net income.
5- No change in the following income statement accounts: Amortization of intangibles, Interest income, Interest expense, and Other, net.
6- No change in the following balance sheet statement accounts: Goodwill, Long-term debts less current portion, Ordinary shares, Other comprehensive loss, and Long-term accrued income taxes. 7- There is no change in macroeconomic readings, including the inflation rate.
8- The Restructuring and other, net is zero.
9- Consider the following accounts increase based on the percentage of the revenue in 2023 .
|
Accounts receivable, net |
9.50% |
|
Inventories |
9.30% |
|
Other current assets |
1.80% |
|
Deferred income taxes |
10.70% |
|
Other assets, net |
1.80% |
|
Accounts payable |
13.70% |
|
Accrued employee compensation |
1.60% |
|
Accrued warranty |
0.90% |
|
Accrued expenses |
5.30% |
|
Long-term accrued warranty |
1% |
|
Other non-current liabilities |
1.30% |
|
RATIO ANALYSIS |
TeCh- USA 2022 |
Industry Average |
|
CURRENT RATIO |
|
1.98 |
|
QUICK RATIO |
|
1.24 |
|
INVENTORY TURNOVER (days) |
|
93 |
|
INTEREST COVERAGE |
|
4.26 |
|
ASSET TURNOVER (days) |
|
529 |
|
RECEIVABLES TURNOVER (days) |
|
58 |
|
GROSS MARGIN |
|
32.50% |
|
OPERATING MARGIN |
|
7.30% |
|
PROFIT MARGIN |
|
5% |
|
ROA |
|
3.70% |
|
ROE |
|
6.70% |
|
Debt to equity |
|
1.01 |
|
Dividend pay-out ratio |
|
0.28 |
Tech-USA, Inc.
Net Income statements (in millions) for the year ending March 31.
Revenue
Cost of Revenue
Gross Profit
Product Development
2022
$10,390 $7,459
$2,931
$991
2021
$11,184 $7,820
$3,364
$1,026
2020
$10,771 $7,597
$3,174
$1,232
|
Marketing and Administrative |
$453 |
$562 |
$606 |
|
Amortization of Intangibles |
$23 |
$53 |
$104 |
|
Restructuring and other, net |
($22) |
$89 |
$178 |
|
Total Operating Expenses |
$1,445 |
$1,730 |
$2,120 |
|
Income from Operations |
$1,486 |
$1,634 |
$1,054 |
|
Interest Income |
$84 |
$38 |
$12 |
|
Interest Expense |
($224) |
($236) |
($222) |
|
Other, net |
$25 |
($18) |
($29) |
|
Other expenses, net |
($115) |
($216) |
($239) |
|
Income before Income Taxes |
$1,371 |
$1,418 |
$815 |
|
(Benefit) provision for income taxes |
($640) |
$236 |
$43 |
|
Net Income |
$2,011 |
$1,182 |
$772 |
|
Tech-USA, Inc. |
|
|
|
|
Consolidated Balance Sheets |
|
|
|
|
(In millions except share and per share data) |
2022 |
2021 |
2020 |
|
as of March 31. |
|
|
|
|
Current Assets |
|
|
|
|
Cash and Cash Equivalents |
$2,220 |
$1,853 |
$2,539 |
|
Accounts receivables, net |
$989 |
$1,184 |
$1,199 |
|
Inventories |
$970 |
$1,053 |
$982 |
|
Other current assets |
$184 |
$220 |
$321 |
|
Total current assets |
$4,363 |
$4,310 |
$5,041 |
|
|
2023-03-24