Question

a. By how much did Mydeco increase its debt from 2012 to 2016?

b. What was Mydeco's EBITDA/Interest coverage ratio in 2012 and 2016? Did its coverage ratio ever fall below 2.00?

c. Overall, did Mydeco's ability to meet its interest payments improve or decline over this period?

Income Statement	2012	2013	2014	2015	2016
Revenue	405,6	368,3	424,2	505,7	602,8
Cost of Goods Sold	(185.3)	(176.1)	(203.5)	(246.2)	(293.5)
Gross Profit	220,3	192,2	220,7	259,5	309,3
Sales and Marketing	(65.8)	(68.2)	(82.2)	(101.8)	(118.7)
Administration	(60.6)	(57.1)	(59.9)	(64.7)	(79.1)
Depreciation & Amortization	(27.5)	(25.5)	(35.6)	(38.0)	(39.0)
EBIT	66,4	41,4	43	55	72,5
Interest Income (Expense)	(31.8)	(33.9)	(32.6)	(37.4)	(39.4)
Pretax Income	34,6	7,5	10,4	17,6	33,1
Income Tax	(12.1)	(2.6)	(3.6)	(6.2)	(11.6)
Net Income	22,5	4,9	6,8	11,4	21,5
Shares outstanding (millions)	53,4	53,4	53,4	53,4	53,4
Earnings per share	$0.42	$0.09	$0.13	$0.21	$0.40
Balance Sheet	2012	2013	2014	2015	2016
Assets
Cash	47,1	66,4	78,6	69,8	70,7
Accounts Receivable	87,2	68,2	70,7	77,7	88,1
Inventory	34,2	29,7	28,1	29,7	37,2
Total Current Assets	168,5	164,3	177,4	177,2	196
Net Property, Plant & Equip.	246,1	239,9	307,4	350,6	342,3
Goodwill & Intangibles	357,4	357,4	357,4	357,4	357,4
Total Assets	772	761,6	842,2	885,2	895,7
Liabilities & Stockholders' Equity
Accounts Payable	19,8	17,3	22,4	27,3	32,8
Accrued Compensation	7,2	7,1	7,8	7,5	9,5
Total Current Liabilities	27	24,4	30,2	34,8	42,3
Long-term Debt	495,6	495,6	569	593,7	593,7
Total Liabilities	522,6	520	599,2	628,5	636
Stockholders' Equity	249,4	241,6	243	256,7	259,7
Total Liabilities & Stockholders' Equity	772	761,6	842,2	885,2	895,7
Statement of Cash Flows	2012	2013	2014	2015	2016
Net Income	22,5	4,9	6,8	11,4	21,5
Depreciation & Amortization	27,5	25,5	35,6	38	39
Chg. in Accounts Receivable	3,9	19	-2,5	(7.0)	(10.4)
Chg. in Inventory	(2.9)	4,5	1,6	(1.6)	(7.5)
Chg. in Pay. & Accrued Comp.	1,7	(2.6)	5,8	4,6	7,5
Cash from Operations	52,7	51,3	47,3	45,4	50,1
Capital Expenditures	(23.6)	(26.7)	(103.2)	(73.6)	(41.9)
Cash from Investing Activ.	(23.6)	(26.7)	(103.2)	(73.6)	(41.9)
Dividends Paid	(5.3)	(5.3)	(5.3)	(5.3)	(7.3)
Sale (or purchase) of stock	-	-	-	-	-
Debt Issuance (Pay Down)	-	-	73,4	24,7	-
Cash from Financing Activ.	(5.3)	(5.3)	68,1	19,4	(7.3)
Change in Cash	23,8	19,3	12,2	(8.8)	0,9
Mydeco Stock Price	$8.02	$4.29	$4.33	$9.37	$11.45

Answer 1

By how much did Mydeco increase its debt from 2012 to 2016?

5937 = 4956 (1 + g) to the power 4

• G= 4.61 %

What was Mydeco's EBITDA/Interest coverage ratio in 2012 and 2016? Did its coverage ratio ever fall below 2.00?

2012 = (664 + 27.5) / 31.8 = 21.74

2016 = (725 + 39) / 39.4 = 19.39

No, Its coverage ratio never fell below 2.00

Overall, did Mydeco's ability to meet its interest payments improve or decline over this period?

Mydeco's ability to meet its interest payments has declined over this period