Watson Leisure Time Sporting Goods
Watson Leisure Time Sporting Goods
Devry University
BUSN 379
Exhibit 1 WATSON LEISURE TIME SPORTING GOODS | Income Statement | | 200X | | 200Z | Sales (all on credit) | $1,500,000 | | $2,160,000 | Cost of goods sold | 950,000 | | 1,300,000 | Gross profit | 550,000 | | 860,000 | Selling and administrative expense* | 380,000 | | 590,000 | Operating profit | 170,000 | | 270,000 | Interest expense | 30,000 | | 85,000 | Net income before taxes | 140,000 | | 185,000 | Taxes | 46,120 | | 64,850 | Net income | $ 93,880 | | $ 120,150 | Shares | 40,000 | | 47,000 | Earnings per share | $2.35 | | $2.56 | *Includes $20,000 in lease payments for each year. | | |
Exhibit 2 WATSON LEISURE TIME SPORTING GOODS | Balance Sheet | | 200X | | 200Z | Assets | Cash | $ 20,000 | | $ 20,000 | Marketable securities | 30,000 | | 50,000 | Accounts receivable | 150,000 | | 330,000 | Inventory | 250,000 | | 325,000 | Total current assets | 450,000 | | 725,000 | Net plant and equipment | 550,000 | | 1,169,000 | Total assets | $1,000,000 | | $1,894,000 | Liabilities and Stockholders’ Equity | Accounts payable | $ 100,000 | | $ 200,000 | Notes payable (bank) | 100,000 | | 300,000 | Total current liabilities | 200,000 | | 500,000 | Long-term liabilities | 250,000 | | 550,740 | Total liabilities | 450,000 | | 1,050,740 | Common stock ($10 par) | 400,000 | | 460,000 | Capital paid in excess of par | 50,000 | | 80,000 | Retained earnings | 100,000 | | 303,260 | Total stockholders’ equity | 550,000 | | 843,260 | Total liabilities and stockholders’ equity | $1,000,000 | | $1,894,000 |
Exhibit 3 Selected Industry Ratios | | 200X | | 200Z | Growth in sales | — | | 10.02% | Profit
Devry University
BUSN 379
Exhibit 1 WATSON LEISURE TIME SPORTING GOODS | Income Statement | | 200X | | 200Z | Sales (all on credit) | $1,500,000 | | $2,160,000 | Cost of goods sold | 950,000 | | 1,300,000 | Gross profit | 550,000 | | 860,000 | Selling and administrative expense* | 380,000 | | 590,000 | Operating profit | 170,000 | | 270,000 | Interest expense | 30,000 | | 85,000 | Net income before taxes | 140,000 | | 185,000 | Taxes | 46,120 | | 64,850 | Net income | $ 93,880 | | $ 120,150 | Shares | 40,000 | | 47,000 | Earnings per share | $2.35 | | $2.56 | *Includes $20,000 in lease payments for each year. | | |
Exhibit 2 WATSON LEISURE TIME SPORTING GOODS | Balance Sheet | | 200X | | 200Z | Assets | Cash | $ 20,000 | | $ 20,000 | Marketable securities | 30,000 | | 50,000 | Accounts receivable | 150,000 | | 330,000 | Inventory | 250,000 | | 325,000 | Total current assets | 450,000 | | 725,000 | Net plant and equipment | 550,000 | | 1,169,000 | Total assets | $1,000,000 | | $1,894,000 | Liabilities and Stockholders’ Equity | Accounts payable | $ 100,000 | | $ 200,000 | Notes payable (bank) | 100,000 | | 300,000 | Total current liabilities | 200,000 | | 500,000 | Long-term liabilities | 250,000 | | 550,740 | Total liabilities | 450,000 | | 1,050,740 | Common stock ($10 par) | 400,000 | | 460,000 | Capital paid in excess of par | 50,000 | | 80,000 | Retained earnings | 100,000 | | 303,260 | Total stockholders’ equity | 550,000 | | 843,260 | Total liabilities and stockholders’ equity | $1,000,000 | | $1,894,000 |
Exhibit 3 Selected Industry Ratios | | 200X | | 200Z | Growth in sales | — | | 10.02% | Profit
References: Block, S. B., Hirt, G. A., & Danielsen, B. R. (2009). Ratio analysis. In Foundations of Financial Management (pp. 55-66). McGraw-Hill. http://www.finpipe.com/equity/finratan.htm. (n.d.). Retrieved July 23, 2009, from Financial Pipeline.