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BUSN460 Devry Senior Project Week 3: Individual Financial Analysis Project – CanGo Intranet

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BUSN460 Devry Senior Project
Individual Financial Analysis Project
Week 3

Assumptions:
1. 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.
2. 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.
3. There is one warehouse for shipping of books and one plant for manufacturing.
4. 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.
5. The IPO took place at the beginning of 2009.
6. The CD/DVDs were customized beginning in 2008. The MP3 players were built beginning in the start of 2009.
7. The online gaming company was purchased for 30,000,000 and both Elizabeth and Andrew initiated the process.
8. 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.
9. It has some type of international operations, hence the need for a “translation gain or loss” in owner’s equity.
10. It has an extraordinary loss from fire and a sale of a segment of its business in 2009.

Balance Sheet
ASSETS Dec 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 32,000,000
Total Current Assets 202,020,000

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
Total Current Liabilities 37,500,000

Long Term Debt 57,400,000

Preferred Stock, 100 par value per share, 100,000 authorized, 0 shares issued and outstanding -
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 Dec 31, 2009 Dec 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) -
Total Operating Expenses (32,560,000) (5,600,000)
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

Instructions:
Go to the CanGo intranet found in the Report Guide tab under Course Home
Use the financial statements from the most recent year to fill in the table below.
You may find some formulae calling for an average, e.g., average inventory, average receivables.
Because we only have the Balance sheet for one year, you can only use the one year number not an average.
Assume interest expense is $0.00
Be sure to cite your references

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