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

Explain calculation firm risk of a capital budgeting project, Explain how t...

Explain how to measure the firm risk of a capital budgeting project. The firm risk of a capital budgeting project calculates the impact of adding a new project to the existing pr

Operating cycle, application of the operating cycle to a vegetable company

application of the operating cycle to a vegetable company

Compute the dividend policy and the value of the firm, Q. Compute the divid...

Q. Compute the dividend policy and the value of the firm? Rate of Return: (i) 15% (ii) 10% (iii)8% Cost of Capital (Ke) = 10% Earning per share (E) = Rs. 10 C

Waht are additional information required in chromex plc, Additional informa...

Additional information required Specification of a time scale for the evaluation. Predict cash flow details year by year for period specified in the time scale. An approxima

Inventory management, A computer products store stocks color graphics monit...

A computer products store stocks color graphics monitors, and the daily demand is normally distributed with a mean of 1.6 monitors and a standard deviation of 0.4 monitor. The lead

Business, Ken started college at the age of 18 with $63,450 already saved, ...

Ken started college at the age of 18 with $63,450 already saved, because 18 years ago his saving account 7.25 per year.

Swap-linked notes, Swap-Linked Notes: Interest rate swaps are derivativ...

Swap-Linked Notes: Interest rate swaps are derivative products which help in transforming the cash flows of existing debt issues. These are not only useful in covering the exis

Evaluate the fair value of the net assets, IFRS 3 Business combinations n...

IFRS 3 Business combinations necessitate goodwill on gaining to be calculated at the date control is gained. The second gaining gives ROB a 75% holding and consequently control o

What are the remedies for overtrading, What are the Remedies for overtradin...

What are the Remedies for overtrading Short-term solutions Speeding up collection from customers. Slowing down payment to suppliers. Maintaining lower inventory

Calculate amount to fund the endowment, On Completion of her introductory f...

On Completion of her introductory finance course, Kieran was so pleased with the amount of useful and interesting knowledge she gained that she convinced her parents, who were weal

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