Assignment
Questions
1 In 2014, 2015 and 2016, how did IPG Photonics (IPGP) generate most of its cash flow?
2 At the end of the 2016 fiscal year, based on the Current Ratio and Quick Ratio, which company (IPGP or its closest competitor, Coherent, Inc.) was in a better position to pay current liabilities and pay them on time? Another way to ask this question: Which company will probably have an easier time obtaining a short-term bank loan?
Hint: Remember Coherent's ratios (and industry averages) are on the right of the Ratios worksheet you completed in Step 2.
3 What method of inventory valuation does IPGP use for accounting purposes? (Refer to Note 1 in the Notes to the Financial Statements.)
4 NOTE: Before answering this question and the next several questions, be sure to study the "Chapter 9 Notes from your Instructor" documents in the Canvas module.
How many days, on average,in 2016, did it take IPGP to purchase, stock, and sell its inventory?
HINT: The Inventory Turnover statistic is not the answer to this question. Think of "turnover" as how many times per year something is happening, so Inventory Turnover is the number of times per year, on average, IPGP sells its entire inventory.
5 Given the data you have, which of the following statements is (are) true regarding IPGP's management of inventory?
6 Remember that "net" means something has been subtracted. What did IPGP subtract from Accounts Receivable?
7 How many days, on average in 2016, did it take IPGP to collect payments from customers for products and services IPGP had provided to them?
8 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.
9 In 2016, on average, how many days did it take IPGP to pay its vendors (suppliers)?
10 How does the amount of time IPGP took to collect from its customers compare to the amount of time it took to pay its own Accounts Payable to its vendors?
11 DidIPGP pay its own Accounts Payable more quickly or less quickly than its competitors paid their vendors? (Competitors include Coherent, Inc. and the industry averages.)
12 What reason(s) might IPGP have for maintaining a low Days Payables Outstanding?
13 If typical credit terms for suppliers to the Semiconductor and Other Electronic Components industry are 2/10, n/30, do IPGP's vendors (suppliers) have any need for concern about being paid on time?
14 Considering the Cash Conversion Cyclesin2015 and 2016, which of the following statements is (are) true?
15 Calculate the dollar amount of increase or decrease in IPGP's working capital from the end of 2015 to the end of 2016.
16 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 and equipment in 2014, 2015, and 2016?
17 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.)
18 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?
19 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".)
20 In terms of total assets, which company (IPGP or Coherent) grew more in the 2016fiscal year (as compared to 2015)?
21 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?
22 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?
23 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?
24 Considering the Ratio of Liabilities to Total Assets and the Ratio of Liabilities to Stockholders' Equity, for 2016, had IPGP used more or less debt to finance its operations than its competitor's hadused? (Competitors include Coherent and the industry averages.)
25 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.?
26 Which statement best describes the trend in IPGP's revenues and its closest competitor, Coherent, Inc.'s, revenues over 2014, 2015, and 2016?
27 What was IPGP's percent increase in revenues from 2015 to 2016?
28 Which statement is correct regarding the trend in IPGP's net income and Coherent, Inc.'s, net income over 2014, 2015, and 2016?
29 In 2014, 2015, and 2016, what was IPGP's most costly item?
(Hint: Look at the income statements.)
30 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 every dollar in cost, how many cents did IPGP mark up its products and services?)
For every dollar in cost, on average, how many cents did Coherent, Inc. mark up its products and services?
For every 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 and the next two questions, 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.
31 In 2016, on average, for every 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?
32 In 2016, on average, for every dollar of product and service sold, how many cents in profit did IPGPand Coherent, Inc. make after accounting for all expenses (product costs, selling and administrative expenses, interest, taxes, and other)?
33 How did IPGP'sGross Profit Margin, Operating Profit Margin, and Net Profit Margin for 2016compare to 2015?
34 How did IPGP'sGross Profit Margin, Operating Profit Margin, and Net Profit Margin for 2016compare toCoherent's and the industry averages?
35 For IPGP, which of the following types of expenses increased the most in 2016, as a percent increase from 2015?
36 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?
37 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 didIPGP'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.
38 Based on the Fixed Asset Turnover ratio, in 2016, was IPGP more or less effective than in 2015 at using fixed assets to generate sales?
39 Considering the Ratio of Net Sales to Assets, in 2016 was IPGP more or less effective than its competitors at using its total assets to generate sales?
40 Considering the Rate Earned on Total Assets (also called Return on Assets, or ROA), in 2016wasIPGP more or less effective than its competitors at using its total assets to generate profits?
41 What type(s) of stock has IPGP issued to stockholders?
42 Considering the Rate Earned 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)?
43 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?
44 What was IPGP's largest asset at the end of 2016 and the end of 2015?
45 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?