Question

In: Finance

Consider the following financial statements for Sports and Company: Sports Team USA Net Income Statement Year...

Consider the following financial statements for Sports and

Company:

Sports Team USA

Net Income Statement

Year Ended June 30, 2013

(in thousands)

Revenue:

Broadcast rights

$26,682

Ticket sales

$1,689

Sponsorships

$242

Total revenue

$28,613

Expenses:

Salaries and benefits

$15,154

Professional services

$7,507

Insurance

$3,963

Contracted services

$19

Rent and occupancy

$367

Interest

$385

Total expenses

$27,395

Taxable Income

$1,218

Taxes (34%)

$414.12

Net Income

$803.88

16

Sports Team USA

Balance Sheet

Year Ended June 30, 2013

(in thousands)

Assets

Cash and cash equivalents

$2,737

Accounts receivable

$821

Prepaid expenses

$387

Total current assets

$3,945

Net

property and equipment

$5,924

Total assets

$9,869

Liabilities and Owner's equity

Notes payable

$2,145

Deferred compensation

$929

Other current liabilities

$382

Total current liabilities

$3,456

Long

-

term debt

$4,295

Total liabilities

$7,751

Equity

$2,118

Total liabilities and owner's equity

$9,869

Industry

average

Profit

margin

3.8%

Total asset turnover

2.1

Equity multiplier

3.2

Return on equity (ROE)

25.5%

Return on assets (ROA)

8.0%

Current

ratio

1.3x

Quick ratio

0.9x

Account receivables

turnover

52x

Average collection period

7 days

Debt ratio

69%

Debt

-

to

-

equity ratio

2.2

Times interest earned (TIE) ratio

2.8

Fixed asset turnover ratio

5.2

Net working capital

850

o

Calculate the ratios for Sports Team USA and compare them with the industry ratios.

Outline Sports Team USA’s strengths and weaknesses. Recommend at least three areas of improvement for the company.

o

Solutions

Expert Solution

Ratios:
Ratio   Formula Company Company-figure Industry - Figure Advan. / Improve Improvement Areas:
Profit margin NI/Sales 803.88/28613 0.03 0.038
total Asset T/o Sales / TA 28613/9869 2.90 2.1 ADVANTAGE
Equity multiplier Owner's Eq./TA 2118/9869 0.21 3.2
Return on Equity NI/Owner's Eq. 803.88/2118 0.38 0.255 ADVANTAGE
Return on Assets NI/TA 803.88/9869 0.08 0.08
Current Ratio CA/CL 3945/3456 1.14 1.3
Quick Ratio CA-Inv/CL (3945-0)/3456 1.14 0.9
Account Receivable T/o Sales/AR 28613/821 34.85 53
Average Collection period AR*365/Sales 821*365/28613 10.47 7 IMPROVE Company has to improve the collection of credit provided.
Debt ratio TD/TA 7751/9869 0.79 0.69
Debt to Equity ratio TD/Owner's Eq. 7751/2118 3.66 2.2 IMPROVE Company has to reduce the debt against the equity.
Times interest earned ratio Interest Exp./EBIT 385/(1218+385) 0.24 2.8
Fixed Asset T/o ratio Sales / FA 28613/5924 4.83 5.2 IMPROVE company has to improve the performance of Fixed assets.
Net working capital CA-CL 3945-3456 489.00 850 ADVANTAGE

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

The following are financial statements of Crane Company. Crane Company Income Statement For the Year Ended...
The following are financial statements of Crane Company. Crane Company Income Statement For the Year Ended December 31, 2022 Net sales $2,237,000 Cost of goods sold 1,019,000 Selling and administrative expenses 906,500 Interest expense 76,000 Income tax expense 69,500 Net income $ 166,000 Crane Company Balance Sheet December 31, 2022 Assets Current assets   Cash $ 57,400   Debt investments 87,000   Accounts receivable (net) 169,400   Inventory 199,200    Total current assets 513,000 Plant assets (net) 573,000 Total assets $ 1,086,000 Liabilities and Stockholders’...
Consider the following simplified financial statements for the Phillips Corporation (assuming no income taxes):   Income Statement...
Consider the following simplified financial statements for the Phillips Corporation (assuming no income taxes):   Income Statement Balance Sheet   Sales $25,000     Assets $10,000     Debt $4,600     Costs 13,200     Equity 5,400     Net income $11,800     Total $10,000     Total $10,000   Phillips has predicted a sales increase of 11 percent. It has predicted that every item on the balance sheet will increase by 11 percent as well. Required: Calculate the dividend paid. (Do not round your intermediate calculations.)
Consider the following simplified financial statements for the Phillips Corporation (assuming no income taxes):   Income Statement...
Consider the following simplified financial statements for the Phillips Corporation (assuming no income taxes):   Income Statement Balance Sheet   Sales $27,000     Assets $10,800     Debt $4,600     Costs 12,800     Equity 6,200     Net income $14,200     Total $10,800     Total $10,800   Phillips has predicted a sales increase of 10 percent. It has predicted that every item on the balance sheet will increase by 10 percent as well. Required: Calculate the dividend paid. (Do not round your intermediate calculations.) Multiple Choice $15,000 $14,969 $14,975 $14,981 $23,740
Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes): Income Statement...
Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes): Income Statement Balance Sheet   Sales $ 46,100   Assets $ 24,300   Debt $ 6,300   Costs 39,630   Equity 18,000     Net income $ 6,470     Total $ 24,300     Total $ 24,300 The company has predicted a sales increase of 10 percent. Assume Yoo pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not.    Prepare...
Consider the following simplified financial statements for the Fire Corporation (assuming no income taxes): Income Statement...
Consider the following simplified financial statements for the Fire Corporation (assuming no income taxes): Income Statement   Sales $38318   Costs $24483 Balance Sheet   Assets $56924   Debt $37803 Equity ? The company has predicted a sales increase of 14 percent. It has predicted that every item on the balance sheet will increase by 14 percent as well. What is the pro forma net income?
Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes) Income Statement...
Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes) Income Statement Balance Sheet   Sales $ 45,700   Assets $ 21,900   Debt $ 5,900   Costs 40,100   Equity 16,000     Net income $ 5,600     Total $ 21,900     Total $ 21,900 The company has predicted a sales increase of 6 percent. Assume the company pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare...
prepare the financial statements of the Company: A) Statement of Comprehensive Income B) Statement of Financial...
prepare the financial statements of the Company: A) Statement of Comprehensive Income B) Statement of Financial Position C) Statement of Changes in Owner's Equity Accounts Payable               63,200.00 Accounts Receivable               74,100.00 Accrued Expenses               20,300.00 Accrued Income                 5,000.00 Accumulated Depreciation - Equipment               20,000.00 Accumulated Depreciation - Furniture               10,000.00 Bonds Payable         1,500,000.00 Capital             517,685.00 Cash in Bank             280,000.00 Cash on Hand               35,000.00 Depreciation Expense - Furniture                     500.00 Depreciation Expense - Equipment                ...
The comparative financial statements for Prince Company are below:      Year 2 Year 1 Income statement:...
The comparative financial statements for Prince Company are below:      Year 2 Year 1 Income statement: Sales revenue $ 194,000 $ 168,000 Cost of goods sold 113,000 100,400 Gross profit 81,000 67,600 Operating expenses and interest expense 56,400 53,200 Pretax income 24,600 14,400 Income tax 8,400 4,200 Net income $ 16,200 $ 10,200 Balance sheet: Cash $ 4,400 $ 7,200 Accounts receivable (net) 14,200 18,200 Inventory 40,400 34,200 Property and equipment (net) 45,600 38,400 Total assets $ 104,600 $ 98,000...
Consider the following income statements for Nero Company: Income statement 1 Revenue = 1,800 Direct costs...
Consider the following income statements for Nero Company: Income statement 1 Revenue = 1,800 Direct costs = (300) Contribution margin = 1,500 Fixed costs = (500) Operating income = 1,000 Income statement 2 Revenue = 1,400 Direct costs = (200) Contribution margin = 1,200 Fixed costs = (300) Operating income = 900 Income statement 3 Revenue = 2,000 Direct costs = (800) Contribution margin = 1,200 Fixed costs = (400) Operating income = 800 Identify which income statement is prepared...
COMPANY STARBUCKS Using the financial statements, answer the following questions: Look at the income statement and...
COMPANY STARBUCKS Using the financial statements, answer the following questions: Look at the income statement and comment on the company’s profitability. What is basic earnings per share? It may be listed on the income statement itself, or you might have to calculate it. Look at the balance sheet. Calculate the current ratio and comment on the company’s liquidity. Calculate the debt-to-total-assets ratio and comment on the company’s solvency. Look at the statement of cash flows Comment on the results of...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT