What risk factors should bob be most concerned

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Reference no: EM13488177

Longs Jewelers

Balance Sheet

For the Years Ending June 30, 20x1, 20x2, 20x3 and 20x4

 

 

 

 

20x1

20x2

20x3

20x4

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash

 

 

$-4,824

$413

$-4,150

$7,637

Accounts Receivable

 

7,886

6,100

5,000

4,368

Inventory

 

 

186,450

188,237

111,455

99,351

Total Current Assets

 

189,512

194,750

112,305

111,356

Long-Term Assets

 

 

 

 

 

Equipment

 

139,497

150,790

149,332

152,942

Less Accumulated Depreciation

-63,592

-82,639

-99,311

-116,049

Equipment (net)

 

75,905

68,151

50,021

36,893

Other Assets

 

 

 

1,458

1,458

Total Long-Term Assets

75,905

68,151

51,479

38,351

 

 

 

 

 

 

 

Total Assets

 

$265,417

$262,901

$163,784

$149,707

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts Payable

 

$151,743

$140,000

$140,000

$141,328

Long-Term Liabilities

 

 

 

 

Loans from Shareholders

19,471

17,200

16,200

44,177

Notes Payable

 

206,377

201,846

133,436

70,684

Total Long-Term Liabilities

225,848

219,046

149,636

114,861

 

 

 

 

 

 

 

Total Liabilities

 

377,591

359,046

289,636

256,189

Common Equity

 

 

 

 

 

Common Stock

 

1,000

1,000

1,000

1,000

Retained Earnings*

 

-113,174

-97,145

-126,852

-107,482

Total Equity

 

-112,174

-96,145

-125,852

-106,482

 

 

 

 

 

 

 

Total Liabilities and Equity

$265,417

$262,901

$163,784

$149,707

 

 

 

 

 

 

 

*Prior period adjustments made

 

 

 

 

to balance in retained earnings

 

-6,417

 

1,669

 

 

 

 

 

 

 

 

Longs Jewelers

Discussion Questions

1.      Complete a financial analysis of Longs Jewelers including a cash flow statement and ratio analysis and discuss your findings.

2.      Identify critical non-quantitative issues that should be considered in the decision process.

3.      What risk factors should Bob be most concerned about regarding his decision?

4.      Identify possible ethical or values-based issues that could impact any decision.

5.      What should Bob and Bonnie do?

 

Reference no: EM13488177

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