Assignment
Questions
1 In 2014, 2015 and 2016, how did IPG Photonics (IPGP) generate most of its cash flow?
2 Calculate the dollar amount of increase or decrease in IPGP's working capital from the end of 2015 to the end of 2016.
Calculate the percent of increase or decrease in IPGP's working capital from the end of 2015 to the end of 2016.
3 At the end of the 2016 fiscal year, based on the liquidity measures of Working Capital, Current Ratio and Quick Ratio, how does IPGP's ability to pay current liabilities and pay them on time compare to the same measures for its closest competitor, Coherent, Inc. and other companies in the same industry?
Remember, Coherent's ratios (and industry averages) are on the right of the Ratios worksheet you completed in Step 2.
At the end of the 2016 fiscal year, IPGP was in a _________ (better or worse) position than its competitors to pay current liabilities and pay them on time.
Which company will probably have an easier time obtaining a short-term loan?
4 Remember that "net" means something has been subtracted. What has been subtracted from IPGP's Accounts Receivable on the balance sheet?
5 How many days, on average in 2016, did it take IPGP to collect payments from customers for products and services IPGP had sold to them?
6 Given the data you have, which of the following statements is (are) true regarding IPGP's management of accounts receivable?
Hint: Remember to look on the Ratios worksheet at Coherent and the industry averages when asked about IPGP's competition.
7 What method of inventory valuation does IPGP use for accounting purposes? (Refer to Note 1 in the Notes to the Financial Statements.)
8 How many days, on average, in 2016 did it take IPGP to sell its inventory?
9 Given the data you have, which of the following statements is (are) true regarding IPGP's management of inventory?
10 Looking at IPGP's and Coherent, Inc.'s Statements of Cash Flows, which of the following statements is (are) true regarding the companies' cash investment in property, plant, and equipment in 2014, 2015, and 2016?
11 Of the fixed assets IPGP owned at the end of 2016, which fixed asset category had IPGP spent the most money on?
(Hint: Remember, when you cannot see the detail you need in the financial statements, look in the Notes to the Financial Statements. You will find a breakdown of IPGP's property, plant, and equipment in Note 4.)
12 As an IT manager, you know you will need to make equipment and software purchases. Which of the following statements is (are) true regarding IPGP's ability to pay for, and attitude toward, purchasing new equipment?
13 What method of depreciation does IPGP use for book (financial accounting) purposes? (Remember, the Notes to the Financial Statements give you this type of information. Look for "Significant Accounting Policies".)
14 In terms of total assets, which company (IPGP or Coherent) grew more in the 2016 fiscal year (as compared to 2015)?
15 Did IPGP purchase any companies (businesses) in 2016?
Remember, you can get clues in the Statement of Cash Flows. (Which section would you check?), and the Goodwill account on the balance sheet.
16 While reviewing the liability section of the balance sheet, you notice IPGP has Accrued Expenses. What kinds of things might be included in this line?
17 Remember that many companies use the term "Long-Term Debt" or "Long-Term Obligations" when referring to bank loans. The current portion is shown under Current Liabilities, and the long-term portion is shown as part of long-term liabilities.
What is the total amount IPGP owed to banks (current portion plus long-term portion) at the end of 2016?
18 Considering the Debt Ratio and the Ratio of Liabilities to Stockholders' Equity for 2016, has IPGP used more or less debt to finance its operations than its competitors have used? (Competitors include Coherent and the industry averages.)
19 Considering the Ratio of Liabilities to Stockholders' Equity, has IPGP used more debt (loans) or more equity (selling stock and/or using its own earnings) to finance its operations?
20 Comparing IPGP's and Coherent's Ratio of Fixed Assets to Long-Term Liabilities, are noteholders (creditors such as bankers) likely to feel more comfortable extending additional long-term loans to IPGP or to Coherent, Inc.?
21 Comparing IPGP's Times Interest Earned ratio to Coherent's and the industry averages, what can you say about IPGP's creditors' level of comfort with IPGP's ability to make interest payments in the future?
22 Which statement best describes the trend in IPGP's revenues and the trend in its closest competitor, Coherent, Inc.'s, revenues over 2014, 2015, and 2016?
23 What was IPGP's percent increase in revenues from 2015 to 2016?
24 Which statement is correct regarding the trend in IPGP's net income and Coherent, Inc.'s, net income over 2014, 2015, and 2016?
25 In 2014, 2015, and 2016, what was IPGP's most costly income statement item?
26 On average, for each dollar IPGP spent on the cost of products and services it sold in 2016, how many cents did it add on to establish its selling price? (In other words, in 2016, on average, for each dollar in cost, how many cents did IPGP mark up its products and services?)
For each dollar in cost, on average, how many cents did Coherent, Inc. mark up its products and services?
For each dollar in cost, on average, how many cents did all companies in the industry mark up their products and services?
NOTE: If you are having trouble with this question, look back at the Chapter 4 Analysis Questions. To see the correct answers to those questions, go to the CENGAGE gradebook and click on your score for each question.
27 In 2016, on average, for each dollar of product and service sold, how many cents in profit did IPGP and Coherent make after accounting for their cost of the products and services sold?
28 How did IPGP's2016 Gross Profit Percent and Operating Profit Margin (also called Return on Sales) compare to 2015?
29 How did IPGP's2016 and 2015 Gross Profit Percent and Operating Profit Margin compare toCoherent's and the industry averages?
30 For IPGP, which of the following types of expenses increased the most in 2016, as a percent increase from 2015?
31 In a high-tech industry, research and development of new products is essential. In 2016 and 2015, how did IPGP's research and development costs compare to Coherent's?
32 In order to be profitable, it is important for a company to keep its selling, general, and administrative expenses under control. In 2016 and 2015, how did IPGP's selling, general, and administrative expenses compare to Coherent's?
Notice, you will need to combine two lines for IPGP (Sales and marketing, and General and administrative). Coherent's are all on one line.
33 Considering the Asset Turnover ratio, in 2016 was IPGP more or less effective than its competitors at using its long-term operating assets to generate sales?
34 Considering the Return on Total Assets, in 2016 wasIPGP more or less effective than its competitors at using its total assets to generate profits?
35 What type(s) of stock has IPGP issued to stockholders?
36 Considering the Return on Stockholders' Equity and Earnings Per Share, are IPGP's stockholders likely to be happy with IPGP's ratios, compared to the competition (Coherent and the industry averages)?
37 Considering IPGP's most recent Price-Earnings (P/E) Ratio, do investors appear to expect IPGP's future earnings to be more or less favorable than its competitors' future earnings, on average?
38 What was IPGP's largest asset at the end of 2016 and the end of 2015?
39 When companies have enough cash and enough retained earnings, typically, shareholders expect to receive a return on their investment in the form of dividends. They also expect dividends to be consistent or to increase from year to year. Which statement best reflects what IPGP's shareholders most likely think about the dividends they received in 2016 and 2015?
40 For this question and all remaining questions in this assignment, refer to the information you prepared for Step 3, related to the new inventory management system.
Assuming you had used the correct number for the company's required rate of return (15%), and assuming there are no other investment proposals competing for the same money, would IPGP consider the new inventory management system to be a good capital investment opportunity?
41 In Year 1 of the project, how would the proposed inventory management system impact IPGP's Current Ratio?
Would this make the Current Ratio better or worse?
42 In each of Years 2-4 of the project, how would the proposed inventory management system impact IPGP's Current Ratio?
Would this make the Current Ratio better or worse?
43 In each of Years 1-4 of the project, how would the proposed inventory management system impact IPGP's Inventory Turnover?
Would this make the Inventory Turnover better or worse?
44 Notice all five of the solvency measures in Step 2 would be affected each year of this project. Would the proposed project make the solvency measures better or worse?
45 Almost all of the profitability measures we used in Step 2 would be affected each year of this project.
Would the proposed project make the Gross Profit Percent better or worse (even just a little)?
Attachment:- ADMG-Assignment.rar