Asset Utilization

Yes, the company’s assets are utilized efficiently as the company has an asset turnover ratio
of 0.50 which is very high and the return on assets for the company is also 27.35% which is
great for the any company.
Profits for the company meets the given level of sales, and the major reason for this to
happen is the tax benefit the company is able to get because of the previous losses.

Debt to EBITDA = Total Debt/EBITDA

= 397/2745
0.14

Yes the earnings and cash flow of the company can cover the long term financial obligation
because the company is not leveraged and therefore the financial obligation for the
company is less and the company is able to generate more than sufficient cash flow,
therefore the earnings and cash flow for the company can cover the long term financial
obligation.

1. The company’s financial strength is that the company is not highly leveraged.
2. The company is net cash flow positive which is a big boost for the company
3. Company is not investing in assets and it is investing in short term investment which is
one weakness for the company.
The trend analysis of the company shows that the company did better in some of the
aspects in 2021 than 2020, but because in 2020 the company had good benefits therefore
the net income of the company reduced in 2021.
Also in the balance sheet the debt of the company has increased which is a cause of concern
for the company but otherwise the company is showing great trend of growing.

Yes, I will invest in the company.

The major reason behind me investing in the company is that the company has a low debt
and the company is generating a ROE of 40% which is simply great and with the growth the
company has shown from 2020 to 2021 it seems that the management of the company
wants to take the company further and improve it in all aspect.

Total Debt = 397

Total Equity = 7461
Cost of debt = 29/397 = 7.3%
Cost of equity = Dividends/Total Common stock = 0.34/3 = 11.33

WACC = Cost of debt * (Total Debt/(Total Debt+Total Equity)) + Cost of equity * (Total
equity/(Total debt + Total equity))
= 7.3% * (397/(397+7461)) + 11.33% * (7461/(397+7461))
= 11.13%