Financial Statement Analysis

Transcription

1 Chapter 13 Financial Statement Analysis Key Concepts What are the limitations of financial statement analysis? What is horizontal analysis and how is it used? What is vertical analysis and how is it used? How are ratios used to assess liquidity? How are ratios used to assess solvency? How are ratios used to assess profitability? Harcourt, Inc. 13-1

2 FINANCIAL ACCOUNTING INSTRUCTOR S MANUAL Chapter Outline LO 1 Precautions in Statement Analysis Underlying assumptions to financial statements, and changes in these assumptions, require that the reader use the footnotes to aid in comparing one company with another. No one ratio can tell a reader everything they need to know; comparisons are needed: Comparison of a number of ratios Comparison of one ratio for a number of periods of time Comparison with other companies within the same industry conglomerates operate in a number of industries, making comparisons more difficult nonoperating items, accounting changes, and differing accounting methods add to confusion Effects of inflation: Statements are prepared using historical costs, which do not reflect the difference between actual growth in unit sales and growth in sales dollars caused by increases in costs LO 2 LO 3 Horizontal Analysis Horizontal analysis: analysis of financial results over a series of years (Exhibit 13-1, 13-2) Increases or decreases, compared to a base year, are in absolute dollars and as percentages of the base year Publicly held companies must show, annually, the three most recent years in the income statement and statement of cash flows, and two years for the balance sheet many annual reports include a multi-year analysis of selected items and ratios (Exhibit 13-3) trend analysis: tracking items over a series of years changes in the elements of the statement of cash flows are receiving increased attention from analysts Vertical Analysis Common size statements recast all items on the statement as a percentage of a selected item on the statement. On the income statement, this item is net sales. (Exhibit 13-6) two important relationships are gross profit ratio, or the ratio of gross profit to sales, shows the relative growth of cost of goods sold compared to growth in sales profit margin ratio, the ratio of net income to sales, measures management's ability to control expenses often measured using income before tax because management cannot control income tax expense On the balance sheet, all assets are a percent of total assets. Liability and equity accounts are each a percent of total liabilities plus equity (Exhibit 13-5) Allows comparison of two companies that are very different in size Can also be used for one company over a number of years 13-2 Harcourt, Inc.

3 CHAPTER 13 FINANCIAL STATEMENT ANALYSIS Liquidity Analysis and the Management of Working Capital LO 4 Liquidity is a measure of how close to cash the various assets and liabilities of a company are, that is, the length of time before cash will be realized. Working capital is the dollar excess of current assets over current liabilities at a point in time. it is of limited value, since it tells nothing about the composition of working capital, and cannot be used in comparing companies of different sizes management of working capital, however, is essential to a company's short-term success Current ratio = Current Assets Current Liabilities Standards exist for different industries despite the 2:1 rule of thumb analysts use Composition of current assets and current liabilities is important in interpretation, particularly the proportion of noncash assets Acid test ratio, also known as quick ratio, is a stricter measure of the ability to pay current debts. Excludes inventory and prepaid assets Quick assets = cash + marketable securities + accounts receivable Acid test ratio = Cash + Marketable Securities + Short term Receivables Current Liabilities Quick ratio of below 1:1 may indicate a need to liquidate marketable securities to pay obligations, regardless of market prices of the securities at the time In assessing this ratio, information such as credit terms extended to the company by its creditors, and by the company to its customers, along with due dates of other obligations, are important For many companies, an acid-test ratio below 1 is not desirable Limitations of both ratios: Almost all debts require payment in cash Both ratios measure liquidity at one point in time Cash flow from operations to current liabilities ratio: since cash flow from operating activities looks at cash flow over time, it can be used to measure cash flow over the year available to cover debts. Cash flow from operations to current liabilities ratio = Net Cash Provided by Operating Activities Average Current Liabilities Accounts receivable turnover ratio measures the efficiency of the collection process: Accounts receivable turnover ratio = Net Credit Sales Average Accounts Receivable An activity ratio, over a period of time, not just one point Another way to measure efficiency is by measuring how long accounts remain in accounts receivable: Number of Days Sales in Receivable = number of days in period accounts receivable turnover Harcourt, Inc. 13-3

4 FINANCIAL ACCOUNTING INSTRUCTOR S MANUAL Inventory can also be measured for efficiency of management: Inventory turnover measures number of times inventory is purchased, sold, and replaced during a year Inventory Turnover Ratio = Cost of Goods Sold Average Inventory Number of days' sales in inventory tells us how long it will take to sell the average item of inventory Number of Days sales in inventory = days in period inventory turnover increase could signal obsolete inventory, problems with sales, or high prices causing reduced demand Cash to cash operating cycle is the time between purchase of merchandise and receipt of cash from sale of that merchandise: Cash to cash cycle = days' sales in inventory + days' sales in accounts receivable LO 5 Solvency Analysis Solvency is the ability to remain in business over the long term, and to remain financially healthy over the period during which both long- and short-term debt will be outstanding. Debt-to-equity ratio measures the relationship between liabilities and equity: Debt to equity ratio = Sometimes measured as Total Liabilities Total Stockholders' Equity total liabilities total liabilities + total stockholders' equity Times interest earned measures the ability to meet current-year interest payments: Times interest earned = Net Income + Interest Expense + Income Tax Expense Interest Expense Limitations are that it only covers interest, not principal it is accrual-based, and does not measure cash available to meet obligations numerator contains various noncash adjustments and denominator measures interest expense, not cash interest payments Debt service coverage ratio measures the adequacy of cash generated by operations in covering debt obligations: Debt service coverage ratio = cash flow from operations before interest and tax payments interest and principal payments Sometimes the numerator used is earnings before interest, taxes, depreciation and amortization The usefulness depends on changes in current assets and liabilities during a period Numerator and denominator figures can be found in the statement of cash flows or footnotes 13-4 Harcourt, Inc.

5 CHAPTER 13 FINANCIAL STATEMENT ANALYSIS Cash flow from operations to capital expenditures ratio measures the ability of a company to finance acquisitions of long-lived assets from operations: Cash flow from operations to capital expenditures ratio = cash flow from operations cash paid for acquisitions total dividends Profitability Analysis LO 6 Profitability measures management's ability to use resources available to earn a return on funds invested. Return is a relationship between income earned by the company and investments made by various groups Return on assets is the broadest measure, calculating return on investments by all providers of capital denominator is average total assets, the sum of all the investments numerator is some measure of income that reflects all providers of capital interest expense must be added back to net income, so that we have income before anyone's return, creditors or stockholders, is deducted should add back interest net of tax, since net income is net of tax Return on assets = Net Income Components of return on assets + Interest Expense, Net of Tax Average Total Assets return on sales * turnover or net income net sales * net sales average total assets Return on stockholders' equity measures the return to common stockholders, after the debt return is accounted for: Return on stockholders equity = Net Income Preferred Dividends Average Common Stockholders' Equity Net income is measured after interest is deducted; common equity equals assets less liabilities Return on assets and return on equity are tied together in a phenomenon called leverage, the practice of using borrowed funds and amounts received from preferred shareholders to earn a higher overall return on common equity If the company can earn an overall rate that is higher than the rates they pay to preferred shareholders and debtholders, it has been successful in its use of outside money, or can be said to have employed favorable leverage If the company's net income should fall, and they pay more to these groups than they earn overall, they will have unfavorable leverage and be at risk Earnings per share (EPS) allows shareholders to calculate what their share of earnings is, and compare it to what they paid for the stock: Earnings per share = Net Income Preferred Dividends Weighted Average Number of Common Shares Outstanding Price-earnings (PE) ratio relates the price of a share of stock to earnings per share: PE ratio = current maret price per share earnings per share Harcourt, Inc. 13-5

6 FINANCIAL ACCOUNTING INSTRUCTOR S MANUAL Dividend ratios evaluate a company's dividend policies. Dividend payout ratio measures how much of the earnings actually go to the shareholders: Dividend payout ratio = common dividends per share earnings per share Dividend yield ratio measures the return on an investment measured by dividends paid: Dividend yield ratio = common dividends per share market price per share NOTE: Exhibit 13-8 in the textbook summarizes the most commonly used financial ratios. Students may want to mark it for reference Harcourt, Inc.

7 CHAPTER 13 FINANCIAL STATEMENT ANALYSIS Lecture Suggestions The Wrigley comparative statistics in Exhibit 13-3 can generate a good discussion of what can be found by comparing more than one statistic without doing any calculations. LO 2 If students have been assigned exercises from the "Activities" section of this book involving comparison of companies, they will have encountered situations where companies of very different sizes had to be compared. Relating common size statements to students' ways of dealing with these differences can launch a discussion on the use of common size statements. LO 3 The cash to cash cycle and its components, the days in inventory and the days in accounts receivable, can be explained in conjunction with the current ratio to assess the adequacy of the company's current ratio. Similarly, days in accounts receivable measures how "quick" accounts receivable actually is. LO 4 Students understand the concept of interest as the return on their investment in a bank account. From there, they can make the transition to a stockholder's investment in a company, and the return the company produces, in the form of net income. In a bank account, interest is not always withdrawn, but is left to earn more interest than that which would be earned on the initial investment alone. Stockholders do not withdraw as dividends all net income, but leave some invested in the company to generate greater future income. LO 6 The Review Problem at the end of the chapter, using the Wrigley statements, contains sufficient information to use as an in-class example for most of the ratios, including solutions for many ratios. Since students have the statements before them in their books, it is not necessary to reproduce them. Detailed clarification and comment as you review the ratios add to what is given in the solution to the Problem. Harcourt, Inc. 13-7

8 FINANCIAL ACCOUNTING INSTRUCTOR S MANUAL Projects and Activities LO 2 Horizontal Analysis In-class exercise: Wrigley income statement The income statements for 1998, 1997, and 1996 for William Wrigley Jr. Company are presented in the review problem in your textbook. Set up a worksheet with columns similar to the Henderson Company example (Exhibit 13-1) in your textbook to do a horizontal analysis of Wrigley s income statements. Round numbers to tenths of a percent to minimize rounding problems. Do you find any changes that you would consider significant and worthy of further investigation? If so, what are they? Why are they important? Does the horizontal analysis make the comparative income statements more meaningful to you as you try to evaluate Wrigley s performance? If you wished to evaluate the influence of inflation on the Wrigley income statements, what factors would complicate your attempts to do so? Solution ($ million) 1997 to 1998 change 1996 to 1997 change Year ended December $ % $ % Revenues: Net sales $ $ $ Investment & other income Total revenues Costs and expenses Cost of sales Cost (gains) related to factory Closure and sale (10.4) (13.7) (415.1) (16.1) (82.9) Selling, distribution and general administrative Interest (.3) (33.3) (.2) (18.1) Total costs and expenses (1.4) Earnings before income taxes Income taxes (6.2) (4.8) Net earnings $ $ $ If you require or encourage the use of personal computers by your students, either at home or in an oncampus lab, students can set up the table on their own as an outside assignment, using a spreadsheet, and come into class ready to discuss their findings. This will save class time. Growth in expenses outpaced revenue growth. In general, 1998 was a more difficult year than 1997 for the company. The growth rate slowed. Cost of interest and plant closure were significant items. This is not a right answer question. Students are being asked to respond subjectively to the effect of seeing the same information in a different format. Few would have noticed, for example, the relatively smaller growth between 1997 and 1998 compared to 1996 and Harcourt, Inc.

9 CHAPTER 13 FINANCIAL STATEMENT ANALYSIS Inflation can be measured in more than one way. One could look at the growth in costs versus the growth in revenues. Alternatively, inflation could be measured by published standards that record inflation in the economy. This is where problems arise. Since Wrigley does business throughout the world, many inflation rates would be applied to the appropriate figures to make this assessment, and the overall analysis would be difficult and perhaps pointless. Vertical Analysis LO 3 In-class exercise: Wrigley balance sheet Vertical analysis involves recasting a financial statement in a form that eliminates absolute size as a variable, and instead looks at the relative size of each element of the statement. Use the Wrigley comparative balance sheets for 1997 and 1998 in the Review Problem in your textbook. Prepare a set of common size comparative balance sheets. What number will you measure each asset against? What will each liability and equity item be expressed as a percent of? Use a four-column format such as the one in Exhibit Consider the following questions: Did any items change significantly? If so, can you explain the change? Explain the foreign currency conversion: How did the foreign currencies fare against the U.S. dollar, overall, in each of the two years? How did the two years compare? What does this format show that you did not see when you merely compared the two balance sheets? Harcourt, Inc. 13-9

10 FINANCIAL ACCOUNTING INSTRUCTOR S MANUAL Solution ($ and shares million) $ % * $ %* Assets Current assets: Cash and cash equivalents Short-term investments, at amortized cost Accounts receivable (less allowance for doubtful accounts: 1998 $7.5; 1997 $7.5) Inventories Finished goods Raw materials and supplies Other current assets Deferred income taxes current Total current assets Marketable securities at fair value Deferred charges and other assets Deferred income taxes noncurrent Property, plant, and equipment at cost: Land Buildings and building equipment Machinery and equipment Less accumulated depreciation Total assets $ Liabilities and shareholders' equity Current liabilities Accounts payable Accrued expenses Dividends payable Income and other taxes payable Deferred income taxes current Total current liabilities Deferred income taxes noncurrent Other noncurrent liabilities Shareholders' equity: Preferred stock no par value Authorized: 20,000 shares Issued: none Common stock no par value Common stock Authorized: 400,000 shares Issued: shares; shares Class B common stock convertible Authorized: 80,000 shares Issued and outstanding: shares; shares Additional paid-in capital Retained earnings Foreign currency translation adjustment (61.3) (4.03) (65.0) (4.83) Unrealized holding gains on marketable equity securities Common stock in treasury, at cost ( shares; shares) (6.7) (.44) (13.3) (.99) Total stockholders equity Total liabilities and stockholders' equity $ $ Harcourt, Inc.

11 CHAPTER 13 FINANCIAL STATEMENT ANALYSIS * Each asset is expressed as a percentage of total assets; each liability or equity account is expressed as a percentage of total liabilities plus equity. Balance sheet amounts are remarkable for their relative consistency. Changes in the percentages between the two years were all immaterial. Foreign currencies in which Wrigley had holdings declined relative to the dollar in aggregate in both years. The relative decline was slightly less in The absolute dollar statements let the reader see increases (or decreases) in individual items; the common size statements show the relative proportions of the balance sheet items (for example, current assets to total assets, or liabilities to total liabilities plus equity), which may be useful in seeing whether the perceived growth is uniform, or concentrated in certain areas, or shifting between balance sheet accounts. Liquidity Analysis and the Management of Working Capital LO 4 Outside assignment: Dell liquidity Use the income statement, balance sheet, and statement cash flows from the 1998 Annual Report of Dell Computer Corp. 1, reproduced at the end of this Chapter in the book, to work on this and the following exercises. Calculate Dell's current ratio. Use one of the references available in your library to discover what the norm is for this ratio in Dell's industry. How does Dell compare to the norm? Calculate Dell's quick ratio. Is the difference significant between the current and quick ratios? Can you explain what the difference means? Use the calculation of days in accounts receivable to evaluate Dell's current ratio. Based upon the business Dell is in, how would you expect their accounts receivable to differ from the receivables of other companies? Calculate days in inventory for Dell. How does the type of business Dell is in influence the contents of Dell's inventories, and how long these inventories are on hand? Calculate Dell's cash to cash cycle. What factors affect the company s ability to generate cash? Is the cash flow from operations to current liabilities ratio a better indicator of Dell's ability to generate enough cash to satisfy short-term obligations? Why or why not? Solution current assets 3912 = = 1.45 : 1 current liabilities 2697 Current ratios for some related companies: Apple Computer 2.25 Digital Equipment Corp Hewlett Packard 1.48 The quick ratio is somewhat smaller. Students will probably use for quick assets, cash, shortterm investments, and accounts receivable, which compared to current liabilities yield , , = 1.23 : 1 Dell s inventories are not so significant to distort the current ratio. Thus the current ratio, subject to accounts receivable and inventory turnover, is a fair indicator of liquidity. 1 Dell Computer Corporation, 1998 Annual Report, Harcourt, Inc

12 FINANCIAL ACCOUNTING INSTRUCTOR S MANUAL Accounts receivable turnover =. Related companies: Apple Computer 5.5 Digital Equipment Corp. 4.1 Hewlett Packard ,327 (1, ) / 2 = times Days in accounts receivable = = 34.9 days The company collects its accounts receivable, on the average, in 35 days. This does not appear a particularly long collection period, especially when turnover for related companies is noted. Inventory turnover = 9, ( + 251) / 2 = 39.6 times. Days in inventory = = 9.07 days For comparison, inventory turnover in other similar companies is Apple Computer 4.6 Digital Equipment Corp. 4.6 Hewlett Packard 2.8 Inventories behavior will differ because of Dell's business. The company buys inventory in advance of its use in manufacturing. Inventories are not immediately sold. In addition, inventories contain labor and overhead, not just purchased parts. This goes beyond the scope of the course. However, in spite of these factors, turnover is relatively short. It should be noted when evaluating accounts receivable and inventory that the cornerstone of Dell s business approach is universal customization. Computers are sold directly to the customer by Dell, and tailored to each customer s needs. Their products are built to order. Cash to cash cycle = = 44 days. Key factors are the extra steps involved in manufacturing, balanced by Dell s efforts at quick turnaround of inventories. Cash flow from operating activities to current liabilities = 1,592 2,697 =.59 : 1. Notwithstanding the fact that its focus is on cash, which is needed to satisfy liabilities, it is only one indicator. None are better, but must be considered in the context of related ratios, and also in comparison to similar companies. Some comparisons: Apple Computer (.10) Digital Equipment Corp. (.08) Hewlett Packard Harcourt, Inc.

13 CHAPTER 13 FINANCIAL STATEMENT ANALYSIS Solvency Analysis LO 5 Outside assignment: Dell Computer Corp. Dell Computer Corporation last year was the third-largest and fastest growing among all major computer systems companies worldwide. 2 They have not grown to that status while ignoring profitability. People within Dell as well as outside analysts pay attention to key measures of the company s ability to use the resources available to it. Calculate Dell's debt to total capitalization (a form of debt to equity) ratio (use total liabilities + stockholders' equity as the denominator) for 1998 and How has it changed? Does Dell appear to depend heavily on debt financing? How do they compare to similar companies? Study Dell s Statement of Cash Flows. How is Dell likely to finance fixed assets in the foreseeable future? Solution Debt to total capitalization ratio for 1998 = and, for 1997, = 1,908 2,993 = 63.7% 2,975 4,268 = 69.7 % Compared to other companies, with debt at 75% to 90% of total financing not uncommon, Dell does not look overly leveraged. The ratio changed little from 1997 to It is useful to remind students that it is good management for a business to use debt for a portion of its financing if it can earn a higher rate of return on the funds obtained than the borrowing rate for the debt. Apple Computer 28.2 % Digital Equipment Corp % Hewlett Packard 51.5 % Since Dell has more than adequate cash flow from operations to pay back its current debt in full even after capital expenditures, it is in a good position to decide to either expand using operating cash, or to borrow additional money at advantageous rates (see exercise on leverage) with no immediate risk of not meeting principal or interest payments. Profitability Analysis LO 6 Ethical decision: Return on assets A company owns two hotels, both in large cities. Revenues for the two hotels are similar. However, one building is about two years old, and the other was built ten years ago. For each manager, a portion of annual compensation is based on return on assets above a guideline set by the company for all hotels in the chain. After carefully studying the financial information available to her, the manager of the new hotel decides that she is at a disadvantage because of this new building, and decides to compensate by recalculating depreciation for the building using an accelerated method. Why does the new building put this manager at a disadvantage relative to her compensation? Can depreciation be calculated differently for reporting and managerial evaluation? Why or why not? What problem would this decision present for the company as a whole? Do you think that a company has any flexibility in how it calculates return on assets (or any ratio, for that matter) for internal use? 2 Op. Cit. Harcourt, Inc

14 FINANCIAL ACCOUNTING INSTRUCTOR S MANUAL Solution What would you, as the company officer who supervises both managers, suggest as a solution to this problem? The manager is at a disadvantage because the net book value of her assets, which will include the new building and fixtures, will be much higher than that of the older building. Thus, for comparable net income, she will show a lower return on assets. The increase in performance would not be a genuine improvement, merely a form of book cooking. It would be surprising if she had the freedom to unilaterally make this decision. However, the company s formula for calculating executive compensation is not subject to the rules of reporting, but is an internally governed matter. For the company as a whole, unless they can show some justification to the contrary, like assets should be treated in the same way. Thus, they would not use two different depreciation methods for two managers.. Although different assets can be depreciated differently, it would be difficult to make a distinction between two buildings. For internal purposes that is for numbers that will not be published the company does have flexibility. They can change the definition of total assets to, for example, cost rather than net book value, or even to current market value. Even in published figures, some variation is found, leading the wise reader to conclude that it is best, if you want to be sure you are comparing the same numbers for two companies, to calculate the ratios yourself. Book cooking notwithstanding, the manager of the newer building does have a legitimate complaint. The two managers are not being evaluated equally. The supervisor could set different standards for each hotel, or change the elements of the calculation to compensate for differences between facilities. Evaluation systems frequently raise controversy, and companies resort to detailed, complex bonus formulae to eliminate bias. The use of target figures for return can serve as a disincentive to capital investments if new assets appear to penalize managers. Note to instructor: For the sake of consistency, and to show how the ratios taken together present a more complete picture, Dell was used for most ratio calculations in this Chapter. However, many of the ratios were introduced earlier in the text, and exercises for them appear in this manual using other companies Harcourt, Inc.

15 Consolidated Statement of Financial Position 3 Dell Computer Corporation ($ 000) February 1, February 2, Assets (in millions) Current assets: Cash $ 320 $ 115 Marketable securities 1,524 1,237 Accounts receivable, net 1, Inventories Other current assets Total current assets 3,912 2,747 Property and equipment, net Other assets Total Assets $4,268 $2,993 Liabilities and Stockholders Equity Current liabilities: Accounts payable $ 1,643 $ 1,040 Accrued liabilities 1, Total current liabilities 2,697 1,658 Long-term debt Deferred revenue on warranty contracts Other liabilities Commitments on contingent liabilities Total liabilities 2,975 1,908 Put options Stockholders equity: Preferred stock: $.01 par value; shares issued: shares outstanding: none Common stock: $.01 par value; shares issued and outstanding: 644 and 692, respectively Retained earnings Other (61) (36) Total stockholders equity 1, Total liabilities + stockholders equity $4,268 $2,993 CHAPTER 13 FINANCIAL STATEMENT ANALYSIS 3 Op. Cit. Harcourt, Inc

16 FINANCIAL ACCOUNTING INSTRUCTOR S MANUAL Consolidated Statement of Operations Dell Computer Corporation ($ 000) February 1 Fiscal Year January (in millions) Net revenue $ 12,327 $ 7,759 $ 5,296 Cost of sales 9,605 6,093 4,229 Gross margin 2,722 1,666 1,067 Operating expenses: Selling, general and administrative 1, Research, development and engineering Total operating expenses 1, Operating income 1, Financing and other income Income before taxes and extraordinary loss 1, Provision for income taxes (benefit) Net income before extraordinary loss Extraordinary loss, net of taxes ---- (13) ---- Net income Preferred stock dividends (12) Net income available to common stockholders $ 944 $ 518 $ 260 Earnings per common share (in whole dollars): Income before extraordinary loss $ 1.44 $ 0.75 $ 0.36 Extraordinary loss, net of taxes ---- (.02) ---- Earnings per common share $ 1.44 $ 0.73 $ 0.36 Diluted earnings per common share (in whole dollars): Income before extraordinary loss $ 1.28 $ 0.68 $ 0.33 Extraordinary loss, net of taxes (.02) Earnings per common share $ 1.28 $ 0.66 $ 0.33 Weighted average shares outstanding: Basic Fully diluted Harcourt, Inc.

17 CHAPTER 13 FINANCIAL STATEMENT ANALYSIS Consolidated Statement of Cash Flows Dell Computer Corporation ($ 000) February 1 Fiscal Year January (in millions) Cash flows from operating activities: Net income $ 944 $ 518 $ 272 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Other Changes in: Operating working capital (195) Non-current assets and liabilities Net cash provided by operating activities 1,592 1, Cash flows from investing activities: Marketable securities: Purchases (12,305) (9,538) (4,545) Maturities and Sales 12,017 8,891 4,442 Capital expenditures (187) (114) (101) Net cash used in investing activities (475) (761) (204) Cash flow from financing activities: Purchase of common stock (1,023) (495) - Repurchase of 11% Senior Notes - (95) - Issuance of common stock under employee plans Cash received from sale of equity options Preferred stock dividends paid other (1) - (14) Net cash provided by financing activities (898) (533) 34 Effect of exchange rate changes on cash (14) (8) 7 Net increase in cash Cash at beginning of period Cash at end of period $ 320 $ 115 $ 55 Harcourt, Inc