21 Jun WHAT WAS FLEXTRONICS’S TOTAL RETAINED EARNINGS FOR THIS PERIOD?
Financial Analysis: Flextronics Industries
Upon graduating from college in 2017, Karen Peterson entered the financial management-training program of a large financial consulting firm.
The training program consisted of a one-year assignment in three different departments. In the Investment and Financial Analysis department, Peterson was asked to answer the questions related to the Company. Using the financial statement and data below answer the following questions:
Financial Statement Data and Stock Price Data for Flextronics
(All data as of fiscal year end; $ in millions)
Income Statement 2012 2013 2014 2015 2016
Revenue 404.3 363.8 424.6 510.7 604.1
Cost of Goods Sold -188.3 -173.8 -206.2 -246.8 -293.4
Gross profit 216 190 218.4 263.9 310.7
Sales and Marketing -66.7 -66.4 -82.8 -102.1 -120.8
Administration -60.6 -59.1 -59.4 -66.4 -78.5
Depreciation & Amortization -27.3 -27 -34.3 -38.4 -38.6
EBIT 61.4 37.5 41.9 57 72.8
Interest Income (Expense) -33.7 -32.9 -32.2 -37.4 -39.4
Pretax Income 27.7 4.6 9.7 19.6 33.4
Income Tax -9.7 -1.6 -3.4 -6.9 -11.7
Net Income 18 3 6.3 12.7 21.7
Shares outstanding (millions) 55 55 55 55 55
Earnings per share $0.33 $0.05 $0.11 $0.23 $0.39
Balance Sheet 2012 2013 2014 2015 2016
Assets
Cash 48.8 68.9 86.3 77.5 85
Accounts Receivable 88.6 69.8 69.8 76.9 86.1
Inventory 33.7 30.9 28.4 31.7 35.3
Total Current Assets 171.1 169.6 184.5 186.1 206.4
Net Property, Plant & Equip. 245.3 243.3 309 345.6 347
Goodwill & Intangibles 361.7 361.7 361.7 361.7 361.7
778.1 774.6 855.2 893.4 915.1
Liabilities & Stockholders’ Equity
Accounts Payable 18.7 17.9 22 26.8 31.7
Accrued Compensation 6.7 6.4 7 8.1 9.7
Current Liabilities 25.4 24.3 29 34.9 41.4
Long-term Debt 500 500 575 600 600
Total Liabilities 525.4 524.3 604 634.9 641.4
Stockholders’ Equity 252.7 250.3 251.2 258.5 273.7
Total Liabilities & Stockholders’ Equity 778.1 774.6 855.2 893.4 915.1
Statement of Cash Flows 2012 2013 2014 2015 2016
Net Income 18 3 6.3 12.7 21.7
Depreciation & Amortization 27.3 27 34.3 38.4 38.6
Chg. In Accounts Receivable 3.9 18.8 0 -7.1 -9.2
Chg. In Inventory -2.9 2.8 2.5 -3.3 -3.6
Chg. In Payables & Accrued Comp 2.2 -1.1 4.7 5.9 6.5
Cash from Operations 48.5 50.5 47.8 46.6 54
Capital Expenditures -25 -25 -100 -75 -40
Cash from Investing Activities -25 -25 -100 -75 -40
Dividends Paid -5.4 -5.4 -5.4 -5.4 -6.5
Sale (or purchase) of stock 0 0 0 0 0
Debt Issuance (Pay Down) 0 0 75 25 0
Cash from Financing Activities -5.4 -5.4 69.6 19.6 -6.5
Change in Cash 18.1 20.1 17.4 -8.8 7.5
Flextronics Stock Price $7.92 $3.30 $5.25 $8.71 $10.89
1. What is Flextronics’s market capitalization at the end of each year?
2. What is Flextronics’s market-to-book ratio at the end of each year?
3. What is Flextronics’s enterprise value at the end of each year?
4. By what percentage did Flextronics’s revenues grow each year from 2013 to 2016?
5. By what percentage did net income grow each year?
6. Why might the growth rates of net income and revenues differ?
7. Suppose Flextronics had purchased additional equipment for $12 million at the end of 2013, and this equipment was depreciated by $4 million per year in 2014, 2015, and 2016. Given Flextronics’s tax rate of 35%, what impact would this additional purchase have had on Flextronics’s net income in years 2013-2016?
8. Suppose Flextronics’s costs and expenses had been the same fraction of revenues in 2013-2016 as they were in 2012. What would Flextronics’s EPS have been each year in this case?
9. From 2012 to 2016, what was the total cash flow from operations that Flextronics generated?
10. What fraction of the total in (a) was spent on capital expenditures?
11. What fraction of the total in (a) was spent paying dividends to shareholders?
12. What was Flextronics’s total retained earnings for this period?
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