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CHAPTER 2
Integrative Problem Donna Jamison was recently hired as a financial analyst by Computron Industries, a manufacturer of electronic components. Her first task was to conduct a financial analysis of the firm covering the last two years. To begin, she gathered the following financial statements and other data.
Balance Sheets 2010 2009
Assets
Cash $ 52,000 $ 57,600
Accounts receivable 402,000 351,200
Inventories 836,000 715,200 Total current assets $1,290,000 $1,124,000
Gross fixed assets 527,000 491,000
Less accumulated depreciation 166,200 146,200 Net fixed assets $ 360,800 $ 344,800 Total assets $1,650,800 $1,468,800
Liabilities and Equity
Accounts payable $ 175,200 $ 145,600
Notes payable 225,000 200,000
Accruals 140,000 136,000 Total current liabilities $ 540,200 $ 481,600
Long-term debt 424,612 323,432
Common stock (100,000 shares) 460,000 460,000
Retained earnings 225,988 203,768 Total equity $ 685,988 $ 663,768 Total liabilities and equity $1,650,800 $1,468,800
Income Statements 2010 2009
Sales $3,850,000 $3,432,000
Cost of goods sold (3,250,000) (2,864,000)
Other expenses ( 430,300) ( 340,000)
Depreciation ( 20,000) ( 18,900)
Total operating costs $3,700,300 $3,222,900
EBIT $ 149,700 $ 209,100
Interest expense ( 76,000) ( 62,500)
EBT $ 73,700 $ 146,600
Taxes (40%) ( 29,480) ( 58,640)
Net income $ 44,220 $ 87,960
EPS $0.442 $0.880
Statement of Cash Flows (2010)
Operating Activities
Net income $ 44,220
Other additions (sources o f cash) Depreciation 20,000 Increase in accounts payable 29,600 Increase in accruals 4,000
Subtractions (uses of cash) Increases in accounts receivable ( 50,800) Increase in inventories (120,800) Net cash flow from operations $( 73,780)
Long-Term Investing Activities
Investment in fixed assets $( 36,000)
Financing Activities
Increase in notes
Integrative Problem Donna Jamison was recently hired as a financial analyst by Computron Industries, a manufacturer of electronic components. Her first task was to conduct a financial analysis of the firm covering the last two years. To begin, she gathered the following financial statements and other data.
Balance Sheets 2010 2009
Assets
Cash $ 52,000 $ 57,600
Accounts receivable 402,000 351,200
Inventories 836,000 715,200 Total current assets $1,290,000 $1,124,000
Gross fixed assets 527,000 491,000
Less accumulated depreciation 166,200 146,200 Net fixed assets $ 360,800 $ 344,800 Total assets $1,650,800 $1,468,800
Liabilities and Equity
Accounts payable $ 175,200 $ 145,600
Notes payable 225,000 200,000
Accruals 140,000 136,000 Total current liabilities $ 540,200 $ 481,600
Long-term debt 424,612 323,432
Common stock (100,000 shares) 460,000 460,000
Retained earnings 225,988 203,768 Total equity $ 685,988 $ 663,768 Total liabilities and equity $1,650,800 $1,468,800
Income Statements 2010 2009
Sales $3,850,000 $3,432,000
Cost of goods sold (3,250,000) (2,864,000)
Other expenses ( 430,300) ( 340,000)
Depreciation ( 20,000) ( 18,900)
Total operating costs $3,700,300 $3,222,900
EBIT $ 149,700 $ 209,100
Interest expense ( 76,000) ( 62,500)
EBT $ 73,700 $ 146,600
Taxes (40%) ( 29,480) ( 58,640)
Net income $ 44,220 $ 87,960
EPS $0.442 $0.880
Statement of Cash Flows (2010)
Operating Activities
Net income $ 44,220
Other additions (sources o f cash) Depreciation 20,000 Increase in accounts payable 29,600 Increase in accruals 4,000
Subtractions (uses of cash) Increases in accounts receivable ( 50,800) Increase in inventories (120,800) Net cash flow from operations $( 73,780)
Long-Term Investing Activities
Investment in fixed assets $( 36,000)
Financing Activities
Increase in notes