Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Diversified Industries is a large conglomerate and is continually in the market for new acquisitions. The company has grown rapidly over the last 10 years through buyouts of medium-size companies. Diversified does not limit itself to companies in any one industry but looks for firms with a sound financial base and the ability to stand on their own financially.
The president of Diversified recently told a meeting of the company's officer: " I want to impress two points on all of you. First, we are not in business of looking for bargains. Diversified has achieved success in the past by acquiring companies with the ability to be a permanent member of the corporate family. We don't want companies that may appear to be a bargain on paper but can't survive in the long run. Second, a new member of our family must be able to come in and make it on its own - the parent is not organized to be a funding agency for struggling subsidiaries."
Ron Dixon is the vice president of acquisitions for Diversified, a position he has held for five years. He is responsible for making recommendations to the board of directors on potential acquisitions. Because you are one of his assistants, he recently brought you a set of financials for a manufacturer, Heavy-Duty Tractors, Inc. Dixon believes that Heavy-Duty is a "can't-miss" opportunity for Diversified and asks you to confirm his hunch by performing basic financial statement analysis on the company. The most recent comparative balance sheets and income statement for the company follow:
Dec 31,2007
Dec 31, 2006
Assets
Current assets:
Cash
$48,500
$24,980
Marketable securities
3,750
0
Account receivable, net of allowances
128,420
84,120
Inventories
135,850
96,780
Prepaid items
7,600
9,300
Total current assets
$324,120
$215,180
Long term investment
$55,890
Property, plant, and equipment:
Land
$45,000
Building and equipment, less accumulated depreciation Of $385,000 in 2007 and $325,000 in 2006
545,000
605,000
Total property, plant, and equipment
$590,000
$650,000
Total assets
$970,010
$921,070
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term notes
$80,000
$60,000
Accounts payable
65,350
48,760
Salaries, wages, and other
14,360
13,840
Income taxes payable
2,590
3,650
Total current liabilities
$162,300
$126,250
Long-term bonds payable, due 2014
$275,000
Stockholders' equity:
Common stock, no par
$350,000
Retained earnings
182,710
169,820
Total stockholders' equity
$532,710
$519,820
Total liabilities and stockholders' equity
Heavy-Duty Tractors Inc. Statement of Income and Retained Earnings For the Year Ended December 31, 2007 (thousands omitted)
Sales revenue
$875,250
Cost of goods sold
542,750
Gross profit
$332,500
Selling, general, and administrative expenses
264,360
Operating income
$68,140
Interest expense
45,000
Net income before taxes and extraordinary items
$23,140
Income tax expense
9,250
Income before extraordinary items
$13,890
Extraordinary gain, less taxes of $6,000
9,000
Net income
$22,890
Retained earnings, January 1, 2007
$192,710
Dividends paid on common stock
10,000
Retained earnings, December 31, 2007
$182,710
What will you tell your boss? Should he recommend to the board of directors that Diversified put in a bid for Heavy-Duty Tractors?
Name and briefly explain the five components of COSO's internal control framework. Explain the relationship between the Sarbanes-Oxley Act and COSO.
Use the given information to complete Phillip and Claire Dunphy's 2012 federal income tax return.
Consider Platypus Building Inc. uses the percentage of completion technique, what amount of gross profit would be recognized in 2013?
Evaluate the weighted-average number of shares used in earnings per share calculations?
Evaluate the amount of the original loan and What effective annual rate of return did I make on my investment on the basis of compound interest
Explain in basic terms the main concern to be addressed in determining the appropriate revenue recognition pattern.
Balance Sheet. Construct a balance sheet for Sophie's Sofas give the following data. Evaluate Shareholders equity?
Evaluate the EPS disclosure that will appear in the December 31, X1 annual report.
Evaluate the number of shares used to determine basic earnings per share for the year ended December 31, 2013.
Purpose the journal entries needed in the Capital Projects Fund to account for the above transactions. Manage closing entries.
Assuming that Susan has a marginal tax rate of 30%, the net effect of her having this hobby will be to increase her total tax liability by:
Organize journal entries to reflex how the transaction and events would be recorded for governmental fund statements and government-wide statements.
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd