Bus 657 Week 1 Assignment Essay

1161 Words Sep 6th, 2013 5 Pages
Financial Statements for 2010:

Jaedan Industries | A: Income Statement | For the year ending December 31, 2010 | | | Sales | $42,000,000 | Cost of Goods Sold | $26,460,000 | Gross Profit | $15,540,000 | Operating Expenses: | | Selling, General and Administrative | $1,621,000 | Depreciation | $800,000 | Earnings before interest and taxes | $13,119,000 | Interest Expense | $375,200 | Earnings before taxes | $12,743,800 | Taxes | $4,332,892 | Net Income | $8,410,908 | Dividends paid | $2,102,727 | Addition to Retained Earnings | $6,308,181 |

Jaedan Industries | B: Statement of Retained Earnings | For the year ending December 31, 2010 | | | Retained Earnings
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operating activities: | | Net income | $8,410,908 | Depreciation | $800,000 | Increase in Accounts Receivable | ($2,555,500) | Increase in Inventory | ($908,000) | Increase in Accounts Payable | $190,000 | Increase in Accruals | $150,000 | Cash provided by operating activities | $6,087,408 | | | Cash flow from investment activities | | Increase in gross fixed assets | ($2,932,000) | Cash provided (consumed) by investing activities | ($2,932,000) | | | Cash flow from financing activities | | Increase in notes payable | $22,000 | Dividends paid: | | Preferred | ($8,000) | Common | ($2,102,727) | Cash provided by financing activities | ($2,088,727) | | | Net increase in cash and marketable securities | $1,066,681.00 |

Free Cash Flow:

OCF = [$13,119,000 * (1 - .34)] + $800,000 = $9,458,540
Change in Fixed Assets = $2,932,000
Change in Current assets = $4,530,181
Change in Accounts Payable = $190,000
Change in Accruals = $150,000

FCF = $9,458,540 - $2,932,000 – ($4,530,181 - $190,000 - $150,000) = $2,336,359

Ratios:

| Jaedan | Industry | | 2009 | 2010 | 2009 | 2010 | Liquidity Ratios | Current Ratio | 2.7 | 3.5 | 2.9 | 3.3 | Quick Ratio | 1.8 | 2.5 | 1.4 | 2.2 | Activity Ratios | Inventory

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