60.1K

Verified Solution

Link Copied!

See Table 2.5 LOADING... showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco's costs and expenses had been the same fraction of revenues in 2016dash2019 as they were in 2015. What would Mydeco's EPS have been each year in this case?

QUESTION:

Year		2016
Revenue (millions)	$
Net Profit Margin			%
New Net Income (millions)	$
Shares Outstanding (millions)
New EPS	$

TABLE

20152015dash20192019 Financial Statement Data and Stock Price Data for Mydeco Corp.
(All data as of fiscal year end; in $ millions)
Income Statement	20152015	20162016	20172017	20182018	20192019
Revenue	404.3404.3	363.8363.8	424.6424.6	510.7510.7	604.1604.1
Cost of Goods Sold	( 188.3 )(188.3)	( 173.8 )(173.8)	( 206.2 )(206.2)	( 246.8 )(246.8)	( 293.4 )(293.4)
Gross Profit	216.0216.0	190.0190.0	218.4218.4	263.9263.9	310.7310.7
Sales and Marketing	( 66.7 )(66.7)	( 66.4 )(66.4)	( 82.8 )(82.8)	( 102.1 )(102.1)	( 120.8 )(120.8)
Administration	( 60.6 )(60.6)	( 59.1 )(59.1)	( 59.4 )(59.4)	( 66.4 )(66.4)	( 78.5 )(78.5)
Depreciation & Amortization	( 27.3 )(27.3)	( 27.0 )(27.0)	( 34.3 )(34.3)	( 38.4 )(38.4)	( 38.6 )(38.6)
EBIT	61.461.4	37.537.5	41.941.9	57.057.0	72.872.8
Interest Income (Expense)	( 33.7 )(33.7)	( 32.9 )(32.9)	( 32.2 )(32.2)	( 37.4 )(37.4)	( 39.4 )(39.4)
Pretax Income	27.727.7	4.64.6	9.79.7	19.619.6	33.433.4
Income Tax	( 9.7 )(9.7)	( 1.6 )(1.6)	( 3.4 )(3.4)	( 6.9 )(6.9)	( 11.7 )(11.7)
Net Income	18.018.0	3.03.0	6.36.3	12.712.7	21.721.7
Shares Outstanding (millions)	5555	5555	5555	5555	5555
Earnings per Share	$ 0.33$0.33	$ 0.05$0.05	$ 0.11$0.11	$ 0.23$0.23	$ 0.39$0.39
Balance Sheet	20152015	20162016	20172017	20182018	20192019
Assets
Cash	48.848.8	68.968.9	86.386.3	77.577.5	85.085.0
Accounts Receivable	88.688.6	69.869.8	69.869.8	76.976.9	86.186.1
Inventory	33.733.7	30.930.9	28.428.4	31.731.7	35.335.3
Total Current Assets	171.1171.1	169.6169.6	184.5184.5	186.1186.1	206.4206.4
Net Property, Plant & Equipment	245.3245.3	243.3243.3	309.0309.0	345.6345.6	347.0347.0
Goodwill & Intangibles	361.7361.7	361.7361.7	361.7361.7	361.7361.7	361.7361.7
Total Assets	778.1778.1	774.6774.6	855.2855.2	893.4893.4	915.1915.1
Liabilities & Stockholders' Equity
Accounts Payable	18.718.7	17.917.9	22.022.0	26.826.8	31.731.7
Accrued Compensation	6.76.7	6.46.4	7.07.0	8.18.1	9.79.7
Total Current Liabilities	25.425.4	24.324.3	29.029.0	34.934.9	41.441.4
Long-Term Debt	500.0500.0	500.0500.0	575.0575.0	600.0600.0	600.0600.0
Total Liabilities	525.4525.4	524.3524.3	604.0604.0	634.9634.9	641.4641.4
Stockholders' Equity	252.7252.7	250.3250.3	251.2251.2	258.5258.5	273.7273.7
Total Liabilities & Stockholders' Equity	778.1778.1	774.6774.6	855.2855.2	893.4893.4	915.1915.1
Statement of Cash Flows	20152015	20162016	20172017	20182018	20192019
Net Income	18.018.0	3.03.0	6.36.3	12.712.7	21.721.7
Depreciation & Amortization	27.327.3	27.027.0	34.334.3	38.438.4	38.638.6
Change in Accounts Receivable	3.93.9	18.818.8	0.00.0	( 7.1 )(7.1)	( 9.2 )(9.2)
Change in Inventory	( 2.9 )(2.9)	2.82.8	2.52.5	( 3.3 )(3.3)	( 3.6 )(3.6)
Change in Pay. & Accrued Comp.	2.22.2	( 1.1 )(1.1)	4.74.7	5.95.9	6.56.5
Cash from Operations	48.548.5	50.550.5	47.847.8	46.646.6	54.054.0
Capital Expenditures	( 25.0 )(25.0)	( 25.0 )(25.0)	( 100.0 )(100.0)	( 75.0 )(75.0)	( 40.0 )(40.0)
Cash from Investing Activ.	( 25.0 )(25.0)	( 25.0 )(25.0)	( 100.0 )(100.0)	( 75.0 )(75.0)	( 40.0 )(40.0)
Dividends Paid	( 5.4 )(5.4)	( 5.4 )(5.4)	( 5.4 )(5.4)	( 5.4 )(5.4)	( 6.5 )(6.5)
Sale (or Purchase) of Stock	-	-	-	-	-
Debt Issuance (Pay Down)	-	-	75.075.0	25.025.0	-
Cash from Financing Activ.	( 5.4 )(5.4)	( 5.4 )(5.4)	69.669.6	19.619.6	( 6.5 )(6.5)
Change in Cash	18.118.1	20.120.1	17.417.4	( 8.8 )(8.8)	7.57.5
Mydeco Stock Price	$ 7.92$7.92	$ 3.30$3.30	$ 5.25$5.25

Answer & Explanation Solved by verified expert

See Answer