LUXIO GOLF CORP.
2009 Income Statement
Sales
$ 285,760.00
Cost of Goods Sold
205,132.00
Depreciation
21,950.00
Earnings Before Interest & Tax
$ 58,678.00
Interest Paid
9,875.00
Taxable Income
$ 48,803.00
Taxes (35%)
17,081.05
Net Income
$ 31,721.95
Dividends
$ 18,000.00
Addition to Retained Earnings
13,721.95
LUXIO GOLF CORP.
2008 & 2009 Balance Sheets
Assets
Liabilities & Owner's Equity
2008
2009
2008
2009
Current Assets
Current Liabilities
Cash
$ 18,270.00
$ 22,150.00
7.75%
Accounts Payable
$ 16,215.00
$ 17,318.00
Accounts Receivable
12,315.00
13,865.00
4.85%
Notes Payable
8,000.00
10,000.00
Inventory
21,584.00
24,876.00
8.71%
Other
11,145.00
14,451.00
Total Assets
$ 52,169.00
$ 60,891.00
Total
$ 35,360.00
$ 41,769.00
Long-term Debt
$ 80,000.00
$ 85,000.00
Fixed Assets
Net Plant & Equipment
$168,326.00
$184,735.00
Owner's Equity
Common Stock & paid in Surplus
$ 20,000.00
$ 20,000.00
Retained Earnings
85,135.00
98,857.00
Total
$105,135.00
$118,857.00
Total Assets
$220,495.00
$245,626.00
Total Liabilities & Owner's Equity
$220,495.00
$245,626.00
- Using the financial statements for 2009 as your ‘base’, assume that Luxio’s sales are 20% higher for 2010. Use this projection to prepare the pro forma statements following the requirements listed below. Assume the change in sales is permanent.
- For the Income Statement:
- Cost of Goods Sold rate is expected to remain constant;
- ‘Depreciation’ and ‘Interest paid’ expenses are expected not to change;
- The Tax rate is expected to decrease to 32%; and
- Management is expected to increase the amount of dividends paid by 5% (therefore, the Dividend payout rate will increase by 5%).
- For the Balance Sheet:
- ‘Current assets’ change in direct proportion to sales;
- ‘Fixed assets’ are being operated at 100% of capacity;
- ‘Accounts payable’ changes in direct proportion to sales;
- ‘Notes payable’ and ‘Other’ current liabilities do not change;
- ‘Common stock’ remains unchanged; and
- Use ‘Long-term debt’ as the plug variable.
- Determine the amount of External Financing Needed (EFN) under the pro forma assumptions. Detail how this external financing is distributed.
| LUXIO GOLF CORP. | ||||
| 2009 Income Statement | ||||
| Sales | $ 285,760.00 | |||
| Cost of Goods Sold | 205,132.00 | |||
| Depreciation | 21,950.00 | |||
| Earnings Before Interest & Tax | $ 58,678.00 | |||
| Interest Paid | 9,875.00 | |||
| Taxable Income | $ 48,803.00 | |||
| Taxes (35%) | 17,081.05 | |||
| Net Income | $ 31,721.95 | |||
| Dividends | $ 18,000.00 | |||
| Addition to Retained Earnings | 13,721.95 | |||
| LUXIO GOLF CORP. | |||||||||||
| 2008 & 2009 Balance Sheets | |||||||||||
| Assets | Liabilities & Owner's Equity | ||||||||||
| 2008 | 2009 | 2008 | 2009 | ||||||||
| Current Assets | Current Liabilities | ||||||||||
| Cash | $ 18,270.00 | $ 22,150.00 | 7.75% | Accounts Payable | $ 16,215.00 | $ 17,318.00 | |||||
| Accounts Receivable | 12,315.00 | 13,865.00 | 4.85% | Notes Payable | 8,000.00 | 10,000.00 | |||||
| Inventory | 21,584.00 | 24,876.00 | 8.71% | Other | 11,145.00 | 14,451.00 | |||||
| Total Assets | $ 52,169.00 | $ 60,891.00 | Total | $ 35,360.00 | $ 41,769.00 | ||||||
| Long-term Debt | $ 80,000.00 | $ 85,000.00 | |||||||||
| Fixed Assets | |||||||||||
| Net Plant & Equipment | $168,326.00 | $184,735.00 | Owner's Equity | ||||||||
| Common Stock & paid in Surplus | $ 20,000.00 | $ 20,000.00 | |||||||||
| Retained Earnings | 85,135.00 | 98,857.00 | |||||||||
| Total | $105,135.00 | $118,857.00 | |||||||||
| Total Assets | $220,495.00 | $245,626.00 | Total Liabilities & Owner's Equity | $220,495.00 | $245,626.00 | ||||||
- Using the financial statements for 2009 as your ‘base’, assume that Luxio’s sales are 20% higher for 2010. Use this projection to prepare the pro forma statements following the requirements listed below. Assume the change in sales is permanent.
- For the Income Statement:
- Cost of Goods Sold rate is expected to remain constant;
- ‘Depreciation’ and ‘Interest paid’ expenses are expected not to change;
- The Tax rate is expected to decrease to 32%; and
- Management is expected to increase the amount of dividends paid by 5% (therefore, the Dividend payout rate will increase by 5%).
- For the Balance Sheet:
- ‘Current assets’ change in direct proportion to sales;
- ‘Fixed assets’ are being operated at 100% of capacity;
- ‘Accounts payable’ changes in direct proportion to sales;
- ‘Notes payable’ and ‘Other’ current liabilities do not change;
- ‘Common stock’ remains unchanged; and
- Use ‘Long-term debt’ as the plug variable.
- Determine the amount of External Financing Needed (EFN) under the pro forma assumptions. Detail how this external financing is distributed.
Related questions
20. Brigman Inc. has the following financial statementinformation for 2009 and 2008:
Balance Sheet Information: | 2009 | 2008 | |
Assets: | |||
Cash | $ 5,000 | $ 12,000 | |
Accounts receivable | 14,000 | 10,000 | |
Inventory | 35,000 | 30,000 | |
Total current assets | $ 54,000 | $ 52,000 | |
Property and Equipment (net) | 50,000 | 45,000 | |
Total assets | $104,000 | $ 97,000 | |
Liabilities: | |||
Accounts payable | $ 9,000 | $ 3,000 | |
Salaries payable | 3,000 | 1,000 | |
Total current liabilities | $ 12,000 | $ 4,000 | |
Notes payable | 20,000 | 25,000 | |
Total liabilities | $ 32,000 | $ 29,000 | |
Stockholders' Equity: | |||
Common stock | $ 40,000 | $ 40,000 | |
Retained earnings | 32,000 | 28,000 | |
Total stockholders' equity | $ 72,000 | $ 68,000 | |
Total liabilities and stockholders' equity | $104,000 | $ 97,000 | |
Income Statement Information: | |||
Net sales | $650,000 | $556,000 | |
Cost of goods sold | 380,000 | 290,000 | |
Gross profit | $270,000 | $266,000 | |
Selling and administrative expenses | 75,000 | 70,000 | |
Interest expense | 4,000 | 10,000 | |
Income before income taxes | $191,000 | $186,000 | |
Income tax expense | 57,300 | 56,300 | |
Net income | $133,700 | $129,700 | |
Other Information: | |||
Number of common shares outstanding | 4,000 | 4,000 | |
Dividends paid | $ 0 | $ 0 | |
Market price per share (12/31) | $40 | $30 | |
Income tax rate | 30% | 30.27% |
Required: Compute the following ratios for the year endingDecember 31, 2009: (round to two decimal places)
A. | Inventory turnover |
B. | Return on assets (ROA) ratio |
C. | Asset turnover ratio |
D. | Earnings per share (EPS) |
E. | Price earnings (P/E) ratio. |
F. Return on common stockholdersâ equity
G. Current ratio
H. Quick ratio
I. Debt-to-equity ratio
Adjusted Trial Balance | ||||||||
Account Name | Debit | Credit | Debit | Credit | ||||
cash | $ 35,000.00 | $ 35,000.00 | ||||||
accounts receivable | $ 5,600.00 | $ 6,689.00 | ||||||
food inventory | $ 21,000.00 | $ 21,000.00 | ||||||
merchandise inventory | $ 62,500.00 | $ 62,500.00 | ||||||
prepaids | $ 3,400.00 | $ 7,500.00 | ||||||
computers | $ 30,000.00 | $ 30,000.00 | ||||||
accumulated amort-computers | $ 12,000.00 | $ 18,000.00 | ||||||
bakery equipment | $ 90,000.00 | $ 90,000.00 | ||||||
accumulated amort-bakery eqpmt | $ 18,000.00 | $ 27,000.00 | ||||||
furniture & fixtures | $ 150,000.00 | $ 150,000.00 | ||||||
accumulated amort-furniture | $ 15,000.00 | $ 22,500.00 | ||||||
accounts payable | $ 18,000.00 | $ 18,000.00 | ||||||
accrued liabilities | $ 1,700.00 | |||||||
interest payable | $ 17,600.00 | |||||||
dividend payable | $ 5,000.00 | |||||||
long term loan | $ 220,000.00 | $ 220,000.00 | ||||||
common shares | $ 50,000.00 | $ 50,000.00 | ||||||
retained earnings | $ 22,000.00 | $ 22,000.00 | ||||||
food revenue | $ 468,500.00 | $ 469,589.00 | ||||||
internet revenue | $ 127,000.00 | $ 127,000.00 | ||||||
merchandise revenue | $ 103,000.00 | $ 103,000.00 | ||||||
food expense | $ 240,000.00 | $ 240,000.00 | ||||||
internet expense | $ 54,000.00 | $ 54,000.00 | ||||||
electricity expense | $ 65,000.00 | $ 65,400.00 | ||||||
telephone expense | $ 20,000.00 | $ 20,400.00 | ||||||
interest expense | $ 17,600.00 | |||||||
salary expense | $ 200,000.00 | $ 200,900.00 | ||||||
insurance expense | $ 9,000.00 | $ 4,900.00 | ||||||
supplies expense | $ 8,000.00 | $ 8,000.00 | ||||||
depreciation expense | $ 22,500.00 | |||||||
rent expense | $ 60,000.00 | $ 60,000.00 | ||||||
dividend expense | $ 5,000.00 | |||||||
$ 1,053,500.00 | $1,053,500.00 | $1,101,389.00 | $1,101,389.00 | |||||
INCOME STATEMENT | ||||||||
Income: | ||||||||
food revenue | $ 469,589.00 | |||||||
internet revenue | $ 127,000.00 | |||||||
merchandise revenue | $ 103,000.00 | $699,589.00 | ||||||
Expenses: | ||||||||
food expense | $ 240,000.00 | |||||||
internet expense | $ 54,000.00 | |||||||
electricity expense | $ 65,400.00 | |||||||
telephone expense | $ 20,400.00 | |||||||
salary expense | $ 200,900.00 | |||||||
insurance expense | $ 4,900.00 | |||||||
supplies expense | $ 8,000.00 | |||||||
depreciation expense | $ 22,500.00 | |||||||
rent expense | $ 60,000.00 | $676,100.00 | ||||||
Operating Income | $ 23,489.00 | |||||||
Interest expense | $ 17,600.00 | |||||||
Net Income | $ 5,889.00 | |||||||
BALANCE SHEET | ||||||
ASSETS | LIABILITIES | |||||
Current Assets: | Current liabilities: | |||||
Cash | $ 35,000.00 | Accounts payable | $18,000.00 | |||
Accounts receivable | $ 6,689.00 | accrued liabilities | $ 1,700.00 | |||
Food inventory | $ 21,000.00 | interest payable | $17,600.00 | |||
Merchandise inventory | $ 62,500.00 | dividend payable | $ 5,000.00 | $ 42,300.00 | ||
Prepaids | $ 7,500.00 | $132,689.00 | Long term liabilities: | |||
Fixed Assets: | Long term loan | $220,000.00 | ||||
Computers | $ 30,000.00 | Equity: | ||||
Less accumulated depn | $ 18,000.00 | $ 12,000.00 | Common Shares | $50,000.00 | ||
Bakery equipment | $ 90,000.00 | Retained earnings | $22,889.00 | $ 72,889.00 | ||
Less accumulated depn | $ 27,000.00 | $ 63,000.00 | ||||
Furniture and fixtures | $150,000.00 | |||||
Less accumulated depn | $ 22,500.00 | $127,500.00 | ||||
$335,189.00 | $335,189.00 | |||||
o assess the financial reporting landscape,considering the user needs, constraints, and businessenvironment;
o identify the issues;
o analyze the issues (qualitatively andquantitatively); and
o provide a recommendation for each issueidentified in the case.
1- A) Find net fixed assets ANS: 99586
B) invested capital ANS: 58311
QUESTION:
Cash & Equivalents | 31499 |
Short Term Investments | 11044 |
Cash & Equivs & ST Investments | 42543 |
Receivables (ST) | - |
Inventories | 10271 |
Current Tax Assets | - |
Other Current Assets | 0 |
Total Current Assets | 52814 |
Gross Property Plant & Equip | - |
Accumulated Depreciation | - |
Net Property Plant & Equip | 40707 |
Receivables (LT) | 114497 |
Assets Held for Sale (LT) | - |
Long Term Investments | 2579 |
Intangible Assets | 5945 |
Deferred LT Assets | 5881 |
Discontinued Ops (LT Asset) | - |
Other Assets | 47053 |
Total Assets | 269476 |
Accounts Payable & Accrued Exps | 23036 |
Accounts Payable | - |
Accrued Expenses | 23036 |
Current Debt | 59904 |
Other Current Liabilities | 28510 |
Total Current Liabilities | 111450 |
LT Debt & Leases | 94428 |
Pensions & OPEB | 24934 |
Discontinued Ops (LT Liab) | - |
Deferred LT Liabilities | 7405 |
Minority Interests | 1122 |
Other Liabilities | 17180 |
Total Liabilities | 256519 |
Temporary Equity | - |
Common Share Capital | 19 |
Additional Paid-In Capital | 4872 |
Retained Earnings | 12461 |
Accum Other Comprehensive Income | -3562 |
Treasury Stock | 833 |
For Curr Trans (BS) | - |
Other Equity | 0 |
Total Equity | 12957 |
Total Liabilities & Equity | 269476 |
