Computron Case
Enviado por sof_soni • 6 de Enero de 2015 • 1.063 Palabras (5 Páginas) • 197 Visitas
MINI CASE: CAPITAL BUDGETING, FINANCIAL MANAGEMENT & CASH FLOW
You are, a recent graduate of the University of Tennessee with four years of banking experience, were recently brought in as assistant to the chairman of the board of Computron Industries, a manufacturer of electronic calculators.
The company doubled its plant capacity, opened new sales offices outside its home territory, and launched an expensive advertising campaign. Computron’s results were not satisfactory, to put it mildly. Its board of directors, which consisted of its president and vice-president plus its major stockholders (who were all local business people), was most upset when directors learned how the expansion was going. Suppliers were being paid late and were unhappy, and the bank was complaining about the deteriorating situation and threatening to cut off credit. As a result, Al Watkins, Computron’s president, was informed that changes would have to be made, and quickly, or he would be fired. Also, at the board’s insistence you were brought in and given the job of assistant to Fred Campo, a retired banker who was Computron’s chairman and largest stockholder. Campo agreed to give up a few of his golfing days and to help nurse the company back to health, with your help.
You began by gathering financial statements and other data, and you must help to answer the following questions for Campo.
Balance Sheets
Assets 2006 2007
Cash $ 9,000 $ 7,282
Short-term investments. 48,600 20,000
Accounts receivable 351,200 632,160
Inventories 715,200 1,287,360
total current assets $ 1,124,000 $ 1,946,802
Gross fixed assets 491,000 1,202,950
Less: accumulated depreciation 146,200 263,160
net fixed assets $ 344,800 $ 939,790
Total assets $ 1,468,800 $ 2,886,592
Liabilities and equity 2006 2007
Accounts payable $ 145,600 $ 324,000
Notes payable 200,000 720,000
Accruals 136,000 284,960
total current liabilities $ 481,600 $ 1,328,960
Long-term debt 323,432 1,000,000
Common stock (100,000 shares) 460,000 460,000
Retained earnings 203,768 97,632
total equity $ 663,768 $ 557,632
Total liabilities and equity $ 1,468,800 $ 2,886,592
Income Statements
2006 2007
Sales $ 3,432,000 $ 5,834,400
Cost of goods sold 2,864,000 4,980,000
Other expenses 340,000 720,000
Depreciation 18,900 116,960
total operating costs $ 3,222,900 $ 5,816,960
EBIT $ 209,100 $ 17,440
Interest expense 62,500 176,000
EBT $ 146,600 $ (158,560)
Taxes (40%) 58,640 (63,424)
Net income $ 87,960 $ (95,136)
Other data 2006 2007
Stock price $ 8.50 $ 6.00
Shares outstanding 100,000 100,000
EPS $ 0.880 $ (0.951)
DPS $ 0.220 $ 0.110
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