Financial Statement Analysis

Whirlpool 2013
Supervisor: Nicoleta Miu, PhD
By: Raluca Bobe
Raluca-Florina Vlrean
Table of contents
Introduction...............................................................................................................2
2. Financial statements and cash flow.......................................................................4
a. Analysis of the structure and evolution of the balance sheet (assets and liabilities).............4
b. Analysis of structure and evolution of income statement......................................................6
c. Achieving cash flow statement............................................................................................. 7
d. Calculation and interpretation of main indicators..................................................................9
3.Financial statements analysis...............................................................................11
a.Calculation and interpretation of liuidity ratios! .................................................................""
b.Calculation and interpretation of asset management ratio! .................................................""
c.Calculation and interpretation of debt management ratios..................................................."#
d.Calculation and interpretation of profitability ratios.............................................................."$
e.Calculation and interpretation of mar%et value ratios.........................................................."4
4. Financial planning and forecasting.....................................................................15
a. &ales pro'ection.................................................................................................................. "(
b.)inancial statement forecasting * the percent of sales method..........................................."6
". +ncome statement pro'ection........................................................................................... "6
#. ,alance sheet pro'ection................................................................................................. "6
Introduction
Whirlpool orporation is the world!s leading manufacturer and mar"eter of ma#or home appliances$
with annual sales of more than %1& billion in 2'11$ ()$''' employees$ and (( manufacturing and
technology research centers around the world. The company mar"ets Whirlpool$ *aytag$ +itchen,id$
-enn.,ir$ ,mana$ /rastemp$ onsul$ /au"necht and other ma#or brand names to consumers in nearly
e0ery country around the world.
Whirlpool orporation!s history dates bac" to 1&11$ when 1pton *achine ompany was
founded in 2t. -oseph$ *I$ 1.2. to produce an electric$ motor.dri0en wringer washer.
In 1&5'$ the company changed its name to Whirlpool orporation.
The 1&)'s and 1&&'s saw Whirlpool orporation!s e3pansion in the global mar"et in
4urope$ *e3ico$ India$ anada$ hina$ 2outh ,frica$ ,rgentina$ and /ra5il. Today$ 1'3 years
after 6ou 1pton started a company that gained entry into the appliance industry by producing an
#
electric$ motor.dri0en wringer washer$ Whirlpool continues to shape and lead the global home
appliance industry.
For 2'13 Whirlpool orporation deli0ered record earnings performance$ successfully dri0ing both
re0enue growth and margin e3pansion with their industry.leading brands and inno0ati0e new products.
7e0enues increased more than 3 percent compared to the prior year. Full.year ongoing business
operating profit margin was 8.3 percent$ up 1.( points from 2'12$ as the company achie0ed eight
consecuti0e 9uarters of margin e3pansion
Whirlpool orporation dro0e significant 0alue for their shareholders$ including higher di0idends$
ongoing business earnings per share of %1'.'2 and a 54 percent increase in the company:s stoc" price
The company continued to e3ecute well on those things that they can control and$ as a result$
deli0ered more earnings than e0er before. They tripled their free cash flow year.o0er.year to %(&'
million$ which Whirlpool effecti0ely deployed in line with their business priorities. They increased the
di0idend by 25 percent during the year and repurchased %35' million in shares. In addition$ the company
ended the year with a strong balance sheet and increased in0estment capacity.
6ed by considerable growth in ;orth ,merica and 6atin ,merica operations$ they strengthened the
financial position around the world with higher sales$ impro0ements in product price and mi3$ ongoing
cost producti0ity$ and cost and capacity.reduction benefits. ,nd they ha0e set the stage to reach e0en
higher le0els of achie0ement in 2'14.
Whirlpool has in0ested % 1.1 billion in capital$ research and de0elopment in 2'13 and that
leaded 5' ma#or launches in 2'13$ and we were recogni5ed around the globe for our craftsmanship$
inno0ation and 9uality. onsumers showed strong preference for their distincti0e offerings$ which
resulted not only in higher global sales$ but also greater o0erall le0els of profitability.
Whirlpool 2'14 shareholder 0alue creation targets are firmly on trac"$ and they remain confident in
their ability to dri0e re0enue growth of 5 to 8 percent$ deli0er more than ) percent ongoing operating
margins and progress toward generating free cash flow of 4 to 5 percent of sale.
$
2. Financial statements and cash flow
a! "nalysis o# the structure an evolution o# the balance sheet $assets an
liabilities%
urrent assets include cash$ stoc"s and bonds$ accounts recei0able$ in0entory$ prepaid
e3penses and anything else that can be con0erted into cash within one year or during the normal
course of business. It is noticeable that Whirlpool:s current assets ha0e increased o0er the year.
ash and e9ui0alents <ban" accounts= and in0entories ha0e both increased. >n a balance
sheet$ the 0alue of in0entory is the cost needed in order to replace it. 2o the company increased
the amount of in0entories on hand$ but also co0ered the ris" with the boost in cash a0ailable.
,s accounts recei0able is what a company is owed by its customers$ the fast action on slow
paying accounts may be the difference between success and failure for businesses. Whirlpool
reduced the amount of this balance sheet element$ thus decreasing the ris" of not paid orders.
The other current assets present on the balance sheet ha0e slightly dropped in 2'13 in
comparison to their 0alues in 2'12$ but despite their diminishment$ current assets o0erall ha0e
raised.
Whirlpool:s fi3ed assets ha0e noticed a small o0erall increase of % (8 million$ with
decreases in goodwill$ intangible assets and deferred income ta3es.
4
,ccounts payable is the opposite of accounts recei0able. It arises when a company recei0es
a product or ser0ice before it pays for it. ,ccounts payable is one of the largest current liabilities
a company will face because they are constantly ordering new products or paying 0endors for
ser0ices or merchandise. 7eally well managed companies attempt to "eep accounts payable high
enough to co0er all e3isting in0entory$ meaning that the 0endors are paying for the company!s
shel0es to remain stoc"ed$ in effect. In this regard$ Whirlpool has its ris" more than fully
co0ered$ as in both years$ the 0alue of accounts payable e3ceeds that of in0entories.
The increase in the other current liabilities elements shows that the company is in0esting in
acti0ities li"e ad0ertising and promotion and it hopes to co0er the accrued e3penses with the
results from these acti0ities.
2hareholder e9uity is the net worth of a company. It represents the stoc"holders! claim to a
business! assets after all creditors and debts ha0e been paid. It can be calculated by ta"ing the
total assets and subtracting the total liabilities.
2hareholder e9uity usually comes from two places. The first is cash paid in by in0estors
when the company sold stoc"? the second is retained earnings$ which are the accumulated profits
a business has held on to and not paid out to its shareholders as di0idends.
(
When a corporation purchases its own stoc"$ the cash on hand is reduced. This lowers the
total shareholder e9uity. In order for in0estors to "now the reduced cash and e9uity was a result
of share repurchases and not debt or losses$ management puts the cost of the reac9uired stoc"
under @Treasury 2toc"@ in order to clarify.
Auring 2'13$ Whirlpool increased its common stoc"$ retained earnings and treasury stoc".
The retained earnings surpass the amount of stoc"holders: e9uity$ reflecting that the company is
more interested in growing business than paying out di0idends. , possible cause for the fact that
it increased its treasury stoc" by % 348 million can be a sign management belie0es the stoc" is
under0alued. Aepending upon its ob#ecti0es$ a company can either retire the shares it purchases$
or hold them with the intention of reselling them to raise cash when the stoc" price rises.
b! "nalysis o# structure an evolution o# inco&e state&ent
,n income statement is a report that shows how much re0enue a company earned o0er a
specific time period <usually for a year or some portion of a year=. ,n income statement also
shows the costs and e3penses associated with earning that re0enue. The literal Bbottom lineC of
the statement usually shows the company:s net earnings or losses. This tells you how much the
company earned or lost o0er the period.
Income statements also report earnings per share <or 4D2=. This calculation tells you how
much money shareholders would recei0e if the company decided to distribute all of the net
earnings for the period.
6
The Fi0e.Eear 2elected Financial Aata shows the history of net sales and it reflects that
2'12 was the only year in which Whirlpool had a decrease in sales. The increase of net sales in
2'13 is almost three times faster than the increase in the cost of products sold <(2( . 221=$ so the
company has disco0ered a way to boost sales at much lower costs.
The operating profit re0eals a steady growth$ despite the drop in sales. 2elling$ general and
administrati0e costs ha0e increased$ but Whirlpool reduced amorti5ation and restructuring costs$
resulting in a satisfying operating profit.
Interest e3penses reflect the cost of the company:s borrowings. The increase in this element
lin"ed with the increase in sales and operating profit shows that Whirlpool:s decision to contract
loans was a good one$ e0en though the amount of interest e3penses is bigger.
Finally$ income ta3 is deducted and the income statement arri0es at the bottom lineF net
profit. The 2'13 result is more than double the net income from 2'12$ showing a 0ery satisfying
situation for Whirlpool.
,s a conse9uence of the double net income$ the earnings per share also doubled. This
calculation tells you how much money shareholders would recei0e for each share of stoc" they
own if the company distributed all of its net income for the considered period.
c! "chievin' cash #lo( state&ent
ash flow statements report a company:s inflows and outflows of cash. This is important
because a company needs to ha0e enough cash on hand to pay its e3penses and purchase assets.
While an income statement can tell you whether a company made a profit$ a cash flow statement
can tell you whether the company generated cash.
, cash flow statement shows changes o0er time rather than absolute dollar amounts at a
point in time. It uses and reorders the information from a company:s balance sheet and income
statement.
The bottom line of the cash flow statement shows the net increase or decrease in cash for
the period. Generally$ cash flow statements are di0ided into three main parts. 4ach part re0iews
the cash flow from one of three types of acti0itiesF <1= operating acti0ities? <2= in0esting
acti0ities? and <3= financing acti0ities.
7
>perating acti0ities in 2'13 ha0e generated double the amount of cash flow from 2'12.
Aespite the decreases in depreciation and amorti5ation$ in in0entories$ accounts recei0able and
other elements$ the boost in net earnings was enough to co0er all of these drops in cash flow.
-
Whirlpool increased its in0estment in assets and diminished the sale of assets$ showing the
company:s propensity to in0est rather than sell$ in order to benefit from the cash flow generated
by the assets on the long.term.
, 9uic" analysis of the financing acti0ities shows that Whirlpool borrowed bac" more than
it repaid from the long.term debt <51) H 513=. There is a consistent increase in the amount of
di0idends paid$ so stoc"holders can be "ept happy$ but the company also repurchased a massi0e
amount of stoc".
Aespite the big e3penses represented by the financial and in0esting acti0ities$ Whirlpool
managed to obtain an increase in cash and e9ui0alents during 2'13$ resulting in a % 13)' cash
amount at the end of the year.
! )alculation an interpretation o# &ain inicators
Net cash flow = net income non cash revenues + non cash charges
For WhirlpoolF
;et cash flow I net income J depreciation J amorti5ation J deferred ta3es
2013 . -49 / 6#7- / (49 . 7676
2012 . 4#( / 6070 / ((- . 7053
The fact that the company increased its net cash flow describes impro0ements in financial
performance. The 0alue of an asset is determined by the cash flow it generates$ so the increase of
the company:s assets has a positi0e influence on the cash flow.
Net operating working capital = all current assets all current liailities that !o not
charge interest
)or 1hirlpool!
2et operating wor%ing capital . current assets * current liabilities
#0"$ . 70## * 6794 . 22"
#0"# . 6-#7 * 6("0 . 317
The decrease in net operating wor"ing capital is e3plained by the fact that$ e0en though the
current assets ha0e increased o0er the year$ current liabilities increased more. The accrued
e3penses and accounts payable ha0e risen$ while the accounts recei0able ha0e dropped.
#otal operating capital = net operating working capital + net fi$e! assets
)or 1hirlpool!
#0"$ . ##- / $04" . 326%
#0"# . $"7 / $0$4 . 3351
,gain$ although the company e3panded its net fi3ed assets$ the increase was not sufficient
to be able to o0erbalance the decrease in net operating wor"ing capital.
Net operating profit after ta$es = &'(# ) *1 #a$ rate+
9
)or 1hirlpool!
#0"$ . "#49 3 (" * 404) . "#49 3 604 . 7,%-,
#0"# . -69 3 (" * 404) . -69 3 604 . 521-,
Whirlpool is an ,merican company$ founded in *ichigan$ so the ta3 rate used for the
calculation is the a0erage ta3 rate of the 1nited 2tates. The increase of ;>D,T can be e3plained
by the almost doubling of the net earnings from operating acti0ities$ but also by the increment in
cash and e9ui0alents generated by financing acti0ities.
.perating cash flow = N./0# + noncash a!1ustments
)or 1hirlpool!
5perating cash flow . 256A7 / depreciation / amorti8ation
#0"$ . 749.4 / (40 . 12"%-,
#0"# . (#".4 / ((" . 1072-,
2ree cash flow = N./0# net investment in operating capital
)or 1hirlpool!
#0"$ . 749.4 * (-# . 167-,
#0"# . (#".4 * 494 . 27-,
/oth the ;>D,T and the free cash flow are positi0e and ha0e increased o0er the year. The
amounts in0ested reduced the free cash flow dramatically$ but all in all$ these indicators describe
a good situation for the company.
3arket value a!!e! = *4hares outstan!ing)4tock price+ #otal common e5uit6
)or 1hirlpool!
#0"$ . 77 3 " * "09 . ($#)
#0"# . 7- 3 " * "0- . ($0)
These numbers indicate that all the common stoc" has not been ac9uired by in0estors$ so
the company has to find other sources of funding in order to finance its acti0ity. ,n e3ample of
this "ind of source is additional paid.in capital.
"0
3. Financial statements analysis
a. )alculation an interpretation o# li*uiity ratios:
7urrent ratio =
bilities Currentlia
ets Currentass
=
(8&4
8'22
= 1-03
Gi0en that the industry a0erage for this indicator is around '.&$ Whirlpool has a good
position in its sector. Kowe0er$ a current ratio that is barely more than 1 can be a worrying
prospect. If current liabilities increase faster than current assets$ the company might be in
trouble.
8uick ratio =
bilites Currentlia
s inventorie ets Currentass
=
(8&4
24') 8'22
= 0-67
The industry a0erage 9uic" ratio is '.2$ so Whirlpool is high abo0e its competition.
b. )alculation an interpretation o# asset &ana'e&ent ratio:
(nventor6 turnover ratio =
s Inventorie
Sales
=
24')
1)8(&
= 7-"
The industry a0erage is (.'1 and Whirlpool is ran"ed first in the industry for this indicator.
9a6s sales outstan!ing = 3(5 L
7e
Sales
ceivables
= 3(5 L
1)8(&
2''5
= 3% !a6s
The days sales outstanding formula shows in0estors and creditors how well companies! can
collect cash from their customers. >b0iously$ sales don!t matter if cash is ne0er collected. This
ratio measures the number of days it ta"es a company to con0ert its sales into cash.
, lower ratio is more fa0orable because it means companies collect cash earlier from
customers and can use this cash for other operations. It also shows that the accounts recei0ables
are good and won!t be written off as bad debts. , business capable of con0erting its recei0ables
into cash 9uic"ly is a great sign of health and efficiency.
2i$e! assets turnover ratio2013 =
sets Netfixedas
Sales
=
3'41
1)8(&
= 6-17
2i$e! assets turnover ratio2012 = . 5-%7
Fi3ed asset turno0er ratio compares the sales re0enue a company to its fi3ed assets. This
ratio tells us how effecti0ely and efficiently a company is using its fi3ed assets to generate
re0enues. This ratio indicates the producti0ity of fi3ed assets in generating re0enues. If a
company has a high fi3ed asset turno0er ratio$ it shows that the company is efficient at managing
""
its fi3ed assets. Fi3ed assets are important because they usually represent the largest component
of total assets.
There is no standard guideline about the best le0el of asset turno0er ratio. Therefore$ it is
important to compare the asset turno0er ratio o0er the years for the same company. This
comparison will tell whether the company:s performance is impro0ing or deteriorating o0er the
years. It is also important to compare the asset turno0er ratio of other companies in the same
industry. This comparison will indicate whether the company is performing better or worse than
others.
,n increasing trend in fi3ed assets turno0er ratio is desirable because it means that the
company has less money tied up in fi3ed assets for each unit of sales. , declining trend in fi3ed
asset turno0er may mean that the company is o0er in0esting in the property$ plant and
e9uipment.
This ratio is usually used in capital.intensi0e industries where ma#or purchases are for
fi3ed assets. This ratio should be used in subse9uent years to see how effecti0e the in0estment in
fi3ed assets has been.
#otal assets turnover ratio =
Assets
Sales
=
15544
1)8(&
= 1-20
The asset turno0er ratio is an efficiency ratio that measures a company!s ability to generate
sales from its assets by comparing net sales with a0erage total assets. In other words$ this ratio
shows how efficiently a company can use its assets to generate sales.
The total asset turno0er ratio calculates net sales as a percentage of assets to show how
many sales are generated from each dollar of company assets.
For instance$ a ratio of 1.2 means that the net sales of a company e9ual the a0erage 0alue
of total assets for the year. In other words$ the company is generating 1.2 dollar of sales for e0ery
dollar in0ested in assets.
6i"e with most ratios$ the asset turno0er ratio is based on industry standards. 2ome
industries use assets more efficiently than others. To get a true sense of how well a company!s
assets are being used$ it must be compared to other companies in its industry. The industry
a0erage is '.&1. Whirlpool:s ratio is abo0e the industry a0erage$ indicating that the company is
generating a solid 0olume of business ma"ing use of its total asset in0estment.
The total asset turno0er ratio is a general efficiency ratio that measures how efficiently a
company uses all of its assets. This gi0es in0estors and creditors an idea of how a company is
managed and uses its assets to produce products and sales.
c. )alculation an interpretation o# ebt &ana'e&ent ratios
#otal !et to total assets =
Assets
Debt
=
15544
1'51'
= 67-61:
This ratio is rather high$ describing that Whirlpool:s in0estors ha0e pro0ided (8.(1M of the
total finances. Kowe0er$ the company does not go below the industry a0erage for this indicator.
#imes;interest;earne! ratio =
Interest
EBIT
=
188 155
124&
+
= 3-76 times
"#
This ratio shows that the operating income of the company can decline more than 3 times
before the company is unable to meet its annual interest costs.
&'(#90 coverage ratio =
nts Leasepayme incipal Interest
nts Leasepayme EBITDA
+ +
+
Dr
=
&) 188 155
54' 1'&4
+ +
+
= 3-"
4/ITA, co0erage ratio is broader than the times interest earned ratio$ which measures a
company!s ability to pay interest charges on debt. 4/ITA, appro3imates a company!s cash flows
more closely than its earnings do <because it e3cludes non.cash e3penses of depreciation and
amorti5ation=. 2ince debts are to be repaid using the cash flows generated$ 4/ITA, co0erage is
a useful measure of a company!s ability to pay off its debt repayment obligations.
4/ITA, co0erage ratio of 3.) means that the company can safely pay off its periodic debt
repayment obligations. Therefore$ Whirlpool co0ered its fi3ed financial charges by 3.) times.
d. )alculation an interpretation o# pro#itability ratios
/rofit margin on sales =
Sales
kholders commonstoc vailableto Netincomea
=
1)8(&
5'34
=26-"2:
It measures how much out of e0ery dollar of sales a company actually "eeps in earnings.
Drofit margin is 0ery useful when comparing companies in similar industries. , higher profit
margin indicates a more profitable company that has better control o0er its costs compared to its
competitors. a 2(.)2M profit margin$ for e3ample$ means the company has a net income of %'.2(
for each dollar of sales.
6oo"ing at the earnings of a company often doesn!t tell the entire story. Increased earnings
are good$ but an increase does not mean that the profit margin of a company is impro0ing. For
instance$ if a company has costs that ha0e increased at a greater rate than sales$ it leads to a lower
profit margin. This is an indication that costs need to be under better control.
'asic earning power =
Assets
EBIT
=
15544
1'&4
=7-03:
/4D shows the raw earning power of the firm:s assets and this low ratio shows that
Whirlpool is not getting a big enough return on its assets.
<eturn on total assets =
Assets
kholders commonstoc vailableto Netincomea
=
15544
)28
= 5-3:
7eturn on ,ssets shows how many dollars of earnings result from each dollar of assets the
company controls. 7eturn on ,ssets ratio gi0es an idea of how efficient management is at using
its assets to generate profit.
7eturn on ,ssets can 0ary substantially across different industries. This is the reason why
it is recommended to compare it against company!s pre0ious 0alues or the return of a similar
company.
The only common rule is that the higher return on assets is$ the better$ because the
company is earning more money on its assets. , low return on assets compared with the industry
a0erage indicates inefficient use of company!s assets.
"$
<eturn on common e5uit6 =
ty Commoneui
kholders commonstoc vailableto Netincomea
=
4&24
)28
=
16-":
7>4 measures the rate of return on the shareholder!s e9uity of the common stoc" owners.
It measures a firm!s efficiency at generating profits from e0ery unit of shareholders! e9uity. 7>4
shows how well a company uses in0estment funds to generate earnings growth. 7>4s between
15M and 2'M are considered desirable.
e. )alculation an interpretation o# &ar+et value ratios
/rice=earnings ratio =
E!S
share ice N Dr
= = 1,-61
96& . . "0.74
,ccording to Eahoo Finance$ the price of a Whirlpool share on Aecember 31st$ 2'13$ was
158%.
, company!s price.to.earnings <DN4 or 4D2= ratio tells you how much in0estors are willing
to pay per unit <O1$ %1$ P1= of a company!s earnings. For this reason$ it is sometimes nic"named
the @price multiple@ or the @earnings multiple.@ The DN4 ratio therefore tells us how attracti0e a
share is relati0e to other shares. The higher the DN4$ the more money shareholders are prepared to
in0est for the same 1% of earnings.
This gi0es DN4 its most important use for e9uity in0estors Q it helps them decide whether a
company!s share is o0erpriced or underpriced compared with the company!s real$ fundamental
0alue and with other shares in the same sector.
/rice=cash flow ratio =
share Cashflo"
share ice
N
N Dr
= = 1-57
>nce the DNF ratio is calculated$ the initial result does not actually re0eal anything of
great significance to the analyst. 2imilar to the subse9uent procedure for relati0e 0alue
methodologies . which use the DN4$ DN2 and DN/R multiples . the calculated DNF must be
assessed based on comparable companies. , DNF of 1.58 does not actually re0eal much useful
information unless the industry and stage of life for the firm is "nown. , low free.cash.flow
price multiple may be unattracti0e for an established slow.growth insurance firm$ yet present a
solid buying opportunity for a small biotech start.up. /asically$ to get a sense if a company is
trading at a cheap price relati0e to its cash flows$ a list of appropriate comparables must form the
comparison benchmar".
'ook ratio =
din# Sharesouts
ty Commoneui
tan
= = 63-%,
"4
4. Financial planning and forecasting
a. Sales projection
The income statement for Whirlpool has data on the pre0ious 3 years$ so the historical
data used in this forecast is represented by the net sales.
The company had a decrease in sales in 2'12$ but rapidly reco0ered in 2'13$ though not
enough to reach the 2'11 le0els.
$
i
6
i
$
i
;$> 6
i
;6> *$
i
;$>+*6
i
;6>+ *$i;$>+
2
200% " "7099 :# :"""0 ###0 4
2010 # "-$66 :" "(7 "(7 "
2011 $ "-666 0 4(7 0 0
2012 4 "-"4$ " :66 66 "
2013 ( "-769 # (60 ""#0 4
#otal 15 %10,3 0 0 3563 10
y I sales ? 3 I years
y = ax + b
a = ; b = y a*x
x = 3 ; y = 18208.6 ~ 18209
a = 35(3N1' I 356.3 ; b = 1)2'&Q 35(.3 L 3 I 1)2'& Q 1'().& I 17140.1
y
2'14
I 35(.3 L 3
2'14
J 1814'.1
y
2014
I 35(.3 L ( J 1814'.1 I 2138.) J 1814'.1 I 19277.9
This means an increase in sales of I 2.71% = 1.0271
This linear model reflects that Whirlpool has had a continuous rate of growth$ with the
e3ception of 2'12. The historical data on net sales shows that$ due to the consistent increase in
net sales that seems to characteri5e the company$ future forecasts are nothing but positi0e.
"(
b. Financial statement forecasting the percent of sales method
1. Income statement projection
Indicato! "ct#a$ 2013 %o&ca!t 'a!i! 2014 %o&ca!t
2ales 1)8(& 1.'281 L 2'13 2ales 1&28)
osts of products 15481 '.)24 L 2'14 Forecast 15))5
>ther costs 2'4& '.1'& L 2'14 Forecast 21'1
()&atin* )o+it
= ,'I-
1249 1292
Interest 155 J 188 I 332 332
,'- 917 960
Income ta3es
<4'M=
55'.2 58(
.&t inco/&
a0ai$ab$& to
!toc12o$d&!
366.8 384
Ai0idends paid 1)8 '.5'& L 2'14 Forecast 1&5.5
7etained earnings 18&.) 1)).5
2. alance sheet projection
"ct#a$ 2013
%o&ca!t
ba!i!
2014 %o&ca!t
%i!t )a!! "%. 3&cond )a!!
ash and
e9ui0alents
13)'
'.'83 L 2'14
Forecast
14'8 14'8
,ccounts
recei0able
2''5
'.1'( L 2'13
2ales
2'43 2'43
In0entories 24')
'.12) L 2'14
Forecast
24() 24()
>ther current
assets
54& J ()' I
122&
'.'(5 L 2'14
Forecast
1253 1253
Total current
assets
7022 7171 7171
Fi3ed assets
3'41 J 1824
J 18'2 J
18(4 J 2&1 I
)522
'.454 L 2'14
Forecast
)852 )852
-ota$ a!!&t! 15544 15923 15923
,ccounts
payable
3)(5
'.2'5 L 2'14
Forecast
3&52 3&52
"6
;otes payable 1' 1' J21 31
,ccruals
81' J 441 I
1151
'.'(1 L 2'14
Forecast
118( 118(
>ther current
liabilities
45( J ('8 J
8'5 I 18()
'.'&4 L 2'14
Forecast
1)12 1)12
Current
liabilities
6794 6950 6971
6ong.term
debt
1)4(
'.'&) L 2'14
Forecast
1))& 1))&
>ther
noncurrent
liabilities
&3' J 45) J
4)2 I 1)8'
'.&& L 2'14
Forecast
1&'& 1&'&
Total
noncurrent
liabilities
3716 3798 3798
Total
liabilities
10510 10748 10769
ommon
stoc"
1'& 1'& 1'&
7etained
earnings
58)4 J 12' 5&'4 5&'4
>ther e9uity
2453 Q 12&)
Q 2124 J11'
I .)5&
.)5& .)5&
Total equity 5034 5154 5154
-ota$
$iabi$iti&!
and &4#ity
15544 15902 15923
,dditional
Funds
;eeded
21
2upposing that the company will adopt a cautious forecast$ Whirlpool e3pects retained
earnings of % 12' million$ e0en though the last year brought a % (38 million increase in retained
earnings.
This way$ the additional funds needed to e0en the balance sheet are % 21 million. The
financial staff decided to raise the needed funds with notes payable.
"7