Business, 11.03.2020 04:18 hemriccaleb5340

Accounting data are used to analyze cash flows, and this analysis is critical for decision making. Consider the following case:

J&H Corp. recently hired Jeffrey . His immediate mandate was to analyze the company . He has to submit a report on the company's operational efficiency and estimate potential investment in working capital. He has the income statement from last year and the following information from the company's financial reports as well as some industry averages.

Last year, J&H Corp. reported a book value of $650 million in current assets, of which 15% is cash, 17% is short-term investments, and the rest is accounts receivable and inventory.

The company reported $552.5 million of current liabilities including accounts payable and accruals .Interestingly, the company had no notes payable claims last year. There were no changes in the accounts payables during the reporting period.

***The company, however, invested heavily in plant and equipment to support its operations. It reported a book value of $1,040 million in long-term assets last year.

Income Statement For the Year Ended on December 31 (Millions of dollars) J&H Corp. Industry Average

Net Sales $1,900 $2,375

Operating costs, except depreciation and amortization $1,520 $1,900

Depreciation and amortization 76 95

Total Operating Costs $1,596 $1,995

Operating income (or EBIT) $304 $380

Less: Interest 30 57

Earnings before taxes (EBT) $274 $323

less: Taxes (40%) 110 129

Net Income $164 $194

Based on the information given to Jeffrey, he submits a report on January 1with some important calculations for management to use, both for analysis and to devise an action plan. Which of the following statements in his report are true? Check all that apply.

a. The company has no notes payable reported in its balance sheet, so all its current liabilities are its operating liabilities.

b. J&H Corp.'s NOPAT is $182.4 million, which is lower than the industry average of $228.0 million.

c. The firm uses $1,027.0 million of total net operating capital to run the business.

d. The compa ny is using -$13.0 million in net operating working capital acquired by investor-supplied funds.

e. J&H Corp. has $169.4 million of net operating capital.

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