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Warrant Officer 1
Join Date: Jan 2008
Posts: 300
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Re: Cntl-V Game
RPM INC.
1. How does RPM report cash?
RPM reports cash on an accrual basis.
2. What assets are included in current assets?
The assets included in Current Assets are Cash and short-term investments, Trade Accounts Receivable, Inventories, Deferred Income Taxes, Prepaid Expenses and Other Current Assets.
3. What does RPM report in the notes to the F.S. regarding cash and short term investments?
RPM reports that they consider all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. They do not believe that they are exposed to any significant credit risk on cash and short-term investments. The carrying amounts of cash and short-term investments approximate fair value.
4. What are short-term investments?
Short-term investments are debt and equity securities that are separated into three portfolios for valuation and reporting purposes. The three portfolios are held-to-maturity, trading, and available-for-sale securities.
5. Does RPM have marketable securities?
Yes, RPM has marketable securities. They are included in other current and long-term assets.
6. What are available-for-sale securities?
Available-for-sale securities are debt and equity securities for which a company does not have the positive intent and ability to hold to maturity.
7. Does RPM have available-for-sale securities?
Yes, RPM has available-for-sale securities. They are reported at fair value, based on quoted market prices. Changes in unrealized gains and losses, net of applicable taxes, are recorded in accumulated other comprehensive income (loss) within stockholders’ equity.
8. What does RPM call its receivables in the notes to the FS?
RPM calls its receivables Financial Instruments.
9. How does RPM state its inventories?
RPM states its inventories at the lower of cost or market, cost being determined on the first-in, first out (FIFO) basis.
10. What are the two main categories of its inventories?
The two main categories of RPM’s inventories are Raw Materials & Supplies and Finished Goods.
11. What does RPM say its primary source of liquidity is?
RPM says that its primary source of liquidity is cash provided from operations, along with the use of available credit lines.
12. How does RPM estimate the amount of its allowance for doubtful accounts?
RPM’s allowance for doubtful account is established by using a combination of specifically identified accounts to be reserved, and a reserve covering trends in collectability. The estimates are based on an analysis of trends in collectability, past experience, and individual account balances identified as doubtful based on specific facts and conditions. Receivable losses are charged against the allowance they confirm uncollectibility.
13. What are the major categories of Property, Plant and, Equipment?
The major categories of Property, Plant, and Equipment are Land, Buildings & and leasehold improvements, and Machinery & Equipment.
14. What does RPM say about its allowance for doubtful accounts in its Management Discussion and Analysis?
RPM states my answer for question 12 from above. It also states that actual collections of trade receivables could differ from their estimates due to changes in future economic or industry conditions or specific customer’s financial conditions.
15. What does RPM say about its inventories in its Management Discussion and Analysis?
RPM states that they use lower of cost or market, cost being determined by FIFO. They also state that inventory costs include raw materials, labor, and manufacturing overhead. They also review their net realizable value of their inventory in detail on an on-going basis. They state that if market conditions differ from their projections, and their estimates prove to be inaccurate, that write downs of inventory values and adjustments to cost of sales may be required.
16. Does RPM have any intangible assets and how are they reported?
Yes, RPM has intangible assets and they report them in the FS notes.
17. What does RPM say about depreciation of long-lived assets?
RPM states that they primarily use the straight-line method of depreciation.
18. What does RPM say about Goodwill and other intangible assets in the notes to the FS?
Yes, RPM has intangible assets and they report them in accordance with the provisions of SFAS No. 142, “Goodwill and Intangible Assets,” and account for business combinations using the purchase method of accounting and accordingly, the assets and liabilities of the entities acquired are recorded at their estimated fair values at the acquisition date.
19. What does RPM say about Goodwill in its Management Discussion and Analysis?
RPM states that they test Goodwill on an annual basis, or more frequently as impairments arise, using a fair-value approach at the reporting unit level.
20. The balance sheet reports “Accrued Loss Reserves.” What does RPM say about this?
RPM states that certain wholly owned subsidiaries, principally Bondex International, Inc., are defendants in various asbestos-related bodily injury lawsuits filed in various state courts with the vast majority of current claims pending in six states-Ohio, Texas, Florida, Mississippi, Maryland, and Illinois. The cases seek unspecified damages for asbestos-related diseases based on alleged exposures to asbestos-containing products previously manufactured by our subsidiaries or others.
21. Did RPM’s debt to equity ratio increase or decrease from 2007 to 2008?
RPM’s debt to equity ratio increased from .67 to .69.
22. How does RPM intend to decrease this ratio subsequent to May, 2008?
23. What are RPM’s values as of 5/31/08 and 5/31/07 for the following:
5/31/08 5/31/07
a. Total Current Assets $1,783,975 $1,570,249
b. Total Current Liabilities 846,361 864,740
c. Working Capital 937,614 705,509
d. Total Assets 3,763,567 3,333,149
e. Total Long-term Debt 1,780,650 1,381,539
f. Total Stockholders Equity 1,136,567 1,086,870
24. How many types of long-term debt and obligations does RPM have?
RPM has 9 types of long-term debt and obligations.
a. What is the total? The total is $1,073,621.
b. What is the current portion? The current portion is $6,934.
c. What does current portion mean? The current portion means
25. What are the Z scores of RPM for 2008 and 2007 and how do you interpret them?
Ratios
1. Current Ratio- the ratio of total current assets to total current liabilities
Current Assets / Current Liabilities
2008 2007
$1,783,975 / 846,361 = 2.1078 $1,570,249 / 864,740 = 1.8158
For 2008, RPM had approximately 2.1 assets to 1 liability. Their current ratio went up approximately 20 percentage points from 2007.
2. Acid Test Ratio-relates total current liabilities to cash, marketable securities, and receivables.
Cash + Short Term Investments + Net Receivables / Current Liabilities
2008 2007
$231,251 + 817, 241 / 846,361 = 1.2388 $159,016 + 744,259 / 864,740 = 1.0445
RPM’s acid test ratio shows that, without inventories, they still had approximately 1.23 current assets to 1 current liability. From 2007 to 2008, RPM’s acid test ratio gained approximately 19 percentage points.
3. Current Cash Debt Coverage- indicates whether or not a company can pay off its current liabilities from its operations in a given year
Net Cash Provided by Operating Activities / Average Current Liabilities
2008 2007
$234,714 / 846,361 = .277 $202,305 / 864,740 = .233
Based on the above ratio information, RPM has a likely chance of having liquidity problems. The company cannot currently meet their obligations to pay their liabilities from internally generated cash flow.
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Xfire: TheBeardedClam
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October 1st, 2008
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