I need help with my financial analysis project. I have calculated the following
ID: 2740997 • Letter: I
Question
I need help with my financial analysis project. I have calculated the following ratio's but i'm worried about their correctness. My business is Lantronix and they had a net loss. My teach told me that I can plug the net loss in to the given formulas as I would net income. I will provide the statements from the company. For market price on common stock I just googled what the current share price is. Please tell me if any of these are incorrect and how to solve them correctly if so.
Return on Assets: ([Net income – (preferred stock if the company has it)] ÷ average total assets) = (-2,771) ÷109,275.5 = - 0.03 <- answer
( i got 109,275.5 from 113,481+105,070 ÷2)
Return on Equity: (Net income ÷ average common stockholders’ equity) = (-2,771)÷ 995.9= -2.78 <- answer
I calculated 995.9 from the shares of common stock that said 0.0001 par value, 15,089720 and 14,787,158 issued)
Net Profit Margin: (Net income ÷ net sales ) = (-2,771) ÷ 29,681= -0.09 <- answer
Dividend Yield: (Dividends per share of common stock ÷ market price per share of common stock) = 0.80 ÷ 1.16= 0.69 <- answer
(I got 1.16 from googling Lantronix current share price)
Price-Earnings Ratio: (Market price per share of common stock ÷ earnings per share on common stock) = 1.16÷0.80= 1.45 <-answer
Next, I will provied the statements that i used to calculate these answers. Please let me know how to make any corrections.
Consolidated Statements of Operations - USD ($) $ in Thousands
12 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Income Statement [Abstract]
Net revenue
$42,946
$44,546
Cost of revenue
22,648
22,261
Gross profit
20,298
22,285
Operating expenses:
Selling, general and administrative
16,041
16,355
Research and development
6,923
6,746
Total operating expenses
22,964
23,101
Loss from operations
-2,666
-816
Interest expense, net
-17
-28
Other expense, net
-30
-28
Loss before income taxes
-2,713
-872
Provision for income taxes
58
61
Net loss
($2,771)
($933)
Net loss per share (basic and diluted)
($0.19)
($0.06)
Weighted-average shares (basic and diluted)
14,904,000
14,657,000
Net revenue from related parties
$298
$524
Consolidated Balance Sheets - USD ($) $ in Thousands
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2013
Current assets:
Cash and cash equivalents
$ 4,989
$ 6,264
Accounts receivable (net of allowance for doubtful accounts of $45 and $34 at June 30, 2015 and 2014, respectively)
2,658
3,631
2,599
Inventories, net
9,503
8,404
8741
Contract manufacturers' receivable
369
359
Prepaid expenses and other current assets
400
524
Total current assets
17,919
19,182
Property and equipment, net
1,471
1,487
Goodwill
9,488
9,488
Deferred tax assets
442
400
Other assets
93
125
Total assets
29,413
30,682
Current liabilities:
Accounts payable
3,633
4,547
Line of credit
700
0
Accrued payroll and related expenses
1,685
1,863
Warranty reserve
163
150
Deferred tax liabilities
442
400
Other current liabilities
3,849
3,418
Total current liabilities
10,472
10,378
Long-term capital lease obligations
152
7
Other non-current liabilities
80
131
Total liabilities
$ 10,704
$ 10,516
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding
$ 0
$ 0
Common stock, $0.0001 par value; 100,000,000 shares authorized; 15,089,720 and 14,787,158 shares issued and outstanding at June 30, 2015 and 2014, respectively
2
1
Additional paid-in capital
206,326
205,013
Accumulated deficit
(187,990)
(185,219)
Accumulated other comprehensive income
371
371
Total stockholders' equity
18,709
20,166
Total liabilities and stockholders' equity
$ 29,413
$ 30,682
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Beginning balance, shares at Jun. 30, 2013
14,580,000
Beginning balance, value at Jun. 30, 2013
$ 1
$ 203,871
$ (184,286)
Shares issued pursuant to stock awards, net - stock issued
207,000
273
Share-based compensation
$ 869
Net loss and comprehensive loss
(933)
Ending balance, shares at Jun. 30, 2014
14,787,000
Ending balance, value at Jun. 30, 2014
$ 1
205,013
(185,219)
Shares issued pursuant to stock awards, net - stock issued
303,000
Shares issued pursuant to stock awards, net value
$ 1
351
Minimum tax withholding paid on behalf of employees for restricted shares
(53)
Share-based compensation
1,015
Net loss and comprehensive loss
(2,771)
Ending balance, shares at Jun. 30, 2015
15,090,000
Ending balance, value at Jun. 30, 2015
$ 2
$ 206,326
$ (187,990)
Consolidated Statements of Cash Flows - USD ($) $ in Thousands
12 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Operating activities
Net loss
$ (2,771)
$ (933)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation
1,015
869
Depreciation
878
895
Provision for excess and obsolete inventories
222
207
Loss (gain) on disposal of property and equipment
(2)
2
Changes in operating assets and liabilities:
Accounts receivable
973
(1,032)
Inventories
(1,321)
130
Contract manufacturers' receivable
(10)
248
Prepaid expenses and other current assets
124
(93)
Other assets
12
(38)
Accounts payable
(960)
1,575
Accrued payroll and related expenses
(178)
347
Warranty reserve
13
(43)
Other liabilities
365
(577)
Net cash provided by (used in) operating activities
(1,640)
1,557
Investing activities
Purchases of property and equipment, net
(577)
(595)
Net cash used in investing activities
(577)
(595)
Financing activities
Minimum tax withholding paid on behalf of employees for restricted shares
(53)
0
Payment of term loan
0
(167)
Proceeds from borrowings on line of credit
1,000
0
Payment of borrowings on line of credit
(300)
0
Net proceeds from issuances of common stock
352
273
Payment of capital lease obligations
(57)
(47)
Net cash provided by financing activities
942
59
Increase (decrease) in cash and cash equivalents
(1,275)
1,021
Cash and cash equivalents at beginning of year
6,264
5,243
Cash and cash equivalents at end of year
4,989
6,264
Supplemental disclosure of cash flow information
Interest paid
19
29
Income taxes paid
$ 39
$ 52
Consolidated Statements of Operations - USD ($) $ in Thousands
12 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Income Statement [Abstract]
Net revenue
$42,946
$44,546
Cost of revenue
22,648
22,261
Gross profit
20,298
22,285
Operating expenses:
Selling, general and administrative
16,041
16,355
Research and development
6,923
6,746
Total operating expenses
22,964
23,101
Loss from operations
-2,666
-816
Interest expense, net
-17
-28
Other expense, net
-30
-28
Loss before income taxes
-2,713
-872
Provision for income taxes
58
61
Net loss
($2,771)
($933)
Net loss per share (basic and diluted)
($0.19)
($0.06)
Weighted-average shares (basic and diluted)
14,904,000
14,657,000
Net revenue from related parties
$298
$524
Consolidated Balance Sheets - USD ($) $ in Thousands
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2013
Current assets:
Cash and cash equivalents
$ 4,989
$ 6,264
Accounts receivable (net of allowance for doubtful accounts of $45 and $34 at June 30, 2015 and 2014, respectively)
2,658
3,631
2,599
Inventories, net
9,503
8,404
8741
Contract manufacturers' receivable
369
359
Prepaid expenses and other current assets
400
524
Total current assets
17,919
19,182
Property and equipment, net
1,471
1,487
Goodwill
9,488
9,488
Deferred tax assets
442
400
Other assets
93
125
Total assets
29,413
30,682
Current liabilities:
Accounts payable
3,633
4,547
Line of credit
700
0
Accrued payroll and related expenses
1,685
1,863
Warranty reserve
163
150
Deferred tax liabilities
442
400
Other current liabilities
3,849
3,418
Total current liabilities
10,472
10,378
Long-term capital lease obligations
152
7
Other non-current liabilities
80
131
Total liabilities
$ 10,704
$ 10,516
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding
$ 0
$ 0
Common stock, $0.0001 par value; 100,000,000 shares authorized; 15,089,720 and 14,787,158 shares issued and outstanding at June 30, 2015 and 2014, respectively
2
1
Additional paid-in capital
206,326
205,013
Accumulated deficit
(187,990)
(185,219)
Accumulated other comprehensive income
371
371
Total stockholders' equity
18,709
20,166
Total liabilities and stockholders' equity
$ 29,413
$ 30,682
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Beginning balance, shares at Jun. 30, 2013
14,580,000
Beginning balance, value at Jun. 30, 2013
$ 1
$ 203,871
$ (184,286)
Shares issued pursuant to stock awards, net - stock issued
207,000
273
Share-based compensation
$ 869
Net loss and comprehensive loss
(933)
Ending balance, shares at Jun. 30, 2014
14,787,000
Ending balance, value at Jun. 30, 2014
$ 1
205,013
(185,219)
Shares issued pursuant to stock awards, net - stock issued
303,000
Shares issued pursuant to stock awards, net value
$ 1
351
Minimum tax withholding paid on behalf of employees for restricted shares
(53)
Share-based compensation
1,015
Net loss and comprehensive loss
(2,771)
Ending balance, shares at Jun. 30, 2015
15,090,000
Ending balance, value at Jun. 30, 2015
$ 2
$ 206,326
$ (187,990)
Consolidated Statements of Cash Flows - USD ($) $ in Thousands
12 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Operating activities
Net loss
$ (2,771)
$ (933)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation
1,015
869
Depreciation
878
895
Provision for excess and obsolete inventories
222
207
Loss (gain) on disposal of property and equipment
(2)
2
Changes in operating assets and liabilities:
Accounts receivable
973
(1,032)
Inventories
(1,321)
130
Contract manufacturers' receivable
(10)
248
Prepaid expenses and other current assets
124
(93)
Other assets
12
(38)
Accounts payable
(960)
1,575
Accrued payroll and related expenses
(178)
347
Warranty reserve
13
(43)
Other liabilities
365
(577)
Net cash provided by (used in) operating activities
(1,640)
1,557
Investing activities
Purchases of property and equipment, net
(577)
(595)
Net cash used in investing activities
(577)
(595)
Financing activities
Minimum tax withholding paid on behalf of employees for restricted shares
(53)
0
Payment of term loan
0
(167)
Proceeds from borrowings on line of credit
1,000
0
Payment of borrowings on line of credit
(300)
0
Net proceeds from issuances of common stock
352
273
Payment of capital lease obligations
(57)
(47)
Net cash provided by financing activities
942
59
Increase (decrease) in cash and cash equivalents
(1,275)
1,021
Cash and cash equivalents at beginning of year
6,264
5,243
Cash and cash equivalents at end of year
4,989
6,264
Supplemental disclosure of cash flow information
Interest paid
19
29
Income taxes paid
$ 39
$ 52
Explanation / Answer
The ratios are calculated as follows:
Return on assets = Net income / (net loss) / Average assets
= ($2,771) / ($29,413+$30,682)/2
= $2,771 / $30,047.5
-9.22%
Return on assets should be calculated on average assets when two years information is given as above.
Return on equity:
Return on equity = Net Income / Average common stockholders’ equity
= ($2,771) / ($18,709 +$20,166)/2
= $2,771 / $19,437.5
= -14.5%
Return on equity should also be calculated on average common stockholders’ equity when two years information is given as above.
Net profit margin:
Net Profit Margin = Net income / Net sales
= $2,771 / $42,946
= -6.45%
It is -6.45% of net profit margin.
Dividend Yield:
Dividend yield = Dividend per share of common stock / Market price per share of common stock
= $0.80/ $1.16
= 68.97%
Dividend yield calculation is correct and no need to change it.
-----
Price-earnings ratio = Market price per share of common stock / Earnings per share
= $1.16 / X
Earnings per share is not given in the question and therefore “X” is placed in the formula.
Price earnings ratio should be calculated based on Earnings per share but not with dividend per share. Therefore, Earnings per share information must be needed to calculate Price-earnings ratio.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.