Case Study: California Choppers

California Choppers HB case 806N22 Income Statement Sales COGS Gross profit Selling, admin Depr expense Operating profit Interest Earnings before taxes Taxes Net income 2000 287.14 209.69 77.45 57.34 7.53 12.58 9.41 3.17 1.01 2.16 2001 299.45 210.45 89.00 60.06 13.54 15.40 12.53 2.87 0.92 1.95 2002 725.45 506.91 218.54 104.14 21.54 92.86 35.51 57.35 18.35 39.00 2003 793.34 559.53 233.81 125.53 20.89 87.39 24.67 62.72 20.07 42.65 2004 814.55 595.34 219.21 136.57 21.22 61.42 17.96 43.46 13.91 29.55

Balance Sheet Cash Acct receivable Inventory Total current assets Land pland, equipment Other assets Total long-term assets Total assets Accounts payable Current portion of LT debt Total current liabililties Long-term debt Shareholder' equity Total
liabilities and equtiy
2000 10.76 45.01 17.12 72.89 54.32 2.47 56.79 129.68 53.77 2.88 56.65 52.82 20.21 129.68

2001 20.56 48.54 79.66 148.76 162.28 5.39 167.67 316.43 90.73 18.09 108.82 185.45 22.16 316.43

2002 25.78 84.89 82.69 193.36 184.18 8.38 192.56 385.92 112.15 18.77 130.92 193.84 61.16
385.92

2003 38.55 85.39 79.30 203.24 178.01 8.82 186.83 390.07 109.96 14.32 124.28 161.98 103.81 390.07
2004 34.21 95.32 53.88 183.41 182.74 9.49 192.23 375.64 129.04 8.56 137.60 104.68 133.36 375.64

2,000 Liquidity Current Ratio Cash Ratio Asset Management Inventory Turnover in Days A/R Turnover in Days

2,001 1.3670 0.1889 83.9266 57.0141

2,002 1.4769 0.1969 58.4500 33.5667

2,003 1.6353 0.3102 52.8357 39.1712

2,004 1.3329 0.2486 40.8260 40.4881

A/P Turnover in Days Cash Conversion Cycle Fixed Assets Turnover Total Asset Turnover Long Term Debt Paying Ability Debt Ratio Times Interest Earned Profitability Gross Margin Operating Profit Margin Net Profit Margin ROA ROE

125.3089 15.6318 2.6682 1.3425 0.9300 1.2291 0.2972 0.0514 0.0065 0.0469 0.0920

73.0418 18.9749 4.0277 2.0658 0.8415 2.6150 0.3012 0.1280 0.0538 0.1798 0.9361

72.4449 19.5621 4.1822 2.0447 0.7339 3.5424 0.2947 0.1102 0.0538 0.1532 0.5171

73.2649 8.0492 4.2977 2.1276 0.6450 3.4198 0.2691 0.0754 0.0363 0.1091 0.2492

2001 2002 2003 2004 2005

EBIT/Sales EBT/EBIT 0.0514 0.1864 0.1280 0.6176 0.1102 0.7177 0.0754 0.7076 0.0465 0.6731

Analysis of ROE -5 Way NI/EBT Total Asset Turnover Debt Ratio 0.6794 1.3425 0.9300 0.6800 2.0658 0.8415 0.6800 2.0447 0.7339 0.6799 2.1276 0.6450 0.6801 2.1318 0.6454

2005 856.00 629.43 226.57 160.23 26.54 39.80 13.01 26.79 8.57
18.22

2005 29.75 99.23 75.33 204.31 211.48 11.65 223.13 427.44 189.84 6.22 196.06 79.80 151.58 427.44

2,005 1.0421 0.1517 37.4638 41.4782

92.4576 (13.5156) 4.1217 2.1318 0.6454 3.0592 0.2647 0.0465 0.0213 0.0674 0.1279

ROE 0.0920 0.9361 0.5171 0.2492 0.1279