Write My Paper Button

NMG, Inc. is a clothing manufacturer that designs and markets new women’s clothing. The company just closed Fiscal Year 2023 ending December 31st and completed the balance sheet and income statement. You are hired as a clothing manufacturer and asked to perform the following tasks: 1-Prepare a forecasted income statement, balance sheet, and cash flow statement for the company for 2024. 2- a- Calculate the listed financial ratios for 2023

Assignment Task

Case Business Analysis and Valuation

NMG, Inc. is a clothing manufacturer that designs and markets new women’s clothing. The company just closed Fiscal Year 2023 ending December 31st and completed the balance sheet and income statement. You are hired as a clothing manufacturer and asked to perform the following tasks:

1-Prepare a forecasted income statement, balance sheet, and cash flow statement for the company for 2024.

2- a- Calculate the listed financial ratios for 2023

b- Using the past three years’ data for the company, perform a financial ratio analysis.

3-Compare and contrast the company’s 2023 ratios with those of the industry.

Forecasting assumptions for 2024: 

1- Revenue will grow by 10% and the tax rate will be 21%

.2- The CAPEX will be 6.5% of Revenue and Depreciation expense will be 6.2% of Property, equipment, and leasehold improvements gross at the start of the year which was $10, 985 million.

3- The company issues $105 million of stock-based compensation, and it is fully vested. Additional paid-in capital will increase by the same amount. The company includes this form of compensation in operating expenses.

4- The company has a dividend payout ratio of 25.6% of net income.

5- No change in the following income statement accounts: Amortization of intangibles, Interest income, Interest expense, and Other, net.

6- No change in the following balance sheet statement accounts Goodwill, Long-term debts less current portion, Ordinary shares, or Other comprehensive loss.

7- There is no change in macroeconomic readings, including the inflation rate.

8- The Restructuring and other, net is zero.

9- Consider the following accounts increase based on the percentage of the revenue in 2024.

Accounts receivable, net 8.20%
Inventories 8.20%
Other current assets 2.50%
Deferred income taxes 9.20%
Other assets, net 1.80%
Accounts payable 14.50%
Accrued employee compensation 2.40%
Accrued warranty 0.85%
Accrued expenses 6.40%
Long-term accrued warranty 1%
Other non-current liabilities 1.20%

 

RATIO ANALYSIS NMG, Inc. 2023 Industry Average
CURRENT RATIO 1.98
QUICK RATIO 1.24
INVENTORY TURNOVER (days) 93
INTEREST COVERAGE 4.26
ASSET TURNOVER (days) 529
RECEIVABLES TURNOVER (days) 58
GROSS MARGIN 32.50%
OPERATING MARGIN 7.30%
PROFIT MARGIN 5%
ROA 3.70%
ROE 6.70%
Debt to equity 1.01
Dividend payout ratio 0.28

 

NMG, Inc.
Net Income statements (in millions) 2023 2022 2021
for the year ending December 31.
Revenue $10,390 $11,184 $10,771
Cost of Revenue $6,939 $7,261 $7,058
Gross Profit $3,451 $3,923 $3,713
Product Development $991 $1,026 $1,232
Marketing and Administrative $453 $562 $606
Depreciation $520 $559 $539
Amortization of Intangibles $23 $53 $104
Restructuring and other, net ($22) $89 $178
Stock-based compensation $0 $0 $0
Total Operating Expenses $1,965 $2,289 $2,659
Income from Operations $1,486 $1,634 $1,054
Interest Income $84 $38 $12
Interest Expense ($224) ($236) ($222)
Other, net $25 ($18) ($29)
Other expenses, net ($115) ($216) ($239)
Income before Income Taxes $1,371 $1,418 $815
(Benefit) provision for income taxes ($640) $236 $43
Net Income $2,011 $1,182 $772

 

NMG, Inc.
Consolidated Balance Sheets
(In millions except share and per share data) 2023 2022 2021
as of December 31.
Current Assets
Cash and Cash Equivalents $2,220 $1,853 $2,539
Accounts receivables, net $989 $1,184 $1,199
Inventories $970 $1,053 $982
Other current assets $184 $220 $321
Total current assets $4,363 $4,310 $5,041
Property, Equipment, and leasehold improvements, net $1,869 $1,792 $1,875
Investment in debt security $0 $1,275 $0
Goodwill $1,237 $1,237 $1,238
Other intangible assets, net $111 $188 $281
Deferred income taxes $1,114 $417 $609
Other assets, net $191 $191 $224
Total Assets $8,885 $9,410 $9,268
Current Liabilities

 

Accounts payable $1,420 $1,728 $1,626
Accrued employee compensation $169 $253 $237
Accrued warranty $91 $112 $113
Current portion of long-term debt $0 $499 $0
Accrued expenses $552 $598 $650
Total current liabilities $2,232 $3,190 $2,626
Long-term accrued warranty $104 $125 $120
Long-term accrued income taxes $4 $10 $15
Other non-current liabilities $130 $100 $122
Long-term debt less current portion $4,253 $4,320 $5,021
Total Liabilities $6,723 $7,745 $7,904
Shareholders’ Equity
Ordinary shares-par value $0.0001, 2.6 billion shares
authorized, 1,354,218,154, and 1,340,697,595 shares
issued and outstanding, respectively
Additional paid-in capital $6,545 $6,377 $6,152
Accumulated other comprehensive Income (loss) ($34) ($16) ($17)
Retained Earnings ($4,349) ($4,696) ($4,771)
Total Shareholders’ equity $2,162 $1,665 $1,364
Total liabilities and shareholders’ equity $8,885 $9,410 $9,268

 

WhatsApp Widget
GET YOUR PAPER DONE