Fundamental Analysis of Ben

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Fundamental Analysis of Ben Jerrys Stock

• By
• Andy Van Inwegen

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Table of Contents

• Definition of Fundamental Analysis
• Income Statement Analysis
• Balance Sheet Analysis
• Overall Decision

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Fundamental What?

• Fundamental Analysis
• screens and classifies financial assets in terms
  of investment quality and expected return
• explores the relationships in a firm and the
  general trend of these relationships over time
• includes making an estimate of expected return
  and relative risk

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Income Statement Analysis

• Years Ended Dec. 27, 1997 Dec. 28, 1996
  Dec. 30, 1995Net Sales
  174,206 167,155
  155,333Cost of Sales 114,284
  115,212 109,125Gross
  Profit 59,922 51,943
  46,208Income BT 6,284
  6,335
  9,405Net Income AT 3,896
  3,926 5,948 Look at
• Change in Income decrease of 2,052
• Change in Sales increase of 18,873

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Balance Sheet Analysis

• For Balance Sheet, look at
• Current Assets
• Current Liabilities
• Profit Margin
• Return on Equity
• Return on Assets
• Price/Earning Ratio
• Debt/Equity Ratio

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Summarized Balance Sheet
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What Does it Mean?

• Profit Margin Net Income/ Revenue
• Return On Equity Net Income/ Total Equity
• Return On Assets Net Income/ Total Assets
• P/E Ratio Price per Share/ Earnings per Share
• Debt/Equity Ratio Long Term Debt/ Owners
  Equity

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Ratio Definitions

• Profit Margin
• measures earnings generated per dollar of sales
• Return On Equity
• measures the profits accruing to shareholders per
  dollar of contributed equity
• Return On Assets
• measures the profitability of the use to which
  assets are being put

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(continued)

• Debt/Equity Ratio
• measures the proportion of capital supplied by
  creditors versus owners
• Price/Earnings Ratio (P/E)
• expresses stock value as multiple of last years
  earnings

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What to Think About

• Increased Sales, yet Decreased NIAT
• Ratio Analysis
• Possibilities of Other Problems/Benefits
• Price of Stock Increasing Over Time

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Chart of Stock Price for 1 Year
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What Do We Want?

• Increase/growth in unit and sales
• Able to retain high return on total assets and
  owners equity
• Increased earnings retention ratio
• Operating and financial leverage is favorable
• Historically, research and development has been
  successful

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Decision Time

• If you own Ben Jerrys stock, do not sell it
• If you do not own Ben Jerrys stock, wait to
  get more information
• the firms financial stability is not consistent