Question

You have recently been hired by Corporation X. Their finance person just up and quit and they need the annual report finished up. Knowing that you just finished your MBA and you were a Finance whiz, they have you step in to clean things up.

1. Utilizing the following data you will create an income statement and balance sheet for Corporation X.

2. You will then generate a common size balance sheet and a common size income statement for Corp. X.

Data (all U.S. $s):

Cash: 74,000

Inventories: 870,000

Accounts Receivable: 450,000

Fixed Assets: 420,000

Cost of Goods Sold: 3,560,000

Selling, general, and admin expenses: 360,000

Accounts Payable: 320,000

Notes Payable: 110,000

Accruals: 160,000

Long-term Debt: 420,000

Common Stock: 565,000

Retained Earnings: ?

Sales: 4,250,000

Depreciation and Amortization: 146,000

Taxes (35%): ?

Per Share Data:

EPS: $4.71

Cash dividends per share: $0.95

P/E ratio: 5.0

Market Price (average): $23.57

Number of shares outstanding: 23,000

Answer 1

a)
X Corporation
Income Statement			Common Income Statement
For the year ended 20XX			Common size %
Sales		$4,250,000.00	100.00%
Less: Cost Of Good Sold		$3,560,000.00	83.76%
Gross Profit		$690,000.00	16.24%
Less: Operating Expenses
Depreciation and Amortization	$146,000.00		3.44%
Selling, general, and admin expenses	$360,000.00		8.47%
Total Operating Expenses		$506,000.00	11.91%
Earning Before Tax		$184,000.00	4.33%
Taxes (35%)		$64,400.00	1.52%
Net Income		$119,600.00	2.81%
Cash dividends per share: $0.95 x 23000 shares		$21,850.00
Addition to Retained Earnings		$97,750.00
Earning Per Share = $97,750/23000		$4.25
X Corporation
Balance Sheet
Year 20XX
Assets		Common size %	Liabilities and Shareholder Equity
Current Assets			Current Liabilities
Cash:	$74,000.00	4.08%	Accounts Payable:	$320,000.00	17.64%
Inventories:	$870,000.00	47.96%	Notes Payable:	$110,000.00	6.06%
Accounts Receivable:	$450,000.00	24.81%	Accruals:	$160,000.00	8.82%
Total Current Assets	$1,394,000.00	76.85%	Total Current Liabilities	$590,000.00	32.52%
Fixed Assets:	$420,000.00	23.15%	Long-term Debt:	$420,000.00	23.15%
			Shareholder Equity
			Common Stock:	$565,000.00	31.15%
			Retained Earnings	$239,000.00	13.18%
Total Assets	$1,814,000.00	100.00%	Total Liabilities and Shareholder Equity	$1,814,000.00	100.00%