BUSN460 Individual Financial Analysis Project
Balance Sheet
Income Statement
Assumptions:
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
3 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.
4
5 There is one warehouse for shipping of books and
one plant for manufacturing.
6
7 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.
8
9 The IPO took place at the beginning of 2009.
10
11
The CD/DVDs
were customized beginning in 2008. The MP3 players were built beginning in the
start of 2009.
12
13
The online
gaming company was purchased for $30,000,000 and both Elizabeth and Andrew
initiated the process.
14
15
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.
16
17
It has some
type of international operations, hence the need for a “translation gain
or loss” in owner’s equity.
18
19
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
