RUNNING HEADER: MINI CASE 1: COMPUTRON INDUSTRIES
Mini Case 1: Computron Industries
Stephanie Walker
Averett University
Dr. Jeffrey Woo
BSA554-M724-SU16
Comprehensive Financial Management
May 2016
Mini Case 1: Computron Industries
In 2012, Computron Industries, a manufacturer of electronic calculators, has been going through some expansion and growth. Some factors of this growth have include new sales offices, doubling of plant faculties and an expensive advertising campaign. Implementation of the growth and strategic plan has been mismanaged by its administration under Robert Edwards, President and Chairman of the Board. Suppliers and lenders are being paid late, banks are complaining, and threating to cut off credit from lenders. …show more content…
Investments have decreased as funds were invested in net plant and equipment. Liabilities and equity were increased due to Jenny Cochran’s decision to invest more in long-term bonds and common stocks. Net sales and account receivable have both increased.
The statement of cash flow demonstrates a negative net cash flow due to operating activities. The company should increase in account receivable, inventories, and prepaid expense. The growth of inventory will facilitate and add force to the expansion. The cash flow from financing activities, shows investing activities have been more negative. The company should use this amount in operating activities. Jenny Cochran has placed investments more in a net fixed assets. Unfortunately, funds were borrowed from outside the company which will make the net income become more …show more content…
Calculating net operating profit after taxes or NOPAT.
EBIT is the profit earned by the business by selling product before deducting financing cost and taxes.
Net operating profit after taxes = Earnings before interest and taxes (1 – tax rate)
NOPAT = EBIT(1-tax rate)
Calculating net operating profit for 2013
NOPAT = $17,440 (1 – 0.40)
NOPAT = $17,440 x 0.60
NOPAT = $10,464
Calculating net operating profit for 2012
NOPAT = $209,100(1-0.40)
NOPAT = $209,100 x 0.60
NOPAT = $125,460
Net operating current assets for 2013: Operating current asset = cash + accounts receivable + inventory Operating current asset = $7,282 + $632,160 + $1,287,360 Operating current asset = $1,926,802
Net operating current assets for 2012: Operating current asset = $9,000 + $351,200 + $715,200 Operating current asset = $1,075,400
Net operating current liabilities for 2013: Operating current liabilities = accruals + accounts payable Operating current liabilities = $284,900 + $324,400 Operating current liabilities = $608, 960
Net operating current liabilities for 2012: Operating current liabilities = $136,000 + $145,600 Operating current liabilities = $281,600
Net operating work capital for
Mini Case 1: Computron Industries
Stephanie Walker
Averett University
Dr. Jeffrey Woo
BSA554-M724-SU16
Comprehensive Financial Management
May 2016
Mini Case 1: Computron Industries
In 2012, Computron Industries, a manufacturer of electronic calculators, has been going through some expansion and growth. Some factors of this growth have include new sales offices, doubling of plant faculties and an expensive advertising campaign. Implementation of the growth and strategic plan has been mismanaged by its administration under Robert Edwards, President and Chairman of the Board. Suppliers and lenders are being paid late, banks are complaining, and threating to cut off credit from lenders. …show more content…
Investments have decreased as funds were invested in net plant and equipment. Liabilities and equity were increased due to Jenny Cochran’s decision to invest more in long-term bonds and common stocks. Net sales and account receivable have both increased.
The statement of cash flow demonstrates a negative net cash flow due to operating activities. The company should increase in account receivable, inventories, and prepaid expense. The growth of inventory will facilitate and add force to the expansion. The cash flow from financing activities, shows investing activities have been more negative. The company should use this amount in operating activities. Jenny Cochran has placed investments more in a net fixed assets. Unfortunately, funds were borrowed from outside the company which will make the net income become more …show more content…
Calculating net operating profit after taxes or NOPAT.
EBIT is the profit earned by the business by selling product before deducting financing cost and taxes.
Net operating profit after taxes = Earnings before interest and taxes (1 – tax rate)
NOPAT = EBIT(1-tax rate)
Calculating net operating profit for 2013
NOPAT = $17,440 (1 – 0.40)
NOPAT = $17,440 x 0.60
NOPAT = $10,464
Calculating net operating profit for 2012
NOPAT = $209,100(1-0.40)
NOPAT = $209,100 x 0.60
NOPAT = $125,460
Net operating current assets for 2013: Operating current asset = cash + accounts receivable + inventory Operating current asset = $7,282 + $632,160 + $1,287,360 Operating current asset = $1,926,802
Net operating current assets for 2012: Operating current asset = $9,000 + $351,200 + $715,200 Operating current asset = $1,075,400
Net operating current liabilities for 2013: Operating current liabilities = accruals + accounts payable Operating current liabilities = $284,900 + $324,400 Operating current liabilities = $608, 960
Net operating current liabilities for 2012: Operating current liabilities = $136,000 + $145,600 Operating current liabilities = $281,600
Net operating work capital for