CRONCO REGIONALis a leading construction company founded in 2001 & is based in Babardos. The business entity has within recent years have been encountering increases in revenues from its construction-related services (design, build, expansion&remodeling, & emergency-services. the mainline of business is from the construction of roads & commercial buildings within Babardos and to a limited extent a few other regional operating-markets. Due to the growth of regional tourism, CRONCO REGIONAL has become worried about the competition of other multiple construction companies which have entered the region to provide similar type services around the Caribbean in various markets. Business overseas contributes to 40 percent of the company’s revenues, while the other 60 percent is earned domestically. The novel virus pandemic has caused a slow down in overall operations leading to prolonged delays in delivery of raw materials from abroad. The CEO (CRONCO REGIONAL) is confident that there will be a turnaround in operations in 2021, and is therefore thinking about contracting a loan of $500.0 Million from its designated bank to help rebuild its lead position in the market and to expand its line of business to include the sales of heavy-equipment. Over the years the company has depend mainly on issuing long-term bonds to finance its capital-projects. As of today, the firm has 50.0 million shares of common stock outstanding. With the requirements below determining whether they would be successful with the new loan. Requirements: 1. Complete CRONCO REGIONAL estimated per share data for the year ending December 31 2021. 2. Calculate 2019, 2020 and 2021 estimated ratios Ratio Analysis 2021 Est. 2020 2019 Industry Average Liquidity Ratios Current Ratio (times) 4.2 Quick Ratio (times) 2.1 Asset Management Ratios Average Sales/Day 9 Inventory Turnover Ratio (times) 9 Days Sales Outstanding (days) 36 Fixed Assets Turn Over Ratio (times) 3 Total Assets Turn Over Ratio 1.8 Debt Management Ratios Total Debt to Total Assets(%) 40 Times Interest Earned (times) 6 Debt to Equity Ratio (%) 1 Profitability Ratios Profit Margin on Sales (%) 8 Earning Power (%) 17.2 Return on Total Assets (%) 12 Return on Common Equity(%) 25 Market Value Ratios(Earning Ratio) Price/Earnings Ratio (times) 12.5 Price/Cash Flow Ratio (times) 6.8 Market/Book Value Ratio (times) 1.7 3.Comments on Financial Performance& Financial Position a.Liquidity b.Profitability c.Leverage d.Asset Management eMarket Value 4.Chance of Success of Application of the Loan.

CRONCO REGIONALis a leading construction company founded in 2001 & is based in Babardos. The business entity has within recent years have been encountering increases in revenues from its construction-related services (design, build, expansion&remodeling, & emergency-services. the mainline of business is from the construction of roads & commercial buildings within Babardos and to a limited extent a few other regional operating-markets. Due to the growth of regional tourism, CRONCO REGIONAL has become worried about the competition of other multiple construction companies which have entered the region to provide similar type services around the Caribbean in various markets. Business overseas contributes to 40 percent of the company’s revenues, while the other 60 percent is earned domestically. The novel virus pandemic has caused a slow down in overall operations leading to prolonged delays in delivery of raw materials from abroad. The CEO (CRONCO REGIONAL) is confident that there will be a turnaround in operations in 2021, and is therefore thinking about contracting a loan of $500.0 Million from its designated bank to help rebuild its lead position in the market and to expand its line of business to include the sales of heavy-equipment. Over the years the company has depend mainly on issuing long-term bonds to finance its capital-projects. As of today, the firm has 50.0 million shares of common stock outstanding. With the requirements below determining whether they would be successful with the new loan. Requirements: 1. Complete CRONCO REGIONAL estimated per share data for the year ending December 31 2021. 2. Calculate 2019, 2020 and 2021 estimated ratios Ratio Analysis 2021 Est. 2020 2019 Industry Average Liquidity Ratios Current Ratio (times) 4.2 Quick Ratio (times) 2.1 Asset Management Ratios Average Sales/Day 9 Inventory Turnover Ratio (times) 9 Days Sales Outstanding (days) 36 Fixed Assets Turn Over Ratio (times) 3 Total Assets Turn Over Ratio 1.8 Debt Management Ratios Total Debt to Total Assets(%) 40 Times Interest Earned (times) 6 Debt to Equity Ratio (%) 1 Profitability Ratios Profit Margin on Sales (%) 8 Earning Power (%) 17.2 Return on Total Assets (%) 12 Return on Common Equity(%) 25 Market Value Ratios(Earning Ratio) Price/Earnings Ratio (times) 12.5 Price/Cash Flow Ratio (times) 6.8 Market/Book Value Ratio (times) 1.7 3.Comments on Financial Performance& Financial Position a.Liquidity b.Profitability c.Leverage d.Asset Management eMarket Value 4.Chance of Success of Application of the Loan.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The novel virus pandemic has caused a slow down in overall operations leading to prolonged delays in delivery of raw materials from abroad. The CEO (CRONCO REGIONAL) is confident that there will be a turnaround in operations in 2021, and is therefore thinking about contracting a loan of $500.0 Million from its designated bank to help rebuild its lead position in the market and to expand its line of business to include the sales of heavy-equipment. Over the years the company has depend mainly on issuing long-term bonds to finance its capital-projects. As of today, the firm has 50.0 million shares of common stock outstanding. With the requirements below determining whether they would be successful with the new loan.

Requirements:

1. Complete CRONCO REGIONAL estimated per share data for the year ending December 31 2021.

2. Calculate 2019, 2020 and 2021 estimated ratios

Ratio Analysis	2021 Est.	2020	2019	Industry Average
Liquidity Ratios
Current Ratio (times)				4.2
Quick Ratio (times)				2.1

Asset Management Ratios
Average Sales/Day				9
Inventory Turnover Ratio (times)				9
Days Sales Outstanding (days)				36
Fixed Assets Turn Over Ratio (times)				3
Total Assets Turn Over Ratio				1.8

Debt Management Ratios
Total Debt to Total Assets(%)				40
Times Interest Earned (times)				6
Debt to Equity Ratio (%)				1

Profitability Ratios
Profit Margin on Sales (%)				8
Earning Power (%)				17.2
Return on Total Assets (%)				12
Return on Common Equity(%)				25

Market Value Ratios(Earning Ratio)
Price/Earnings Ratio (times)				12.5
Price/Cash Flow Ratio (times)				6.8
Market/Book Value Ratio (times)				1.7

3.Comments on Financial Performance& Financial Position
a.Liquidity
b.Profitability
c.Leverage
d.Asset Management
eMarket Value

4.Chance of Success of Application of the Loan.

CRONCO REGIONAL
Balance Sheet (Millions of Dollars)
2021
2021
Assets
2020
2019
Liabilities
2020
2019
Est
Est
Cash and Cash
15
10
15
Accounts payable
115
60
30
Equivalents
Short-Term
10
65
Overdrafts
115
110
60
investments
Accounts Receivable
420
375
315
Accruals
260
140
130
Inventories
700
615
415
Total Current Liabilities
490
310
220
Long-Term Bonds and
Total Current Assets
1,145
1,000
810
1300
754
580
New Loan
Net Plant and
1884
1,190
870
Total Debt
1790
1,064.00
800
Equipment
Preferred Stock
40
40
40
Common Stock
130
130
130
Retained Earnings
Total Common Equity
1069
956
710
1199
1086
840
2$
$
Total Liabilities and
$
Total Assets
3,029 2,190
1,680
Equity
3,029
2,190
1,680
Est. Estimate

CRONCO REGIONAL
Income Statement (Millions of Dollars)
2021 Est.
2020
2019
Net Sales
4,000
3,000
2,850
Operating Costs
3,100
2,300
2,100
ЕBITD
900.00
700
750
Depreciation
110
100
90
Amortizaton
Depreciation and Amortization
110
100
90
ЕВITD
790
600
660
Interest
100
88
60
Earnings Before Taxes
Тахes (40%)
690
512
600
276
204.8
240
Net Income Before preferred Dividends
414
307.2
360
Preferred Dividends
4
4.
4
Net Income
$
410.0 $
303.2 $
356.0
Common Dividends
57.5
57.5
53
Addition to retained Earnings
352.50 $
245.70 $
303.0
Per Share Date
2021
2020
2019
Common Stock Price
2$
28.0 $
23.00
$
26.00
Earnings Per Share (EPS)
Dividend Per Share (DPS)
Book Value Per Share (BVPS)
$
$
6.06 $
$
???
7.12
????
1.15
1.06
????
21.72
16.80
Cash Flow Per Share
????
8.06
8.92

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