EXHIBIT C2.1 KF Income Statements: 2012–2013 2012 2013 Sales $6,572,800 $7,811,500 Cost of goods sold Gross margin 4,896,700 $ 1,676,100 5,866,200 $1,945,300 1,492,200 Administrative 1,281,700 72,000 $ 322,400 37,900 $ 284,500 113,800 $ 170,700 Depreciation Earnings before interest and taxes 86,000 $ 367,100 Interest 31,600 Earnings before taxes $ 335,500 Taxes (at 40%) 134,200 Net income $ 201,300 EXHIBIT C2.2 KF Balance Sheets: 2012–2013 2012 2013 Assets $ 300,000 $ 915,000 $ 700,000 $ 36,200 Cash $ 244,000 Accounts receivable $1,106,600 $1,222,300 $ 46,800 Inventory Other current Current assets $1,951,200 $2,619,700 $ 340,000 ($ 135,000) $ 205,000 $2,361,200 $ 493,600 ($ 233,800) $ 259,800 $2,879,500 Gross fixed assets Accumulated depreciation Net fixed assets Total assets Liabilities and Net Worth $ 345,700 $ 63,200 $ 164,300 $ 573,200 $ 316,000 $ 948,000 $ 524,000 $2,361,200 $ 544,800 $ 63,200 $ 156,100 $ 764,100 $ 252,800 $ 1,137,600 $ 725,000 $2,879,500 Accounts payable Notes payable Accruals Current liabilities Long-term debt Common stock (62,000 shares outstanding) Retained earnings Total liabilities and net worth
EXHIBIT C2.1 KF Income Statements: 2012–2013 2012 2013 Sales $6,572,800 $7,811,500 Cost of goods sold Gross margin 4,896,700 $ 1,676,100 5,866,200 $1,945,300 1,492,200 Administrative 1,281,700 72,000 $ 322,400 37,900 $ 284,500 113,800 $ 170,700 Depreciation Earnings before interest and taxes 86,000 $ 367,100 Interest 31,600 Earnings before taxes $ 335,500 Taxes (at 40%) 134,200 Net income $ 201,300 EXHIBIT C2.2 KF Balance Sheets: 2012–2013 2012 2013 Assets $ 300,000 $ 915,000 $ 700,000 $ 36,200 Cash $ 244,000 Accounts receivable $1,106,600 $1,222,300 $ 46,800 Inventory Other current Current assets $1,951,200 $2,619,700 $ 340,000 ($ 135,000) $ 205,000 $2,361,200 $ 493,600 ($ 233,800) $ 259,800 $2,879,500 Gross fixed assets Accumulated depreciation Net fixed assets Total assets Liabilities and Net Worth $ 345,700 $ 63,200 $ 164,300 $ 573,200 $ 316,000 $ 948,000 $ 524,000 $2,361,200 $ 544,800 $ 63,200 $ 156,100 $ 764,100 $ 252,800 $ 1,137,600 $ 725,000 $2,879,500 Accounts payable Notes payable Accruals Current liabilities Long-term debt Common stock (62,000 shares outstanding) Retained earnings Total liabilities and net worth
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
- Using the data in exhibits C2.1 and C2.3, calculate and analyze the firm’s 2012 and 2013 ratios. Enter the ratios in the table below in the 2012 and 2013 columns, respectively:
|
Ratio Type |
2012 |
2013 |
|
Current (times) |
3.40 |
3.43 |
|
Quick (times) |
2.18 |
1.83 |
|
Debt (%) |
|
|
|
Times interest earned (times) |
|
|
|
Inventory turnover (times) |
|
|
|
Total asset turnover (times) |
|
|
|
Average collections period (days) |
|
|
|
Return on equity (%) |
|
|
Transcribed Image Text:EXHIBIT C2.1 KF Income Statements: 2012–2013
2012
2013
Sales
$6,572,800
$7,811,500
5,866,200
Cost of goods sold
Gross margin
4,896,700
$ 1,676,100
$1,945,300
Administrative
1,281,700
1,492,200
Depreciation
Earnings before interest and taxes
72,000
$ 322,400
86,000
$ 367,100
31,600
$ 335,500
Interest
37,900
$ 284,500
Earnings before taxes
Taxes (at 40%)
113,800
134,200
$ 170,700
$ 201,300
Net income
EXHIBIT C2.2 KF Balance Sheets: 2012–2013
2012
2013
Assets
$ 300,000
$ 915,000
$ 700,000
$ 36,200
$ 1,951,200
$ 340,000
($ 135,000)
$ 205,000
$2,361,200
$ 244,000
$1,106,600
$1,222,300
$ 46,800
Cash
Accounts receivable
Inventory
Other current
Current assets
$2,619,700
$ 493,600
($ 233,800)
$ 259,800
Gross fixed assets
Accumulated depreciation
Net fixed assets
Total assets
$2,879,500
Liabilities and Net Worth
$ 345,700
$ 63,200
$ 164,300
$ 573,200
$ 316,000
$ 948,000
$ 524,000
$2,361,200
$ 544,800
$ 63,200
$ 156,100
$ 764,100
$ 252,800
$ 1,137,600
$ 725,000
$2,879,500
Accounts payable
Notes payable
Accruals
Current liabilities
Long-term debt
Common stock (62,000 shares outstanding)
Retained earnings
Total liabilities and net worth
Transcribed Image Text:EXHIBIT C2.3 Financial Ratios for the Electronic Arts Industry
Industry Averages
Current (times)
2.6/1.7/1.3
Quick (times)
1.6/0.8/0.6
Debt %
41/57/71
Times interest earned (times)
7.4/3.9/1.3
Inventory turnover (times)
Total asset turnover (times)
8.1/6.0/3.5
3.5/2.8/2.0
Average collection period (days)
Return on equity %
41/50/68
27.3/19.5/7.8
* Third quartile, median, and first quartile results
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