Indiv Project

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CorpA Balance Sheets


Corporation A
Comparative Balance Sheets
As of December 31

Assets:	20X3	20X2	20X1
Cash	$ 210,000	$ 780,000	$ 1,530,000
Accounts Receivable	315,000	265,000	240,000
Inventory	436,000	405,000	330,000
Prepaid Insurance	15,000	18,000	21,000
Total Current Assets	$ 976,000	$ 1,468,000	$ 2,121,000
Land	1,650,000	1,630,000	1,400,000
Buildings	2,300,000	1,760,000	1,400,000
Less: Accumulated Depreciation	(560,000)	(490,000)	(440,000)
Net Buildings	1,740,000	1,270,000	960,000
Total Long-Term Assets	3,390,000	2,900,000	2,360,000
Total Assets	4,366,000	4,368,000	4,481,000
Liabilities & Stockholder's Equity
Accounts Payable	215,000	134,000	185,000
Salaries and Wages Payable	63,000	49,000	40,000
Dividends Payable	69,702	36,818	0
Notes Payable—Line of Credit	356,000	205,000	98,000
Total Current Liabilities	703,702	424,818	323,000
Notes Payable—Long-Term	1,393,722	949,811	1,017,219
Bonds Payable	1,000,000	1,000,000	1,000,000
Less: Discount on Bonds Payable	(41,583)	(48,317)	(54,603)
Net Bonds Payable	958,417	951,683	945,397
Total Long-term Liabilities	2,352,139	1,901,494	1,962,617
Total Liabilities	3,055,841	2,326,312	2,285,617
Contributed Capital	1,500,000	1,500,000	1,500,000
Retained Earnings	1,449,159	1,080,688	730,383
Treasury Stock	(1,639,000)	(539,000)	(35,000)
Total Stockholders’ Equity (SE)	1,310,159	2,041,688	2,195,383
Total Liabilities & Stockholdler's Equity	$4,366,000	$4,368,000	$4,481,000

CorpA Income Statements


Corporation A
Comparative Income Statements
For the 12 Months Ended December 31
	20X3	20X2	20X1
Sales Revenue	$4,010,000	$3,400,000	$2,300,000
Cost of Goods Sold Expense	(2,520,000)	(1,910,000)	(940,000)
Salaries and Wages Expense	(660,000)	(840,000)	(750,000)
Depreciation Expense-Building	(115,000)	(88,000)	(70,000)
Insurance Expense	(117,000)	(102,000)	(95,000)
Total Expenses	(3,412,000)	(2,940,000)	(1,855,000)
Operating Income	598,000	460,000	445,000
Interest Expense—Notes	(76,911)	(69,591)	(54,749)
Interest Expense—Bonds	(66,734)	(66,286)	(65,868)
Gain (Loss) Sale of Buildings	(2,000)	45,000	(51,000)
Gain (Loss) Sale of Land	(3,000)	43,000	7,000
Total Other	(148,645)	(47,877)	(164,617)
Net Income	$449,355	$412,123	$280,383
Earnings per share	$6.71	$4.74	$2.83

CorpA Statement of Cash Flows

Corporation A
Comparative Statements of Cash Flow
For the 12 Months Ended December 31
For the 12 Months Ended December 31	20X3	20X2
Cash received from customers	$ 3,938,484	$ 3,335,116
Cash paid to suppliers	-2,470,000	-2,022,000
Cash paid for salaries and wages	-646,000	-831,000
Cash paid for insurance	-114,000	-99,000
Cash paid for income taxes	-145,556	-129,709
Cash paid for interest—Bonds	-60,000	-60,000
Cash paid for interest—Notes Payable	-52,740	-66,946
Net Cash from Operating Activities	$ 450,188	$ 126,461
Investment in Land	-300,000	-1,420,000
Investment in Building	-930,000	-640,000
Sale of Building	343,000	287,000
Sale of Land	277,000	1,233,000
Net Cash from Investing Activities	$ (610,000)	$ (540,000)
Proceeds (Payment) Notes Payable	-32,188	128,539
(Purchase) Sale Treasury Stock	-330,000	-440,000
Dividends Paid	-48,000	-25,000
Cash from Financing Activities	$ (410,188)	$ (336,461)
Net Change in Cash	-570,000	-750,000
Beginning Cash	780,000	1,530,000
Ending Cash	$ 210,000	$ 780,000

CorpA Firm & Industry Ratios


Corporation A
Firm and Industry Financial Ratios
	20X3	20X2	20X3/20X2 Industry
Return on Equity	0.27	0.19	0.14
Dividend Payout	0.18	0.15	0.10
Return on Assets	0.10	0.09	0.10
Return on Sales	0.11	0.12	0.11
Asset Turnover	0.92	0.77	1.02	`
Current Ratio	1.39	3.46	2.35
Quick Ratio	0.75	2.46	1.75
Debt/Assets	0.70	0.53	0.35
Accounts Receivable Days	26.40	27.11	19.50
Inventory Days	60.91	70.23	41.50
Accounts Payable Days	25.59	31.73	28.40
Summary: Cash Conversion Days	61.71	65.61	32.60

CorpA Other Information

Corporation A
Common Stock: The firm has 400,000 shares authorized and 100,000 shares issued at year-end 20X1, 20X2, and 20X3.
Treasury Stock: The firm purchased 1,000 shares of treasury stock at year-end 20X1, 12,000 at year-end 20X2, and 20,000 at year-end 20X3.
Market Valuation: The market price of the stock was $31 at year-end 2006, $35 at year-end 20X1, $42 at year-end 20X2, and $55 at year-end 20X3. o
	For valuation purposes, industry experts use the dividend valuation model to value the common equity interest of industry firms. Potential investors’ required rate of return for this firm is 14%; growth rate is 13% for 20X4 and 20X5, and then declines to 12% for all later years.
Market Returns: The stock returns for the market as a whole were as follows: 15.7% in 20X1, 8.2% in 20X2, and 12.1% in 20X3.

CorpB Balance Sheets

Corporation B
Comparative Balance Sheets
As of December 31,
	20X3	20X2	20X1
Cash	210,000	780,000	1,530,000
Accounts Receivable	410,000	360,000	300,000
Less: Allowance for Doubtful Accounts	(4,100)	(14,616)	(1,500)
Net Accounts Receivable	405,900	345,384	298,500
Inventory	436,000	405,000	330,000
Prepaid Insurance	15,000	18,000	21,000
Total Current Assets	1,066,900	1,548,384	2,179,500
Land	1,650,000	1,630,000	1,400,000
Buildings	2,300,000	1,760,000	1,400,000
Less: Accumulated Depreciation	(560,000)	(490,000)	(440,000)
Net Buildings	1,740,000	1,270,000	960,000
Total Long-Term Assets	3,390,000	2,900,000	2,360,000
Total Assets	4,456,900	4,448,384	4,539,500
Accounts Payable	215,000	134,000	185,000
Salaries and Wages Payable	63,000	49,000	40,000
Dividends Payable	93,216	44,178	0
Notes Payable—Line of Credit	356,000	205,000	98,000
Total Current Liabilities	727,216	432,178	323,000
Notes Payable—Long Term	778,032	961,219	939,680
Bonds Payable	1,000,000	1,000,000	1,000,000
Add: Premium on Bonds Payable	89,826	105,753	121,062
Net Bonds Payable	1,089,826	1,105,753	1,121,062
Total LT Liabilities	1,867,857	2,066,973	2,060,743
Total Liabilities	2,595,073	2,499,151	2,383,743
Contributed Capital	1,500,000	1,500,000	1,500,000
Retained Earnings	1,167,827	925,233	691,757
Treasury Stock	(806,000)	(476,000)	(36,000)
Total Stockholders’ Equity (SE)	1,861,827	1,949,233	2,155,757
Total Liabilities and SE	4,456,900	4,448,384	4,539,500

CorpB Income Statements

Corporation B
Comparative Income Statements
For the 12 Months Ended December 31

	20X3	20X2	20X1
Sales Revenue	4,010,000	3,400,000	2,300,000
Cost of Goods Sold Expense	(2,520,000)	(1,810,000)	(940,000)
Salaries and Wages Expense	(660,000)	(840,000)	(750,000)
Depreciation Expense—Building	(115,000)	(88,000)	(70,000)
Bad Debt Expense	(11,000)	(18,000)	(8,000)
Insurance Expense	(117,000)	(102,000)	(95,000)
Total Expenses	(3,423,000)	(2,858,000)	(1,863,000)
Operating Income	587,000	542,000	437,000
Interest Expense—Notes	(52,740)	(66,946)	(51,647)
Interest Expense—Bonds	(44,072)	(44,691)	(45,285)
Loss from Inventory Write-Off	0	(86,000)	0
Gain (Loss) Sale of Buildings	(2,000)	45,000	(1,700)
Gain (Loss) Sale of Land	(3,000)	43,000	7,000
Total Other	(101,812)	(109,637)	(91,633)
Net Income Before Taxes	485,188	432,363	345,367
Income Tax Expense (30 percent rate)	145,556	129,709	103,610
Net Income	339,631	302,654	241,757
Earnings per share	4.04	3.40	2.44

CorpB Statement of Cash Flows

Corporation B
Comparative Statements of Cash Flow
For the 12 Months Ended December 31

	20X3	20X2
Cash received from customers	3,938,484	3,335,116
Cash paid to suppliers	(2,470,000)	(2,022,000)
Cash paid for salaries and wages	(646,000)	(831,000)
Cash paid for insurance	(114,000)	(99,000)
Cash paid for income taxes	(145,556)	(129,709)
Cash paid for interest—Bonds	(60,000)	(60,000)
Cash paid for interest—Notes Payable	(52,740)	(66,946)
Net Cash from Operating Activities	450,188	126,461
Investment in Land	(300,000)	(1,420,000)
Investment in Building	(930,000)	(640,000)
Sale of Building	343,000	287,000
Sale of Land	277,000	1,233,000
Net Cash from Investing Activities	(610,000)	(540,000)
Proceeds (Payment) Notes Payable	(32,188)	128,539
(Purchase) Sale Treasury Stock	(330,000)	(440,000)
Dividends Paid	(48,000)	(25,000)
Cash from Financing Activities	(410,188)	(336,461)
Net Change in Cash	(570,000)	(750,000)
Beginning Cash	780,000	1,530,000
Ending Cash	210,000	780,000

CorpB Firm & Industry Ratios

Benson, Cundiff, & Gilbert
Interview Ratios
Firm and Industry Financial Ratios
			20X3 / 20X2
	20X3	20X2	Industry
Return on Equity	0.25	0.21	0.19
Dividend Payout	0.2	0.16	0.1
Return on Assets	0.11	0.1	0.1
Return on Sales	0.12	0.13	0.11
Asset Turnover	0.9	0.76	1.02
Current Ratio	1.47	3.58	2.35
Quick Ratio	0.85	2.64	1.75
Debt/Assets	0.58	0.56	0.35
Accounts Receivable Days	35.04	35.43	35.68
Inventory Days	60.91	74.11	41.5
Accounts Payable Days	25.59	33.55	28.4
Summary: Cash Conversion Days	70.36	75.98	48.78

CorpB Projected Balance Sheet


Corporation B
Projected Comparative Balance Sheets
As of December 31
	20X3	20X4	20X5	20X6	20X7
Cash	$ - 0	$ - 0	$ - 0	$ - 0	$ - 0
Accounts Receivable	0	40,000	60,000	70,000	0
Inventory	200,000	230,000	250,000	260,000	0
Current Assets	200,000	270,000	310,000	330,000	0
Equipment	400,000	400,000	400,000	400,000	400,000
Less: Accumulated Depr.	0	-132,000	-312,000	-372,000	-400,000
Net Equipment	400,000	268,000	88,000	28,000	0
Other	0	0	0	0	0
Total Long-Term Assets	400,000	268,000	88,000	28,000	0
Total Assets	$ 600,000	$ 538,000	$ 398,000	$ 358,000	$ - 0
Accounts Payable	140,000	161,000	175,000	182,000	0
Total Liabilities	140,000	161,000	175,000	182,000	0
Equity	460,000	377,000	223,000	176,000	0
Total Liabilities & Equity	$ 600,000	$ 538,000	$ 398,000	$ 358,000	$ - 0

CorpBProjected Income Statement


Corporation B
Projected Comparative Income Statements
For the Years Ending December 31
	20X4	20X5	20X6	20X7
Sales Revenue	$ 440,000	$ 510,000	$ 560,000	$ 630,000
Cost of Goods Sold	140,000	160,000	210,000	250,000
Salaries Expense	60,000	75,000	90,000	120,000
Depreciation Expense	132,000	180,000	60,000	28,000
Other Expense	10,000	10,000	10,000	10,000
Total Operating Expenses	342,000	425,000	370,000	408,000
Gain (Loss) Sale Asset	0	0	0	40,000
Net Income Before Taxes	98,000	85,000	190,000	262,000
Income Tax Expense	29,400	25,500	57,000	78,600
Net Income	$ 68,600	$ 59,500	$ 133,000	$ 183,400