Balance Sheet

ASSETS	December 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
Total Inventory	$32,000,000
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
Long Term Debt	$57,400,000
Preferred Stock, $100 par value per share,
100,000 authorized, 0 shares issued and outstanding	$0
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

	December 31, 2009	December 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)	$0
Total Operating Expenses	$(32,560,000)
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

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 careful of the Debt equity ratio. The review covers debt asset ratio as an example of how to calculate ratios and that is different from debt equity ratio,
and that is different from the debt equity ratio so think about how you calculate the debt equity ratio using the debt asset ratio as an example.

Ratio	Formula (express the ratio in words)	Detailed calculation (actual numbers from financial statements used for the calculation)	Final number (final result of the detailed calculation)
Example:	Term A/Term B (Term A divided by Term B)	1000/2000	.50
Efficiency Ratio: Receivables Turnover	Sales / Accounts receivable
Efficiency Ratio: Inventory Turnover	Cost of goods sold / Inventory
Financial Leverage Ratio: Debt/Equity Ratio	Total assets / Total equity

Balance Sheet ASSETS December 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 Total Inventory $32,000,000 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 Long Term Debt $57,400,000 Preferred Stock, $100 par value per share, 100,000 authorized, 0 shares issued and outstanding $0 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 December 31, 2009 December 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) $0 Total Operating Expenses $(32,560,000) 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 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 careful of the Debt equity ratio. The review covers debt asset ratio as an example of how to calculate ratios and that is different from debt equity ratio, and that is different from the debt equity ratio so think about how you calculate the debt equity ratio using the debt asset ratio as an example. Ratio Formula (express the ratio in words) Detailed calculation (actual numbers from financial statements used for the calculation) Final number (final result of the detailed calculation) Example: Term A/Term B (Term A divided by Term B) 1000/2000 .50 Efficiency Ratio: Receivables Turnover Sales / Accounts receivable Efficiency Ratio: Inventory Turnover Cost of goods sold / Inventory Financial Leverage Ratio: Debt/Equity Ratio Total assets / Total equity