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CanGo Financial Analysis, BUSN460 assignment help
BUSN460 Senior Project
Individual Financial Analysis Project (CanGo)
Week 3
Assumptions:
- At the beginning of 2009, CanGo purchased the online gaming company. This purchase was for cash, paid for through the proceeds of the IPO and results in goodwill.
- 90% of the online book sales comes from JIT, the other 10% through the inventory which CanGo possesses. 100% of the CD/DVD/MP3 come through CanGo inventory. The result is that 80% of ALL sales is JIT and 20% is inventory.
- There is one warehouse for shipping of books and one plant for manufacturing.
- There are three divisions: a CD/DVD/MP3 division, an online gaming division and a books division. All manufacturing takes place in the CD/DVD/MP3 division.
- The IPO took place at the beginning of 2009.
- The CD/DVDs were customized beginning in 2008. The MP3 players were built beginning in the start of 2009.
- The online gaming company was purchased for $30,000,000 and both Elizabeth and Andrew initiated the process.
- The company began in 2006, has a VC infusion in 2007 and 2008. It showed a profit in 2008 and 2009. Its only profitable division is the online book sales division.
- It has some type of international operations, hence the need for a “translation gain or loss” in owner’s equity.
- It has an extraordinary loss from fire and a sale of a segment of its business in 2009.
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Order Paper NowBalance Sheet
| ASSETS | December 31, 2009 | |
| Cash | $20,900,000 | |
| Marketable Securities | $117,000,000 | |
| Accounts Receivable | $33,000,000 | |
| Less: Allowance for Bad Debts | $(880,000) | |
| Net Accounts Receivable | $32,120,000 | |
| Inventory | ||
| Raw Materials | $2,000,000 | |
| Work-in-process | $1,000,000 | |
| Finished Goods | $5,000,000 | |
| Inventory Purchased for Resale | $24,000,000 | |
| Total Inventory | $32,000,000 | |
| Plant, Property and Equipment | $6,700,000 | |
| Less: Accumulated Depreciation | $(320,000) | |
| Net Plant, Property and Equipment | $6,380,000 | |
| Prepaid Expenses | $200,000 | |
| Goodwill and Other Purchased Intangibles | $28,000,000 | |
| Less: Amortization | $(700,000) | |
| Net Goodwill and Other Purchased Intangibles | $27,300,000 | |
| Total Assets | $235,900,000 | |
| LIABILITIES AND OWNERS’ EQUITY | ||
| Accounts Payable | $22,000,000 | |
| Accrued Advertising | $11,800,000 | |
| Other Liabilities and Accrued Expense | $1,400,000 | |
| Current Portion of Long-Term Debt | $2,300,000 | |
| Long Term Debt | $57,400,000 | |
| Preferred Stock, $100 par value per share, | ||
| 100,000 authorized, 0 shares issued and outstanding | $0 | |
| Common Stock, $1 par value per share, | ||
| 250,000,000 shares authorized, 13,000,000 shares | ||
| issued, 12,900,000 outstanding | $13,000,000 | |
| Additional Paid-in-Capital in excess of par value, Common Stock | $117,000,000 | |
| Treasury Stock | $(1,000,000) | |
| Retained Earnings (less Cash Dividends Paid) | $12,000,000 | $11,000,000 |
| Total Liabilities and Owner’s Equity | $235,900,000 |
Income Statement
| December 31, 2009 | December 31, 2008 | |
| Sales Revenues | $51,000,000 | $10,300,000 |
| Less: Sales Returns | $(1,000,000) | $(300,000) |
| Net Sales Revenues | $50,000,000 | $10,000,000 |
| Less: Cost of Goods Sold | $(9,000,000) | $(4,000,000) |
| Gross Profit | $41,000,000 | $6,000,000 |
| Operating Expenses: | ||
| Advertising and Sales | $(26,000,000) | $(3,000,000) |
| Depreciation | $(160,000) | |
| Salaries and Wages | $(1,700,000) | $(1,400,000) |
| Product Development | $(4,000,000) | $(1,200,000) |
| Merger and Acquisition Related Costs, including | ||
| Amortization of Goodwill and Other Intangibles | $(700,000) | $0 |
| Total Operating Expenses | $(32,560,000) | |
| Income from Continuing Operations Before Income Taxes | $8,440,000 | |
| Less: Income Taxes at 35% | $(2,954,000) | |
| Income from Continuing Operations | $5,486,000 | |
| Discontinued Operations: | ||
| Income from Operations of Discontinued Division | ||
| (less applicable income taxes) | $350,000 | |
| Loss on Disposal of Discontinued Division | ||
| (less applicable income taxes) | $(150,000) | |
| Total Gain from Discontinued Operations | $200,000 | |
| Extraordinary Items: | ||
| Loss from fire (less applicable income taxes) | $(200,000) | |
| Net Income | $5,486,000 | |
| Divisional Revenues | ||
| Books | $15,000,000 | $7,000,000 |
| Online gaming | $25,000,000 | |
| Customized MP3/CD/DVD | $10,000,000 | $3,000,000 |
| Customized MP3/CD/DVD Inventory at end of 2009 | $8,000,000 |
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