Cabela's Case Summary

$.57 per share in 1988. The stock carries an historical Price to Earnings ratio of 59, and there were

Earnings were down 23.6 percent in the first half of the year. The stock was trading around $17 per share, a far cry from the $40 neighborhood the stock had visited the year before.

The company’s cash has been decreasing over the 2 years however its current and quick ratio has gone up, from 2.26 to 2.53 and 1.06 to 1.26 respectively, due to its increase in accounts receivable and inventory, the company may need to minimize amount of sales based on credit or require however down payment on its installment sales. Haefren must also be offering more lenient credit terms to its customers since its average collection period has also gone up significantly, this could be correlated to the lax credit terms Wiegandt currently offers Haefren. Haefren’s return on equity is also declining, using the DuPont method, as a result of our low net profit margin and our decreasing asset turnover (as a result of lower sales and higher assets). The company currently finances itself with bank loans which have decreased while cash is decreasing, the increase in debt may be growing to an unsustainable rate as our debt to equity ratio has almost doubled from 5.84 to 9.37 between 1993 and 1994. This poses a major a problem for the corporation as cash and sales are decreasing and loans are increasing, the company may need to liquidate the warehouses. The warehouses could be a major factor in another problem: low profitability. Low operating profit margins of 1.6% suggests high operating expenses. The company may need to cut operating expenses by reducing by

The four stocks diversified across different industries that I have chosen are McDonald’s, Target, Honda Motor Co., Ltd., and Whole Foods Market. After researching each stock using Mergent Online you can see my findings in the above chart. When looking at the P/E ratio of the chosen stocks I believe that each of them varies from being underpriced, fairly priced, or overpriced when compared to the peer and the industry as a whole for each. For McDonald’s I feel that this stock is fairly priced. Yesterday the stock price was 158.90 and 30 days ago it was 153.96 and the P/E ratio is 26.0492 and if I purchased 100 shares I would have a 3.2% share return. This would mean that the company’s growth looks good and the P/E ratio is fairly priced we have to continually look at the interest rate, stability of the firm, and expected growth.

2. Forecast the firm’s financial statements for 2002 and 2003. What will be the external financing requirements of the firm in those years? Can the firm repay its loan within a reasonable period? In order to forecast the financial statements of 2002 and 2003, the following assumptions need to be made. The growth of sales is 15%, same as 2001, which is estimated by managers. The rate of production costs and expenses per sales is constant to 50%. Administration and selling expenses is the average of last 4 years. The depreciation is $7.8 million per year, which is calculated by $54.6 million divided by 7 years. Tax rate is 24.5%, which is provided. The dividend is $2 million per year only when the company makes profits. Therefore, we assume that there will be no dividend in 2003. Gross PPE will be $27.3 million (54.6/2) per year. We also assume there is no more long term debt, because any funds need in the case are short term debt, it keeps at $18.2 million. According to the forecast, Star River needs external financing approximately $94 million and $107 million in 2002 and 2003, respectively. In order to analysis if the company can repay the debt, we need to know the interest coverage ratio, current ratio and D/E ratio. The interest coverage ratios through the forecast were 1.23 and 0.87 respectively, which is the danger signal to the managers, because in 2003, the profits even not

The best way to improve this ratio and better position the business to cover its short-term obligations is to better manage current liabilities (accounts payables). Generate more profit (cash) out of each sale by increasing profit (as long as it is competitive within the industry), reducing costs of goods sold (making the product with less cost or providing services with less costs) or finding efficiencies throughout the operating cycle.

Vertical Analysis- In conducting the vertical analysis of the financial statements provided, I have found a few rather unfavorable results. First, I can’t help but notice that in 2014 Smith Enterprises has a measly 19% total assets in cash, and 20% total assets in cash in 2015. This may be a negative result of the company’s confined inventory by 22% in 2014 and 30% for 2015. If inventory is not being moved, there is no opportunity for cash, therefore, the cash account is being negatively affected overall. Next, when reviewing Smith Enterprises total liability, for 2014 the company’s total assets to total liability equals 50% in 2014, and 46% percent in the year 2015. While the total liabilities decreased by a total of 4% between 2014 and 2015, the company’s total liabilities are extremely unfavorable. By this I am expressing that 46% and 50% of how Smith Enterprises pays for their assets is with debt through accounts such as accounts payable, salaries payable, and notes payable. If the company were moving out inventory at a faster rate, the higher debt percentage may be justified as the company could pay off this debt quickly, but when tied up inventory is visible this leads me to believe that the debt percentage will stay within a few

Vertical Analysis- In conducting the vertical analysis of the financial statements provided, I have found a few rather unfavorable results. First, I can’t help but notice that in 2014 Smith Enterprises have a measly 19% total assets in cash, and 20% total assets in cash in 2015. This may be a negative result of the company’s confined inventory by 22% in 2014 and 30% for 2015. If inventory is not being moved, there is no opportunity for cash, therefore, the cash account is being negatively affected overall. Next, when reviewing Smith Enterprises total liability, for 2014 the company’s total assets to total liability equals 50% in 2014, and 46% percent in the year 2015. While the total liabilities decreased by a total of 4% between 2014 and 2015, the company’s total liabilities are extremely unfavorable. By this I am expressing that 46% and 50% of how Smith Enterprises pays for their assets is with debt through accounts such as accounts payable, salaries payable, and notes payable. If the company were moving out inventory at a faster rate, the higher debt percentage may be justified as the company could pay off this debt quickly, but when tied up inventory is visible this leads me to believe that the debt percentage will stay within a few

Price to earnings tells how much investors are willing to spend per dollar on a stock in this case the PE is 18.25 the rule of thumb is that if you have two companies

This Feed Processing Company is in a content place for financial condition. Perhaps the best strength is the debt to equity ratio. The ratio of it falls within the ideal range, meaning it will be easier to get a loan for needs that are in the short term. The profit on sales percentage of this business is at a good number with 5.7%. This means that the company will be making money, which in turn will keep this business thriving.

The company’s debt ratios are 54.5% in 1988, 58.69% in 1989, 62.7% in 1990, and 67.37% in 1991. What this means is that the company is increasing its financial risk by taking on more leverage. The company has been taking an extensive amount of purchasing over the past couple of years, which could be the reason as to why net income has not grown much beyond several thousands of dollars. One could argue that the company is trying to expand its inventory to help accumulate future sales. But another problem is that the company’s

The retail consumer electronics industry was undergoing rapid and dramatic changes during the 1980’s, so did Crazy Eddie’s business. A factor in the Crazy Eddie case had to do with the inventory being overvalued. A small reason for why the inventory was overvalued is due to the rapidly decreasing prices in electronics due to constant improvements in technology. Electronics are out dated very fast if not sold upon arrival, they are always being improved on, and therefore electronic stores need to have a high inventory turnover. If not, then there is a chance that the inventory can become overvalued if the auditor does not stay up on the latest in electronics. Another change was with how Crazy Eddie was able to buy in such large amounts that he was able to sell via drop-shipments, this is something that the auditors are not used to because it is not a common occurrence. The drop-shipments would affect sales, but it should not affect inventory. As seen in this case, it required special attention because same store sales were increased by the way drop-shipments were recorded as revenue.

The company currently faces serious financial challenges. It was struggling with declining sales and increasing costs. Since 2004, revenues had fallen by more than 40% while costs especially for employees health insurance, maintenance, and utilities climbed. Credits and loans had been borrowed to

Term Project Tracking One Stock Sector: Specialty Retailers. Company: Whitehall Jewelers, Inc. Symbol: Jwl. The Company is a specialty retailer of fine jewelry offering an in-depth selection in the following key categories: diamond, gold, precious and semi-precious jewelry. Daily price movement from 30th June 2003 To 25th July 2003 Price Earning (Last Available 2003) 15.3 Dividend Yield 0.00 % (No dividend given during the year) Comparison with the Industry (Retail industry) Price Earning Ratio (Latest). JWL: 23.50 Industry: 52.86 (Jewelers:16.5) The ratio indicates the number of times the earnings per share is covered by market price. The P/E ratio is one of the major considerations for an investor to decide whether to buy or not to buy the shares of an entity at a certain price. The difference in the P/E indicates that investors are buying JWL's earnings at a significant discount. This lower valuation may indicate a bargain but could also represent the market's low expectations for the company. Since earnings tend to fluctuate and can often distort the P/E ratio the EPS of the company is $.66 when multiplied with its P/E ratio of 23.5 its gives a market price of $ 15.51which is $ 4.92 then the current market price of $ 10.49. When you compare it with the Jewelers sector it seems that the JWL is far forward then its raw competitors, which is a good sign for the company. Return on Assets. JWL: 3.6% Industry: -3.43%

Using the P/E ratio of 10.3 and earnings per share of 3.87, we found the stock price to be $39.92. This is only a $.12 difference from YVC’s current market price. To further our analysis, we calculated an exchange ratio for YVC’s and TSE’s current market prices, the DCF prices, and P/E ratio prices. We first