Week 3 Notes

company Ticker 2018 Revenue 2018 Net Income 2018 Assets 2017 Assets Humana Inc. HUM $ 66,832.00 $ 11,603.00 $ 35,333.00 $ 37,098.00 a. Return of equity (ROE) 2018 Return o 58% b. PM Sales= Revenue c. Financial leverage (FL) 22% Tax rate NOPAT= $ 3,669.26 NOPAT= $ 3,669.26 EBIAT Current assets Cash and cash equivalents $430 Short-term investments 183 Solution: Merchandise inventory—net 10,570

Other current assets 789 Operating Assets= $ 28,209.00 Total current assets 11,972 Property, less accumulated depreci 15,511 Long-term investments 215 Operating Liab= $ 12,321.00 Deferred income taxes—net 247 Goodwill 255 Other assets 837 NOA= $ 15,888.00 Total assets $29,037 Current liabilities Short-term borrowings $608 Current maturities of long-term deb 934 Accounts payable 6,967 Accrued compensation and employ 557 Deferred revenue 1,093 Other current liabilities 2,041 Total current liabilities 12,200 Long-term debt, excluding current m 12,110 Deferred revenue—extended prote 696 Other liabilities 967 Total liabilities 25,973 Shareholders’ equity Preferred stock—$5 par value, non - Common stock—$0.50 par value 335 Capital in excess of par value - Retained earnings 2,905 Accumulated other comprehensive -176 Total shareholders’ equity 3,064 Total liabilities and shareholders’ eq $29,037 $ Millions 2018 2017 Solution: Current assets $ 34,636.00 $28,716 Ratio: Current liabilities 36,413 33,037 Current Ratio= Total liabilities 382,308 376,200 Times Interest Earned= Equity 52,522 44,687 Liab-to-Equity Ratio= Earnings before interest and taxes 22,278 26,328 Interest expense, gross 4,640 4,733 Net cash flow from operating activit 34,339 23,345 Current Yr Net Operating Asset Prior Yr Net OA Average NOA $1,167.30 $1,252.30 $1,209.80 $4,627.00 $4,489.30 $4,558.15 RNOA= NOPAT/AVG NOA

2018 SE 2017 SE $ 20,081.00 $ 19,762.00

2018 2017 0.95 0.87 4.80 5.56 7.28 8.42

$ 6,600.00 0 0 0 $ 66,000.00 b. 0 $ (4,500.00) 0 0 $ (6,750.00) c. $ 66,300.00 $ (67,500.00) 0 0 $ (1,200.00) d. a. Purchased 12,000 common shares of Bakersfield Co. at $11 per share; the shares represent 30% ownership in Bakersfield. c. Bakersfield reported annual net income of $120,000. d. Sold all 12,000 common shares of Bakersfield for $152,000. Solution: Cash Asset Noncash Asset Liabilites Contributed Capit Earned Capital -132000 $ 132,000.00 $ - 0 $ - a. $ 21,000.00 -21000 0 0 $ - b. 0 $ 36,000.00 0 0 $ 36,000.00 c. $ 152,000.00 $ (147,000.00) 0 0 $ 5,000.00 d. Cash Asset + Noncash Assets = Liabilities + contributed Capital + Earned Capital b. Received a cash dividend of $1.75 per common share from Bakersfield.

10 4557 0.745189349 F Revenue Expenses Net Income $ - $ - $ -