Special Project MBA 6203 – Spring 2022 To Be Completed By Commencement of Class Step 1 – Analytics (40 of 100 points)   Using the F S Analysis tab in the “Special Project Excel Template”, report the enclosed information regarding Valero and PBF, based upon the formulas defined in Appendix A,  Managerial Analysis of Financial Statements - Exhibit A

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Special Project MBA 6203 – Spring 2022

To Be Completed By Commencement of Class

Step 1 – Analytics (40 of 100 points)

 

Using the F S Analysis tab in the “Special Project Excel Template”, report the enclosed information regarding Valero and PBF, based upon the formulas defined in Appendix A,  Managerial Analysis of Financial Statements - Exhibit A.3 (page 504) of the Textbook. Do the calculations, submit the information below and utlize the the Excel template that has been provided to calculate your values.  Note that the shaded cells in the Excel spreadsheet are the input cells for the required financial data.

 

                                Valero

2020       Valero

2019                                       PBF

2020       PBF

2019

 

Solvency Ratios

 

Working Capital                                                                                               

Current Ratio                                                                                                    

Acid Test Ratio                                                                                                 

Inventory Turnover                                                                                                       

Days Sales in Receivables                                                                                                            

Days Sales in Inventory                                                                                                

Debt to Equity Ratio                                                                                                       

Times Interest Earned                                                                                                  

 

 

 

                                Valero

2020       Valero

2019                                       PBF

2020       PBF

2019

 

Performance Ratios

 

Asset Turnover                                                                                                

Return of Sales                                                                                                

Return on Assets                                                                                                            

Return on Equity                                                                                                             

Average Interest Rate                                                                                                  

Earnings Per Share                                                                                                         

Price Earnings Ratio                                                                                                        

Dividend Yield                                                                                                  

Dividend Payout                                                                                                              

 

 

Step 2 – Solvency & Performance Analytics

 

Imagine you are reporting to management on the performance of these respective companies. Using the financials statements and the ratios you just calculated, please prepare your comments and remarks in this Word document to the following questions.

 

Solvency Ratios (20 of 100 points)

 

1)            Based upon your analysis of the solvency measures, how would compare the ability of Valero and PBF to withstand a significant credit event such as a recession or other event?

 

 

2)            Has Valero and PBF improved, declined or remained stable with regards to solvency from 2019 to 2020? 

 

 

3)            Search the internet or financial statements and define the interest rate Valero and PBF pay on their debt.

 

4)            Provide any other observations you think are meaningful with regards to solvency measures. 

 

 

 

 

Performance Ratios (20 of 100 points)

 

1)            Compare and comment upon the relative performance on each of the Performance Ratios for Valero over the period 2019 – 2020. Did Valero’s performance improve, decline or remain stable?

 

 

2)            Compare and comment upon the relative performance on each of the Performance Ratios for PBF over the period 2019 – 2020. Did PBF performance improve, decline or remain stable?

 

 

 

3)            Compare and comment over the relative performance Valero versus PBF for the period 2019 – 2020. Which company do you think performed better?

 

 

 

 

 

4)            What happened in 2020 that may have resulted in steep performance declines?

 

5)            Provide any other comments or observations that you think are interesting or meaningful with regard to performance ratios.

 

 

Cash Flow Analysis (20 of 100 points)

 

A simplified cash flow statement for Valero Energy has been provided in the template Valero Cash  Flow  tab in the “Special Project Excel Template” and is noted herein..

 

 

 

 

Based upon your review, answer the following:

 

1.            How much more cash did Valero generate from operating activities above net income?  Does this surprise you the significant difference between cash generation from operations and net income? How much  is the difference and why is it generated?

 

 

 

 

 

 

2.            How much cash each year did Valero generate from operations in excess of its capital expenditure requirements?  Can it fund its capital requirements from operations?

 

 

 

 

 

 

3.            Did Valero add meaningful debt in 2019 and 2020 or did it simply replace existing debt?

 

 

4.            Did Valero generate enough cash from operations each year to support  it’s capital expenditures and treasury stock purchases /  common stock dividends? Or did it use debt to continue paying dividends? Why would a company continue to pay dividends if it had to borrow to continue to do so?

 

 

 

 

 

 

Useful General Info Regarding the Cash Flow Statement

 

•             Net cash providing by Operating Activities can be thought of as how much cash are we generating from the normal day to day operations of the business, including income from operations plus changes in working capital items such as inventory, accounts payable and accounts receivable.  You will note you add back non-cash items such as depreciation and deferred taxes net income to derive

 

•             Cash Used in Investing Activities can be thought of as how much are we investing in the business with regards to capital expenditures and acquisitions of assets.

 

•             Cash Flows from Financing Activities are typically debt repayments / issuance of payments as well  as dividend payments to stockholders and major acquisitions.

 

 

 

 

 

 

Upon Completion of the Assignment

 

 

Upon completion of the assignment take the following steps:

 

1)            Upload the Excel spreadsheet you have completed to MBC site. Go to the Appendix A -Managerial Analysis of Financial Statements chapter in the e-texbook in the Special Project Due Date file. Use the “Submission” button to execute the upload. Ensure your last name is included in the file name.

 

2)            Upload the Word document you have completed to the MBC site. Go to the Appendix A -Managerial Analysis of Financial Statements chapter in the e-texbook in the Special Project Due Date file. Use the “Submission” button to execute the upload. Ensure your last name is included in the file name.

 

3)            For clarity the location of the “Submission” Button is Dashboard\Courses\MBA 6203(Spring 2022)\Appendix A- Managerial Analysis \ Special Project Due Date

 

 

4)            Email both the completed Excel spreadsheet and the completed Word document to the professor.

 

 

AdditionaI Financial Information

 

Valero and PBF both operate in the same industry, the petroleum refining industry. However, the two companies have significantly different size as Valero is one of the largest in the industry while PBF is one of the midsize companies in the industry.

 

PBF Energy Stock Price

 

12/31/2018         32.67

12/31/2019         31.07

12/31/2020         7.10

12/31/2021         12.99

 

Valero Stock Price

 

12/31/2018         73.48

12/31/2019         93.20

12/31/2020         56.57

12/31/2021         75.11