Question

Haver Industries is a leading consumer products company. The company’s adapted comparative balance sheets and income...

Haver Industries is a leading consumer products company. The company’s adapted comparative balance sheets and income statements (in $ millions) follow.

Haver Industries

Comparative Income Statements
For the Years Ended December 31
2016 2015 2014 2013 2012
Net sales revenue $68,222 $56,741 $51,407 $43,377 $40,238
Cost of goods sold 33,125 27,872 25,076 22,141 20,989
Gross profit 35,097 28,869 26,331 21,236 19,249
Research & development expenses 2,075 1,940 1,802 1,665 -
Selling, general, & administrative expenses 19,773 16,460 14,702 11,718 12,052
Nonoperating income (expense) 283 346 152 238 (211)
Interest expense 1,119 834 629 561 603
Income before taxes 12,413 9,981 9,350 7,530 6,383
Income taxes 3,729 3,058 2,869 2,344 2,031
Net income $8,684 $6,923 $6,481 $5,186 $4,352
Income before taxes $2.79 $2.70 $2.34 $1.80 $1.46
Income before taxes $1.15 $1.03 $0.93 $0.82 $0.76
Haver Industries
Comparative Balance Sheets
As of December 31
Assets 2016 2015 2014 2013 2012
    Cash $6,693 $6,389 $4,232 $5,912 $3,427
    Marketable securities 1,133 1,744 1,660 300 196
    Receivables 5,725 4,185 4,062 3,038 3,090
    Inventories 6,291 5,006 4,400 3,640 3,456
    Other current assets 4,487 3,005 2,761 2,330 1,997
            Total current assets 24,329 20,329 17,115 15,220 12,166
    Property, plant, & equipment, net 18,770 14,332 14,108 13,104 13,349
    Inventories 89,027 24,163 23,900 13,507 13,430
    Deposits & other assets 3,569 2,703 1,925 1,875 1,831
Total Assets $135,695 $61,527 $57,048 $43,706 $40,776
Liabilities
    Notes payable $0 $0 $6,769 $1,079 $3,113
    Accounts payable 4,910 3,802 3,617 2,795 2,205
    Current long-term debt 2,128 11,441 1,518 1,093 n/a
    Accrued expense 4,757 2,957 2,925 2,606 2,429
    Income taxes 3,360 2,265 2,554 1,879 1,438
    Other current liabilities 4,830 4,574 4,764 2,906 3,519
            Total current liabilities 19,985 25,039 22,147 12,358 12,704
    Deferred charges 12,354 1,896 2,261 1,396 1,077
    Long-term debt 35,344 12,614 12,302 11,475 11,201
    Non-current capital leases 632 273 252
    Other long-term liabilities 4,472 3,230 2,808 2,291 2,088
            Total liabilities 72,787 43,052 39,770 27,520 27,070
Stockholders’ Equity
    Common stock 3,976 2,977 2,544 1,297 1,301
    Capital surplus 57,856 3,030 2,425 2,931 2,490
    Retained earnings 35,666 31,004 13,611 13,692 11,980
    Treasury stock (34,235) (17,194) 0 0 0
    Other (355) (1,342) (1,302) (1,734) (2,065)
            Total stockholders’ equity 62,908 18,475 17,278 16,186 13,706
Total Liabilities and Stockholders’ Equity $135,695 $61,527 $57,048 $43,706

$40,776

In his letters to shareholders in 2012, Haver’s CEO stated that the company’s goal for the next five years was to achieve 4% to 6% sales growth each year and at least 10% growth in earnings per share. Did the company meet its targets? How do you know?

Managing a broad collection of brands is challenging. In its 2012 annual report, Haver Industries stated that acquisitions and divestitures “are part of the Company’s strategic focus on developing brands that offer the greatest potential for growth.” The report went on, “This requires some diffi cult decisions, including a restructuring program to reduce overhead and streamline manufacturing processes.” In other words, the company strives to use its assets to earn the greatest possible return. How well has the company managed its assets over the five-year period shown here?

2016

2015

2014

Return on assets     

8.8%

11.7%

12.9%

12.3%

Would you recommend Haver Industries shares to a friend who is interested in investing for growth potential? Why or why not?

Homework Answers

Answer #1

Would you recommend Havre Industries shares to a friend who is interested in investing for growth potential? Why or why not?

Solution

Current year sales –previous year sales previous year sales

2016

2015

2014

2013

Sale

68222

56741

51407

43377

%sales growth%

68222-56-56741

56741-51407

51407-43377

43377-40238

56741

51407

43377

40238

11481

5334

8030

3139

56741

51407

43377

40238

%Sale growth

20.2%

10.4%

18.5%

7.8%

Current year EPS- previous year EPS previous EPS

Earn per shares

2.79

2.7

2.34.

1.8

EPS growth %

2.79-2.7

2.7-2.34

2.34-1.8

1.8-1.46

2.7

0.36

0.54

0.34

0.09

0.36

0.54

0.34

2.7

2.34

1.8

1.46

% EPS growth

3.3%

15.4%

30.0%

23.3%

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