Financial analysis project, Financial Management

Assignment Help:

Financial Analysis Project:

  1. 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.
  2. 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.
  3. There is one warehouse for shipping of books and one plant for manufacturing.
  4. 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.
  5. The IPO took place at the beginning of 2009.
  6. The CD/DVDs were customized beginning in 2008. The MP3 players were built beginning in the start of 2009.
  7. The online gaming company was purchased for $30,000,000 and both Elizabeth and Andrew initiated the process.
  8. 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.
  9. It has some type of international operations, hence the need for a "translation gain or loss" in owner's equity.
  10. 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



Related Discussions:- Financial analysis project

Define floating rate notes, Define Floating Rate Notes Floating-rate n...

Define Floating Rate Notes Floating-rate notes (FRNs) are commonly medium-term bonds along with their coupon payments indexed to some reference rate.  Common reference rates a

Factors considered in assigning a credit rating, Credit rating agenci...

Credit rating agencies carry out credit rating. Companies appoint these agencies to assign credit rating for their corporate issues. The rating agencies may condu

What are the financing methods, Q. What are the financing methods? - Th...

Q. What are the financing methods? - The export transaction could be correlated to a bill of exchange. If this bill was established (guaranteed) by the bank it could be discoun

Calculate the average interest rate , At the end of 1922, your great grandf...

At the end of 1922, your great grandfather (g.g.f.) established a trust fund to be used in order to help a later generation of the family obtain a university education. The ultimat

Define the meaning of overtrading, Define the meaning of Overtrading Wh...

Define the meaning of Overtrading When  a  company  is  trading  at  a  very  fast  pace,  it  would be  generating  sales  on  credit  with  speed, so have a large volume of t

What do you mean by financial leverage, Q. What do you mean by Financial Le...

Q. What do you mean by Financial Leverage? Financial Leverage: - The financial leverage perhaps defined as the tendency of the residual net profit to vary disproportionately wi

Benefits of e-trading, QUESTION (a) (i) Outline some capabilities of E-...

QUESTION (a) (i) Outline some capabilities of E-Trading. (ii) List three benefits of E-Trading. (b) (i) How can privacy be affected in E-Banking? (ii) Outline two meas

Available bid capacity for a bidder, A vailable bid capacity We saw th...

A vailable bid capacity We saw the criterion that qualifies the bidder. Now we will learn about the bid capacity. There are chances that a bidder might acquire more contrac

Explain savings and loan associations, Savings and loan associations Hi...

Savings and loan associations Historically savings along with loan associations (S&Ls) and thrift institutions have concentrated mostly on residential mortgages by acquiring fu

Is depreciation the loss of value of fixed assets, Is depreciation the loss...

Is depreciation the loss of value of fixed assets No. An operative (and not a pseudo-philosophical) explanation of depreciation might be: it is a number that allows us to save

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd