Lan & Chen Technologies: Income Statements for Year Ending December 31 (Thousands of Dollars) 2018 2017 Sales $945,000 $900,000 Expenses excluding depreciation and amortization 812,700 774,000 EBITDA $132,300 $126,000 Depreciation and amortization 33,100 31,500 EBIT $99,200 $94,500 Interest Expense 10,470 8,600 EBT $88,730 $85,900 Taxes (40%) 35,492 34,360 Net income $53,238 $51,540 Common dividends $43,300 $41,230 Addition to retained earnings $9,938 $10,310 Lan & Chen Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets 2018 2017 Cash and cash equivalents $47,250 $45,000 Short-term investments 3,800 3,400 Accounts Receivable 283,500 269,000 Inventories 141,750 136,000 Total current assets $476,300 $453,400 Net fixed assets 330,750 315,000 Total assets $807,050 $768,400 Liabilities and equity Accounts payable $94,500 $89,800 Accruals 47,250 45,000 Notes payable 26,262 9,000 Total current liabilities $168,012 $143,800 Long-term debt 94,500 90,000 Total liabilities $262,512 $233,800 Common stock 444,600 444,600 Retained Earnings $99,938 90,000 Total common equity $544,538 $534,600 Ratio Analysis 2018 2017 Industry Avg Asset Management Ratios Days Sales Outstanding 98.00 Fixed Assets Turnover 2.56 Total Assets Turnove 1.23 Debt Management Ratios Debt Ratio (Total debt-to-assets) 20.0% Liabilities-to-assets ratio 32.1% Times-interest-earned ratio 12.33 Profitability Ratios Profit Margin 6.25% Basic Earning Power 10.25% Return on Assets 6.75% Return on Equity 9.46% Market Value Ratios Earnings per share NA Price-to-earnings ratio 15.65 Cash flow per share NA Price-to-cash flow ratio 10.11 Book Value per share NA Market-to-book ratio 1.72 How has Lan & Chen's LIQUIDITY changed from 2017 to 2018 and in comparision to the industry average? How has Lan & Chen's ASSET MANAGEMENT changed from 2017 to 2018 and in comparision to the industry average? How has Lan & Chen's DEBT MANAGEMENT changed from 2017 to 2018 and in comparision to the industry average?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Lan & Chen Technologies: Income Statements for Year Ending December 31
(Thousands of Dollars) 2018 2017
Sales $945,000 $900,000
Expenses excluding
EBITDA $132,300 $126,000
Depreciation and amortization 33,100 31,500
EBIT $99,200 $94,500
Interest Expense 10,470 8,600
EBT $88,730 $85,900
Taxes (40%) 35,492 34,360
Net income $53,238 $51,540
Common dividends $43,300 $41,230
Addition to
Lan & Chen Technologies: December 31
(Thousands of Dollars)
Assets 2018 2017
Cash and cash equivalents $47,250 $45,000
Short-term investments 3,800 3,400
Accounts Receivable 283,500 269,000
Inventories 141,750 136,000
Total current assets $476,300 $453,400
Net fixed assets 330,750 315,000
Total assets $807,050 $768,400
Liabilities and equity
Accounts payable $94,500 $89,800
Accruals 47,250 45,000
Notes payable 26,262 9,000
Total current liabilities $168,012 $143,800
Long-term debt 94,500 90,000
Total liabilities $262,512 $233,800
Common stock 444,600 444,600
Retained Earnings $99,938 90,000
Total common equity $544,538 $534,600
Ratio Analysis 2018 2017 Industry Avg
Asset Management Ratios Days Sales Outstanding 98.00
Fixed Assets Turnover 2.56
Total Assets Turnove 1.23
Debt Management Ratios
Debt Ratio (Total debt-to-assets) 20.0%
Liabilities-to-assets ratio 32.1%
Times-interest-earned ratio 12.33
Profitability Ratios
Profit Margin 6.25%
Basic Earning Power 10.25%
Market Value Ratios
Earnings per share NA
Price-to-earnings ratio 15.65
Cash flow per share NA
Price-to-cash flow ratio 10.11
Book Value per share NA
Market-to-book ratio 1.72
How has Lan & Chen's LIQUIDITY changed from 2017 to 2018 and in comparision to the industry average?
How has Lan & Chen's ASSET MANAGEMENT changed from 2017 to 2018 and in comparision to the industry average?
How has Lan & Chen's DEBT MANAGEMENT changed from 2017 to 2018 and in comparision to the industry average?
How has Lan & Chen's PROFITABILITY changed from 2017 to 2018 and in comparision to the industry average?
How do Lan & Chen's MARKET VALUE ratios compare to the industry average?
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