Study guide Distribuidora Avícola Zacatecas

Always use 2 decimal places (when % as percent –not as fractions)

and provide detail of the calculations made

1- Using figures from Distribuidora Avícola Zacatecas , forcast the Income Statement for 2012.
Assuming:

a. Sales growth of 10%

b. Cost of goods sold 65% (over sales)
c. Of the 2011 operating expenses,
i. 2,000 are fixed (with an inflation rate of 3%) and
ii. the remaining are variable with the sales level
d. Total interest expenses $900,000
e. The tax rate and the dividend payout ratio will have no changes over 2011

Forcast the balance for: (I´m not asking for the complete statement, only these 4 accounts)

f. Accounts receivable on Dec 31st, 2012 if DSO= 35 days of sales

g. Inventories on Dec 31st, 2012 if DSI= 35 days of Cost of goods sold
h. Accounts payable on Dec 31st, 2012 2 if DPO= 12 days of sales
i. Retained Earnings on the Dec 31st, 2012 Balance Sheet

2- Search on www.investopedia.com the DEFINITION (WHAT IS …..) of

• ROE (http://www.investopedia.com/terms/r/returnonequity.asp )
• ROA (http://www.investopedia.com/terms/r/returnonassets.asp)
• ROI(http://www.investopedia.com/terms/r/returnoninvestment.asp )
• RONA (http://www.investopedia.com/terms/r/rona.asp )

Based on the formula shown by Investopedia, Explain the differences between these four
profitability Ratios

3- Search on www.investopedia.com the DEFINITION of

• Cash conversion cycle (http://www.investopedia.com/terms/c/cashconversioncycle.asp )
• Days sales of inventory (http://www.investopedia.com/terms/d/dsi.asp )
• Inventory turnover (in the previous one or in
http://www.investopedia.com/terms/i/inventoryturnover.asp )

Based on the formula shown by Investopedia, Explain the differences between the last two
efficiency ratios
4- Search on www.investopedia.com the DEFINITION of:

• Days Sales Outstanding (http://www.investopedia.com/terms/d/dso.asp)

Explain the differences between the Investopedia formula and the one we have been using.

• If you want to judge the performance of the Sales Director of the company using this ratio,
which formula is “more appropriate”? Why?
• If you want to judge the performance of the Accounts Receivable manager of the company
using this ratio, which formula is “more appropriate”?

5- The DuPont formula, helps to understand where the ROE comes from; calculate the
ROE, ROS, AT and EM for Distribuidora Avícola Zacatecas on 2008 and 2011. What
can you infer from these 4 ratios?

6- On http://www.investopedia.com/terms/1/1-10net30.asp, is stated that the cost of 1%/10

net 30 is 18.2%. This statement is not considering that you should compound the
interest rate and the real yearly cost of these terms is 19.83% (using a “360 days year”).
Search the formula for compound interest and calculate the yearly cost of 2%/12, net 45.

7- Explain the difference between a recourse and a non-recourse factoring

http://www.rtsfinancial.com/guides/difference-between-recourse-and-non-recourse-factoring

8- Assuming that Working Capital NEEDS, come from Accounts receivable (including
factoring), Inventories and 12 days of purchases on accounts payable to suppliers;
calculate the Working Capital Needs on Dec 31st of 2008 and 2011. USE ACTUAL data
for Cash, Accounts receivable and inventories and desired data for Accounts payable

9- Assuming that the Working Capital comes from

Equity + Long term debt - Net fixed Assets

Calculate the Working Capital on Dec 31st of 2008 and 2011