Individual Financial Analysis Report
Start on the Individual Financial Analysis Report, due Week 3.Note that this is not a team assignment. Be sure to include proper citations for all references you use.
Go to theCanGo Intranetand pull the financial statements. (Listed Below) Use these to fill out the table found in Doc Sharing labeledFinancial Analysis Project. (Will attach as well)
Assumptions:
- At the beginning of 2009, CanGo purchased the online gaming company. This purchase was for cash, paid for through the proceeds of the IPO and results in goodwill.
- 90% of the online book sales comes from JIT, the other 10% through the inventory which CanGo possesses. 100% of the CD/DVD/MP3 come through CanGo inventory. The result is that 80% of ALL sales is JIT and 20% is inventory.
- There is one warehouse for shipping of books and one plant for manufacturing.
- There are three divisions: a CD/DVD/MP3 division, an online gaming division and a books division. All manufacturing takes place in the CD/DVD/MP3 division.
- The IPO took place at the beginning of 2009.
- The CD/DVDs were customized beginning in 2008. The MP3 players were built beginning in the start of 2009.
- The online gaming company was purchased for $30,000,000 and both Elizabeth and Andrew initiated the process.
- The company began in 2006, has a VC infusion in 2007 and 2008. It showed a profit in 2008 and 2009. Its only profitable division is the online book sales division.
- It has some type of international operations, hence the need for a “translation gain or loss” in owner’s equity.
- It has an extraordinary loss from fire and a sale of a segment of its business in 2009.
Balance Sheet
| ASSETS |
December 31, 2009 |
|
| Cash |
$20,900,000 |
|
| Marketable Securities |
$117,000,000 |
|
| Accounts Receivable |
$33,000,000 |
|
| Less: Allowance for Bad Debts |
$(880,000) |
|
| Net Accounts Receivable |
$32,120,000 |
|
|
|
|
| Inventory |
|
|
| Raw Materials |
$2,000,000 |
|
| Work-in-process |
$1,000,000 |
|
| Finished Goods |
$5,000,000 |
|
| Inventory Purchased for Resale |
$24,000,000 |
|
| Total Inventory |
$32,000,000 |
|
|
|
|
| Plant, Property and Equipment |
$6,700,000 |
|
| Less: Accumulated Depreciation |
$(320,000) |
|
| Net Plant, Property and Equipment |
$6,380,000 |
|
|
|
|
| Prepaid Expenses |
$200,000 |
|
|
|
|
| Goodwill and Other Purchased Intangibles |
$28,000,000 |
|
| Less: Amortization |
$(700,000) |
|
| Net Goodwill and Other Purchased Intangibles |
$27,300,000 |
|
|
|
|
| Total Assets |
$235,900,000 |
|
|
| LIABILITIES AND OWNERS’ EQUITY |
| Accounts Payable |
$22,000,000 |
|
| Accrued Advertising |
$11,800,000 |
|
| Other Liabilities and Accrued Expense |
$1,400,000 |
|
| Current Portion of Long-Term Debt |
$2,300,000 |
|
|
|
|
| Long Term Debt |
$57,400,000 |
|
|
|
|
| Preferred Stock, $100 par value per share, |
|
|
| 100,000 authorized, 0 shares issued and outstanding |
$0 |
|
|
|
|
| Common Stock, $1 par value per share, |
|
|
| 250,000,000 shares authorized, 13,000,000 shares |
|
|
| issued, 12,900,000 outstanding |
$13,000,000 |
|
|
|
|
| Additional Paid-in-Capital in excess of par value, Common Stock |
$117,000,000 |
|
|
|
|
| Treasury Stock |
$(1,000,000) |
|
|
|
|
| Retained Earnings (less Cash Dividends Paid) |
$12,000,000 |
$11,000,000 |
|
|
|
| Total Liabilities and Owner’s Equity |
$235,900,000 |
|
Income Statement
|
December 31, 2009 |
December 31, 2008 |
| Sales Revenues |
$51,000,000 |
$10,300,000 |
| Less: Sales Returns |
$(1,000,000) |
$(300,000) |
| Net Sales Revenues |
$50,000,000 |
$10,000,000 |
| Less: Cost of Goods Sold |
$(9,000,000) |
$(4,000,000) |
| Gross Profit |
$41,000,000 |
$6,000,000 |
|
|
|
| Operating Expenses: |
|
|
| Advertising and Sales |
$(26,000,000) |
$(3,000,000) |
| Depreciation |
$(160,000) |
|
| Salaries and Wages |
$(1,700,000) |
$(1,400,000) |
| Product Development |
$(4,000,000) |
$(1,200,000) |
| Merger and Acquisition Related Costs, including |
|
|
| Amortization of Goodwill and Other Intangibles |
$(700,000) |
$0 |
| Total Operating Expenses |
$(32,560,000) |
|
|
|
|
| Income from Continuing Operations Before Income Taxes |
$8,440,000 |
|
|
|
|
| Less: Income Taxes at 35% |
$(2,954,000) |
|
| Income from Continuing Operations |
$5,486,000 |
|
|
|
|
| Discontinued Operations: |
|
|
| Income from Operations of Discontinued Division |
|
|
| (less applicable income taxes) |
$350,000 |
|
| Loss on Disposal of Discontinued Division |
|
|
| (less applicable income taxes) |
$(150,000) |
|
| Total Gain from Discontinued Operations |
$200,000 |
|
|
|
|
| Extraordinary Items: |
|
|
| Loss from fire (less applicable income taxes) |
$(200,000) |
|
|
|
|
| Net Income |
$5,486,000 |
|
|
| Divisional Revenues |
| Books |
$15,000,000 |
$7,000,000 |
| Online gaming |
$25,000,000 |
|
| Customized MP3/CD/DVD |
$10,000,000 |
$3,000,000 |
| Customized MP3/CD/DVD Inventory at end of 2009 |
$8,000,000 |
|
