Question BnB Caribbean Inc. (BnB) is a leading construction company founded in 2001 and is based in Jamaica. The company has within recent years been experiencing increases in revenues from its construction related services such as design, build, expansion and remodeling, and emergency services. It’s main line of business is from the construction of roads and commercial buildings within Jamaica and to a lesser extent a few other Caribbean countries. Since the growth of the tourism sector in the Caribbean, BnB Caribbean has become concerned about the number of other construction companies which have entered the market to provide similar services around the Caribbean region. Business overseas contributes to 40% of the company’s revenues, while the other 60% comes mainly from works done in the domestic market. The COVID-19 pandemic has caused a slowdown in overall operations leading to prolonged delays in delivery of raw materials from abroad. The CEO of the company is optimistic that there will be a turnaround in operations in 2021, and is therefore considering contracting a loan of $500.0 Million from its local bank to help rebuild its lead position in the market and to expand its line of business to include the sales of heavy equipment. The company has over the years relied 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. You are hired as the Chief Financial Controller of the company to advise the CEO and board of the company of the current financial health of the company and to assist them in determining whether they would be successful with the new loan. You began by gathering the following financial statements and other data about the firm. (image attached) Analysis of Financial Data (Table with 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 Turnover Ratio (times) 3 Total Asset Turnover 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 Price/Earnings Ratio Price/Earnings Ratio (times) 12.5 Price/Cash Flow Ratio (times) 6.8 Market /Book Value Ratio (times) 1.7 Required: Comments on Financial Performance and Financial Position a. Liquidity b. Profitability c. Leverage

Question BnB Caribbean Inc. (BnB) is a leading construction company founded in 2001 and is based in Jamaica. The company has within recent years been experiencing increases in revenues from its construction related services such as design, build, expansion and remodeling, and emergency services. It’s main line of business is from the construction of roads and commercial buildings within Jamaica and to a lesser extent a few other Caribbean countries. Since the growth of the tourism sector in the Caribbean, BnB Caribbean has become concerned about the number of other construction companies which have entered the market to provide similar services around the Caribbean region. Business overseas contributes to 40% of the company’s revenues, while the other 60% comes mainly from works done in the domestic market. The COVID-19 pandemic has caused a slowdown in overall operations leading to prolonged delays in delivery of raw materials from abroad. The CEO of the company is optimistic that there will be a turnaround in operations in 2021, and is therefore considering contracting a loan of $500.0 Million from its local bank to help rebuild its lead position in the market and to expand its line of business to include the sales of heavy equipment. The company has over the years relied 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. You are hired as the Chief Financial Controller of the company to advise the CEO and board of the company of the current financial health of the company and to assist them in determining whether they would be successful with the new loan. You began by gathering the following financial statements and other data about the firm. (image attached) Analysis of Financial Data (Table with 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 Turnover Ratio (times) 3 Total Asset Turnover 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 Price/Earnings Ratio Price/Earnings Ratio (times) 12.5 Price/Cash Flow Ratio (times) 6.8 Market /Book Value Ratio (times) 1.7 Required: Comments on Financial Performance and Financial Position a. Liquidity b. Profitability c. Leverage

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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BnB Caribbean Inc. (BnB) is a leading construction company founded in 2001 and is based in Jamaica. The company has within recent years been experiencing increases in revenues from its construction related services such as design, build, expansion and remodeling, and emergency services. It’s main line of business is from the construction of roads and commercial buildings within Jamaica and to a lesser extent a few other Caribbean countries. Since the growth of the tourism sector in the Caribbean, BnB Caribbean has become concerned about the number of other construction companies which have entered the market to provide similar services around the Caribbean region. Business overseas contributes to 40% of the company’s revenues, while the other 60% comes mainly from works done in the domestic market.

The COVID-19 pandemic has caused a slowdown in overall operations leading to prolonged delays in delivery of raw materials from abroad. The CEO of the company is optimistic that there will be a turnaround in operations in 2021, and is therefore considering contracting a loan of $500.0 Million from its local bank to help rebuild its lead position in the market and to expand its line of business to include the sales of heavy equipment. The company has over the years relied 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. You are hired as the Chief Financial Controller of the company to advise the CEO and board of the company of the current financial health of the company and to assist them in determining whether they would be successful with the new loan.

You began by gathering the following financial statements and other data about the firm. (image attached)

Analysis of Financial Data (Table with 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 Turnover Ratio (times) 3
Total Asset Turnover 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 Price/Earnings Ratio
Price/Earnings Ratio (times) 12.5
Price/Cash Flow Ratio (times) 6.8
Market /Book Value Ratio (times) 1.7

Required:

Comments on Financial Performance and Financial Position
a. Liquidity
b. Profitability
c. Leverage
d. Asset Management
e. Market Value
4. Chance of Success of Application of the Loan

Case Analysis_S2_20 20 x
financial management X
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financial management x M Gmail - Email from Goo x
Financial Ratio Analysis x b Answered: nB Caribbea x +
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Case Analysis_S2_20 2021 (1) - DUE 14th February 2021.pdf
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BnB Construction Inc.
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
1069
956
710
Total Common Equity
1199
1086
840
$
$
Total Liabilities and
$
$
$
Total Assets
3
3,029 2,190 1,680
Equity
3,029
2,190
1,680
Est. Estimate
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BnB Construction Inc.
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
EBITD
790
600
660
Interest
100
88
60
Earnings Before Taxes
Тахes (40%)
Net Income Before preferred Dividends
690
512
600
276
204.8
240
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
28.0 $
23.00 $
26.00
%24

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