Financial Management Finance Case Analysis Needs To Be Completed By April 8th, 2025
Scorpio87
4233-XLS-ENGFlashMemorySupplementalSpreadsheet.xlsxExhibit 1
| Flash Memory, Inc. | |||
| Exhibit 1 Income Statements, 2007 - 2009 ($000s except earnings per share) | |||
| 2007 | 2008 | 2009 | |
| Net sales | $77,131 | $80,953 | $89,250 |
| Cost of goods sold | $62,519 | $68,382 | $72,424 |
| Gross margin | $14,612 | $12,571 | $16,826 |
| Research and development | $3,726 | $4,133 | $4,416 |
| Selling, general and administrative | $6,594 | $7,536 | $7,458 |
| Operating income | $4,292 | $902 | $4,952 |
| Interest expense | $480 | $652 | $735 |
| Other income (expenses) | -$39 | -$27 | -$35 |
| Income before income taxes | $3,773 | $223 | $4,182 |
| Income taxes (a) | $1,509 | $89 | $1,673 |
| Net income | $2,264 | $134 | $2,509 |
| Earnings per share | $1.52 | $0.09 | $1.68 |
| (a) In years 2007 and after, Flash's effective combined federal and state income tax rate was 40%. | |||
Exhibit 2
| Flash Memory, Inc. | |||
| Exhibit 2 Balance Sheets, 2007 - 2009 ($000s except number of shares outstanding) | |||
| December 31, | |||
| 2007 | 2008 | 2009 | |
| Cash | $2,536 | $2,218 | $2,934 |
| Accounts receivable | $10,988 | $12,864 | $14,671 |
| Inventories | $9,592 | $11,072 | $11,509 |
| Prepaid expenses | $309 | $324 | $357 |
| Total current assets | $23,425 | $26,478 | $29,471 |
| Property, plant & equipment at cost | $5,306 | $6,116 | $7,282 |
| Less: Accumulated depreciation | $792 | $1,174 | $1,633 |
| Net property, plant & equipment | $4,514 | $4,942 | $5,649 |
| Total assets | $27,939 | $31,420 | $35,120 |
| Accounts payable | $3,084 | $4,268 | $3,929 |
| Notes payable (a) | $6,620 | $8,873 | $10,132 |
| Accrued expenses | $563 | $591 | $652 |
| Income taxes payable (b) | $151 | $9 | $167 |
| Other current liabilities | $478 | $502 | $554 |
| Total current liabilities | $10,896 | $14,243 | $15,434 |
| Common stock at par value | $15 | $15 | $15 |
| Paid in capital in excess of par value | $7,980 | $7,980 | $7,980 |
| Retained earnings | $9,048 | $9,182 | $11,691 |
| Total shareholders' equity | $17,043 | $17,177 | $19,686 |
| Total liabilities & shareholders' equity | $27,939 | $31,420 | $35,120 |
| Number of shares outstanding | 1,491,662 | 1,491,662 | 1,491,662 |
| (a) Secured by accounts receivable. | |||
| (b) To avoid a penalty for underpayment of income taxes, Flash made equal estimated tax payments quarterly on the 15th of | |||
| April, June, September, and December of each year. The total of these four quarterly payments was required to equal at | |||
| least the lesser of (a) 90% of the taxes that would actually be incurred in the same year, or (b) 100% of the taxes due | |||
| on income of the prior year. | |||
| For informational purposes only: | |||
| Notes payable / accounts receivable | 60.2% | 69.0% | 69.1% |
| Notes payable / shareholders' equity | 38.8% | 51.7% | 51.5% |
| Notes payable / total capital | 28.0% | 34.1% | 34.0% |
Exhibit 3
| Flash Memory, Inc. | |
| Exhibit 3 Key Forecasting Assumptions and Relationships for 2010 Through 2012 | |
| Line Item | Assumption or Ratio |
| Cost of goods sold | 81.10% of sales |
| Research and development | 5.0% of sales |
| Selling, general and administrative | 8.36% of sales |
| Interest expense | Beginning of year debt balance × interest rate |
| Other income (expenses) | $50,000 of expense each year |
| Cash | 3.3% of sales |
| Accounts receivable | 60 days sales outstanding |
| Inventories | 52 days of cost of good sold |
| Prepaid expenses | 0.4% of sales |
| Property, plant & equipment at cost | Beginning PP&E at cost + capital expenditures |
| Accumulated depreciation | Beginning A/D + 7.5% of beginning PP&E at cost |
| Accounts payable | 30 days of purchases |
| Purchases | 60% of cost of goods sold |
| Accrued expenses | 0.73% of sales |
| Income taxes payable | 10% of income taxes expense |
| Other current liabilities | 0.62% of sales |
Exhibit 4
| Flash Memory, Inc. | ||||||||
| Exhibit 4 Selected Financial Information for Flash Memory, Inc., and Selected Competitors, 2007 through 2009 | ||||||||
| Flash Memory, Inc. | Micron Technology | |||||||
| 2007 | 2008 | 2009 | 30-Apr-10 (a) | 2007 | 2008 | 2009 | 30-Apr-10 (a) | |
| Sales ($ millions) | 77 | 81 | 89 | 5,688 | 5,841 | 4,803 | ||
| EPS ($) | 1.52 | 0.09 | 1.68 | -0.42 | -2.10 | -2.29 | 1.46 | |
| Dividend per share ($) | -- | -- | -- | -- | -- | -- | ||
| Closing stock price ($) | n/a | n/a | n/a | 7.25 | 2.64 | 10.56 | 9.35 | |
| Shares outstanding (millions) | 1.492 | 1.492 | 1.492 | 769.1 | 772.5 | 800.7 | 847.6 | |
| Book Value per share ($) | 11.43 | 11.52 | 13.20 | 10.08 | 8.00 | 5.81 | 6.61 | |
| ROE | 13.28% | 0.78% | 12.75% | -4.13% | -26.21% | -39.43% | 21.00% | |
| Capitalization (book value) | ||||||||
| Debt | 28% | 34% | 34% | 24% | 31% | 40% | 33% | |
| Equity | 72% | 66% | 66% | 76% | 69% | 60% | 67% | |
| Beta coefficient | n/a | 1.25 | ||||||
| SanDisk Corporation | STEC, Inc. | |||||||
| Sales ($ millions) | 3,986 | 3,351 | 3,567 | 189 | 227 | 354 | ||
| EPS ($) | 0.84 | -8.82 | 1.83 | 3.71 | 0.20 | 0.09 | 1.47 | 1.29 |
| Dividend per share ($) | -- | -- | -- | -- | -- | -- | ||
| Closing stock price ($) | 33.17 | 9.60 | 28.99 | 39.84 | 8.74 | 4.26 | 16.34 | 13.90 |
| Shares outstanding (millions) | 227.7 | 225.3 | 227.4 | 229.3 | 49.8 | 50.0 | 49.4 | 50.3 |
| Book Value per share ($) | 22.64 | 15.27 | 17.18 | 18.13 | 3.72 | 3.63 | 5.65 | 5.48 |
| ROE | 3.70% | -57.74% | 10.63% | 17.87% | 5.40% | 2.36% | 26.06% | 18.90% |
| Capitalization (book value) | ||||||||
| Debt | 15% | 22% | 21% | 19% | 0% | 0% | 0% | 0% |
| Equity | 85% | 78% | 79% | 81% | 100% | 100% | 100% | 100% |
| Beta coefficient | 1.36 | 1.00 | ||||||
| (a) Security analyst estimates for year-end EPS $ and Return on Equity; actual data on April 30, 2010, for all other items. |
