?? Assignment 1 Annual Report Analysis JWI 530 Financial Manag
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Assignment 1 Annual Report Analysis
JWI 530 Financial Management 1?
Executive Memo:?
1. Profitability/Net Income Margins?
? What are the after-tax net income margins (i.e., net profit margins) for both companies??
Mohawk net margin in FY2019 is 7% and Dixie is -4%
How do they compare? ?
Mohawk net margin is significantly better because Dixie??s net margin is in the negative
? Who achieves the higher net income margin? Why? Mohawk achieves the higher net income margin based on the COGS $7,294.63, SG&A 19% sales and net profit 744, the cost structure items are higher compared with Dixie ?cost of sales 288, 22%
Tip: Analyze the major cost structure line items in the income statement (COGS, SG&A, interest, other, and taxes) as percentages of net sales, so you can identify reasons for better net income margins. Identify and comment on the differences. You may not know why a particular cost item like COGS is higher or lower, and that??s okay. Your CEO only wants to know which cost-structure items are higher or lower for each company.?
2. Inventory Management?
? Who does a better job managing their inventory (Inventory Days on Hand ratio)??
? What are their respective 3-year trends for Inventory DOH??
? What options could the company consider improving inventory management??
3. Cash Is King?
? How much net cash from operations did each company generate last year??
? Which company has done a better job generating cash from operations??
? In layman’s terms, how is each company spending their cash with respect to reinvestments in?
the business, changes in debt, and returning money to shareholders??
4. Liquidity?
? How do the companies compare in terms of the current ratio, and what are their respective 3- year trends??
? Do their current ratios indicate that either of these companies could go bankrupt soon??
Explain.?
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