ISEE 703 Fa_2024 Financial Data Assignment 3
EnergyCo is a US utility company that distributes electricity to over 1,000,000 residential and
industrial customers and is responsible for electricity generation and the grid on which the
electricity flows. EnergyCo uses a mix of technologies including hydroelectric, wind, nuclear
power, coal, oil and natural gas, however the predominant base-load power is coal provided by
an inefficient coal plant that needs to be decommissioned in the next 10 years.
tric
1%
5%
Oil
6% 5%
Gas
14%
Coal
69%
Over the last 20 years, electricity consumption has increased by 50% while residential rates
have decreased by 13%. EnergyCo has budgeted more than $100 million over the next 5 years
on programs to reduce the growth rate of electricity consumption, however, efficiency and
conservation efforts cannot offset the base-load capacity when the old coal-fired plant is
decommissioned. EnergyCo has decided to build a new power plant to align with the
decommissioning of the coal plant. Managers have some flexibility in the capacity for the new
plant due to the buying and selling of modest amount of power. In fact, in the last year, 40% of
earnings were due to wholesale power. The decision now exists as to which type of technology
to pursue for the additional capacity at the new power plant.
EnergyCo’s financial information is summarized in the table below: (in millions of US $s)
ISEE 703 Fa_2024 Financial Data Assignment 3
2022 2021 2020 2019 2018
Net Sales 8,602.0 7,843.0 7,725.0 5854 5253
Cost of Goods Sold 3,957.0 3,529.0 3,399.0 2342 1944
Gross Profit 4,645.0 4,314.0 4,326.0 3,512.0 3,309.0
Operating Income 1,456.0 1,341.0 1,417.0 1229 1313
Interest Expense (423.0) (350.0) (301.0) -268 -273
Non-Operating Income Expemse 67.0 46.0 17.0 -10 -15
Income before Taxes 1,100.0 1,037.0 1,133.0 951.0 1,025.0
Income taxes 363.0 342.0 374.0 314.0 338.0
Net Income 737.0 695.0 759.0 637.0 687.0
Earning per Share 3.3 3.2 3.5 3.4 3.8
Cash and Cash Equivalents 405.0 156.0 169.0 112 127
Net Receivables 969.0 659.0 659.0 549 477
Inventories 1,247.0 1,090.0 1,022.0 866 827
Other Current Assets 206.0 231.0 220.0 152 89
Total Current Assets 2,827.0 2,136.0 2,070.0 1,679.0 1,520.0
Property and Equipment 17,179.0 16,286.0 15,472.0 15159 12449
Other Assets 3,624.0 3,961.0 3,356.0 3070 2250
Total Assets 23,630.0 22,383.0 20,898.0 19,908.0 16,219.0
Accounts Payable 783.0 765.0 805.0 646 547
Other liabilities 14902 13809 12536 12397 10456
Total Liabilities 15,685.0 14,574.0 13,341.0 13043 11003
Stockholder Equity 7,994.0 7,811.0 7,557.0 6864 5217
*current tax rate =35%
In the past, cost minimization and reliability were the primary criteria when deciding how to
increase capacity. However today, EnergyCo needed to also consider the rising fuel and
transportation costs; the need for fuel diversity to mitigate risks and align with regulatory and
legislative mandates; concerns for climate and environmental factors, and the benefits of
developing renewable energy sources. EnergyCo cannot increase rates without permission from
authorities. The rates charged for electricity were established in a regulatory process that took up
to 18 months for approval. The rates that were agreed to were predominantly based on historical
data of costs plus an allowable return on investment by regulators.
Question:
1) How has EnergyCo been performing financially? What trends have you seen over the
last 5 years? Determine the profit margin, asset turnover, APT, ART, INVT, PPET and
C2C, ROE, ROA, ROFL and summarize these measures in a table. How might these
measures relate back to current supply chain strategies?
