SciTronics Inc.

Consolidated Income Statements 2005-2008 ($ in thousands)

2004 2005 2006 2007 2008

Sales $115,000 $147,000 $171,000 $205,000 $244,000
Cost of goods sold 43,000 50,000 63,000 74,000
Gross margin 104,000 121,000 142,000 170,000
Research & development 15,000 20,000 26,000 28,000
Sell, general & administrative 79,000 92,000 106,000 116,000
Operating income 10,000 9,000 10,000 26,000
Interest expense 1,000 2,000 2,000 2,000
Profit before tax 9,000 7,000 8,000 24,000
Income tax 4,000 2,000 3,000 10,000
Net income $5,000 $5,000 $5,000 $14,000

Answer questions
Sales Growth
Compounded growth rate over 2005-2008 period 20.69%

Profitability Ratios
1. SciTronics’ profit as a percentage of sales in 2008 was 5.74%

2. This represented an increase from 3.40% in 2005

3.
SciTronics had a total of $112,000 of capital at year-end 2008
EBIAT $15,167 in 2008
ROIC 13.54% in 2008
Increase from the 7.51% in 2005

4. In 2008, SciTronics had

Owner's equity of $75,000
Profit after taxes of $14,000
ROE 18.67%
Increase from the 8.20% in 2005

Activity Ratios
1. Total asset turnover 1.53 in 2008
Decrease from the 1.58 in 2005

2. In 2008, SciTronics had

Account receivable $66,000
Average sales per day $668.49
Average collection period 99
Decrease from the 104 in 2005

3. In 2008, SciTronics had

Inventory $29,000
COGS $74,000
Inventory turnover 2.55
Increase from the 2.05 in 2005

4. In 2008, SciTronics had

Net fixed assets $18,000
Sales $244,000
Fixed asset turnover 13.56
Decrease from the 16.33 in 2005
Common-sized 2004 2005 2006 2007
Sales 100% 100% 100% 100%
Cost of goods sold 29.25% 29.24% 30.73%
Gross margin 70.75% 70.76% 69.27%
Research & development 10.20% 11.70% 12.68%
Sell, general & administrative 53.74% 53.80% 51.71%
Operating income 6.80% 5.26% 4.88%
Interest expense 0.68% 1.17% 0.98%
Profit before tax 6.12% 4.09% 3.90%
Income tax 2.72% 1.17% 1.46%
Net income 3.40% 2.92% 2.44%

Leverage Ratios
1. In 2008, SciTronics had
Total assets/ Owner's equity 2.12
Increase from the 1.52 in 2005

2. In year-end 2008, SciTronics had

Total liabilities/ Total assets 0.53
Increase from the 0.34 in 2005

3. Total debt ratio at market 0.32

4. In 2008, SciTronics had

EBIT $26,000
Interest charges $2,000
Times interest earned 13
Increase from the 10 in 2005

5. In year-end 2008, SciTronics had

Accounts payable $6,000
Accounts payable/ COGS 8.11%
Decrease from the 11.63% in 2005

Liquidity Ratios
1. In year-end 2008, SciTronics had
Current assets $133,000
Current liabilities $48,000
Current ratio 2.77
Decrease from the 3.90 in 2005

2. The quick ratio 2.17 in 2008

Decrease from the 2.90 in 2005
 2008
100%
30.33%
69.67%
11.48%
47.54%
10.66%
0.82%
9.84%
4.10%
5.74%
SciTronics Consolidated Balance Sheet December 31, 2005-2008

2005 2006 2007 2008

Cash $9,000 $10,000 $15,000 $18,000
Accounts receivable 42,000 53,000 61,000 66,000
Inventories 21,000 28,000 30,000 29,000
Other current assets 10,000 13,000 21,000 20,000
Total current assets 82,000 104,000 127,000 133,000
Net property & equipment 9,000 12,000 13,000 18,000
Other 2,000 2,000 6,000 8,000
Total assets $93,000 $118,000 $146,000 $159,000

Notes payable $3,000 $18,000 $8,000 $10,000

Accounts payable 5,000 6,000 7,000 6,000
Accrued expenses 10,000 13,000 21,000 28,000
Other current liabilities 3,000 3,000 4,000 4,000
Total current liabilities 21,000 40,000 40,000 48,000
Long-term senior debt 10,000 9,000 8,000 7,000
Subordinated convertible debt 20,000 20,000
Other liabilities 1,000 3,000 7,000 9,000
Total long-term liabilities 11,000 12,000 35,000 36,000
Owners’ equity 61,000 66,000 71,000 85,000
Treasury stock (10,000)
Owners’ equity 61,000 66,000 71,000 75,000
Total liabilities and equity $93,000 $118,000 $146,000 $159,000
Common-sized 2005 2006 2007 2008
Cash 9.68% 8.47% 10.27% 11.32%
Accounts receivable 45.16% 44.92% 41.78% 41.51%
Inventories 22.58% 23.73% 20.55% 18.24%
Other current assets 10.75% 11.02% 14.38% 12.58%
Total current assets 88.17% 88.14% 86.99% 83.65%
Net property & equipment 9.68% 10.17% 8.90% 11.32%
Other 2.15% 1.69% 4.11% 5.03%
Total assets 100.00% 100.00% 100.00% 100.00%

Notes payable 3.23% 15.25% 5.48% 6.29%

Accounts payable 5.38% 5.08% 4.79% 3.77%
Accrued expenses 10.75% 11.02% 14.38% 17.61%
Other current liabilities 3.23% 2.54% 2.74% 2.52%
Total current liabilities 22.58% 33.90% 27.40% 30.19%
Long-term senior debt 10.75% 7.63% 5.48% 4.40%
Subordinated convertible debt 0.00% 0.00% 13.70% 12.58%
Other liabilities 1.08% 2.54% 4.79% 5.66%
Total long-term liabilities 11.83% 10.17% 23.97% 22.64%
Owners’ equity 65.59% 55.93% 48.63% 53.46%
Treasury stock 0.00% 0.00% 0.00% -6.29%
Owners’ equity 65.59% 55.93% 48.63% 47.17%
Total liabilities and equity 100.00% 100.00% 100.00% 100.00%
 2005 2006 2007
Sales Growth
Growth rate YoY 27.83% 16.33% 19.88%
Compounded growth rate over 2005-2008 period 20.69%

Profitability
Gross profit margin = Gross profit/ Sales 70.75% 70.76% 69.27%
Operating profit margin = EBIT/ Sales 6.80% 5.26% 4.88%
Net profit margin = Net income/ Sales 3.40% 2.92% 2.44%
Tax rate = Taxes/ EBT 44.44% 28.57% 37.50%
EBIT 10,000 9,000 10,000
EBIAT = EBIT*(1-Tax rate) 5,556 6,429 6,250
Owners' equity 61,000 66,000 71,000
Interest bearing debt 13,000 27,000 36,000
Invested capital 74,000 93,000 107,000
ROC = EBIAT/ (Interested capital + Cash) 8.55% 7.75% 6.79%
ROIC = EBIAT/ Invested capital 7.51% 6.91% 5.84%
ROE = Net income/ Owner's equity 8.20% 7.58% 7.04%
ROS = Net income/ Sales 3.40% 2.92% 2.44%

Activity Ratios
Total asset turnover = Net sales/ Total assets 1.58 1.45 1.40
Average collection period = AR/ Daily credit sales 104 113 109
Inventory turnover = COGS/ Inventory 2.05 1.79 2.10
Days goods in inventory = 365/ Inventory turnover 178 204 174
Days goods in inventory = Inventory/ Daily purchases 178 204 174
Fixed asset turnover = Net sales/ Net fixed assets 16.3 14.3 15.8
Accounts payable period = AP/ Daily credit purchases 42.4 43.8 40.6
Cash conversion cycle = DGI + ACP - APP 240 274 242

Leverage Ratios
Total assets/ Owner's equity (Equity multiplier) 1.52 1.79 2.06
Total liabilities/ Total assets 0.34 0.44 0.51
Total debt ratio at market = Total liabilities/ (Total
0.15 0.23 0.30
liabilities + Market value of the equity)
Time interest earned ratio = EBIT/ Interest expense 10 4.5 5
Days of payable 12.41 12.81 12.46
Accounts payable/ COGS 11.63% 12.00% 11.11%

Liquidity Ratios
Current ratio = Current assets/ Current liabilities 3.90 2.60 3.18
Quick ratio = (Current assets - Inventory)/ Current
2.90 1.90 2.43
liabilities

Profitability Revisited
Asset utilization efficiency = Sales/ Total assets 1.58 1.45 1.40
Financial leverage = Total assets/ Owner's equity 1.52 1.79 2.06
ROE = (Net income/ Sales)*(Sales/ Total assets)*(Total
8.20% 7.58% 7.04%
assets/ Owner's equity)
 2008

19.02%

69.67%
10.66%
5.74%
41.67%
26,000
15,167
75,000
37,000
112,000
16.13%
13.54%
18.67%
5.74%

1.53
99
2.55
143
143
13.6
29.6
212

2.12
0.53
0.32
13
8.98
8.11%

2.77
2.17

1.53
2.12
18.67%
Unidentified Industries

Japanese
Upscale apparel
Electric utility automobile
retailer
manufacturer

Balance Sheet Percentages A B C

Cash 1.5% 14.4% 12.1%

Receivables 4.6% 3.8% 30.9%

Inventories 1.8% 24.6% 13.7%

Other current assets 2.0% 4.3% 5.0%

Property and equipment (net) 74.5% 49.6% 34.1%

Other assets 15.6% 3.4% 4.3%
Total assets 100% 100% 100%
Notes payable 5.3% 0.4% 5.4%
Accounts payable 2.1% 24.8% 11.0%
Other current liabilities 5.9% 17.0% 14.2%
Long-term debt 33.6% 10.0% 34.3%
Other liabilities 26.3% 2.2% 11.2%
Owners’ equity 26.8% 45.6% 23.9%
Total 100% 100% 100%

Selected Ratios
Net profit/net sales 10.3% 1.5% 5.1%
Return on capital 6.8% 9.2% 12.6%
Return on equity 12.5% 10.8% 28.1%
Sales/total assets 0.32 3.25 1.31
Collection period (days) 52 4 86
Days of inventory 43 32 62
Sales/net property & equipment 0.43 6.7 3.8
Total assets/equity 3.73 2.19 4.19
Total liabilities/total assets 0.73 0.54 0.76
Interest-bearing debt/total capital 59% 19% 62%
Times interest earned 3.2 16 6
Current assets/current liabilities 0.67 1.11 2.01
Discount general
Automated test
merchandise
equipment
retailer

D E A

13.3% 11.0% B

39.8% 11.8% C

4.7% 16.7% D

3.8% 10.0% E

22.1% 20.3%
16.3% 30.2% wording hộ t thành TA đống này nhé, t draft ý chính thôi
100% 100%
18.2% 1.4%
8.3% 8.8%
8.7% 16.5%
23.1% 21.7%
5.6% 2.0%
36.1% 49.6%
100% 100%

1.3% -5.8%
0.9% -3.1%
2.2% -7.6%
0.63 0.65
232 43
31 147
2.9 3.6
2.79 2.01
0.66 0.5
53% 32%
4.4 NM
1.22 1.85
 điện --> fixed assets cao nhất và tỷ trọng htk ít nhất, bù lại vì điện
thiết yếu nên ROE duy trì ở mức khá ok
sx ô tô --> ít AR nhưng nhiều AP do phải trả nhà cung cấp ng vật
liệu. htk cao, lượng cash lớn. Equity tương đương liab do vcsh
nhiều. Sale/TA lớn nhất do là sx ô tô thì bán dc nhiều thôi kiểu thế --
> collection period ngắn
đang scale up --> vay nợ nhiều, liab tỷ trọng lớn, cx cần 1 lượng
cash nhất định vì bán lẻ thì tiêu dùng nhanh, AR nhiều do cho KH
nợ, ROE có thể sẽ cao do tỷ trọng equity ít trong khi scale up nên
doanh thu và NI cx sẽ tốt. Ncl cái này là nợ siêu nhiều

discount --> doanh thu NI sẽ thấp --> ROE thấp. Bán lẻ nên tỷ trọng
htk cx k nhiều, khoản phải thu KH cao do cho KH nợ. Profit kém

htk tương đối nma đang lỗ --> htk ứ đọng lâu mãi k process dc, chắc
do hàng lỗi thời. Cơ cấu vốn = 1. ncl cái này t k sure lắm nma t dùng
phép loại trừ thôi í D:

wording hộ t thành TA đống này nhé, t draft ý chính thôi