Assignment 2 Essay

1748 WordsSep 26, 20157 Pages
A B C D E F G H I 1 12/9/2012 2 3 Chapter 3 Mini Case 4 5 The first part of the case, presented in Chapter 3, discussed the situation of Computron Industries after an expansion 6 program. A large loss occurred in 2013, rather than the expected profit. As a result, its managers, directors, and investors 7 are concerned about the firm’s survival. 8 9 Jenny Cochran was brought in as assistant to Gary Meissner, Computron’s chairman, who had the task of getting the company back into a sound financial position. Computron’s 2012 and 2013 balance sheets and income statements, together 11 with projections for 2014, are shown in the following tables. The tables also show the 2012 and 2013 financial ratios, along 12 with industry average data. The 2014 projected financial statement data represent Cochran’s and Meissner’s best guess for 13 2014 results, assuming that some new financing is arranged to get the company “over the hump.” 14 15 Input Data: 16 2012 2013 2014 17 Year-end common stock price $8.50 $6.00 $12.17 18 Year-end shares outstanding 100,000 100,000 250,000 19 Tax rate 40% 40% 40% 20 Lease payments $40,000 $40,000 $40,000 21 22 Balance Sheets 23 24 25 Assets 2012 2013 2014 26 Cash and equivalents $9,000 $7,282 $14,000 27 Short-term investments $48,600 $20,000 $71,632 28 Accounts receivable $351,200 $632,160 $878,000 29 Inventories $715,200 $1,287,360 $1,716,480 30 Total current assets $1,124,000 $1,946,802 $2,680,112 31 Gross Fixed Assets $491,000 $1,202,950 $1,220,000 32 Less Accumulated Dep. $146,200 $263,160 $383,160 33 Net Fixed Assets $344,800 $939,790 $836,840 34 Total Assets $1,468,800 $2,886,592 $3,516,952 35 36 Liabilities and equity 37 Accounts payable $145,600 $324,000 $359,800 38 Notes payable $200,000 $720,000 $300,000 39 Accruals $136,000 $284,960 $380,000 40 Total current liabilities $481,600 $1,328,960 $1,039,800 41 Long-term bonds $323,432

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