Question
Balance Sheet for iRobot All numbers in thousands 12/31/2016 12/31/2015 Cash 214,523 179,915 Short Term Investments 39,930 33,124 AR 72,909 104,679 Unbilled Revenue 139 452
Balance Sheet for iRobot | ||
All numbers in thousands | ||
12/31/2016 | 12/31/2015 | |
Cash | 214,523 | 179,915 |
Short Term Investments | 39,930 | 33,124 |
AR | 72,909 | 104,679 |
Unbilled Revenue | 139 | 452 |
Raw Materials | 4,717 | 9,082 |
Work in Process | 0 | 0 |
Finished Goods | 45,861 | 52,596 |
Other Current Assets | 5,591 | 9,501 |
Total Current Assets | 383,670 | 389,349 |
PP&E | 27,532 | 26,850 |
Goodwill | 41,041 | 48,751 |
Intangible Assets | 12,207 | 15,664 |
Other assets | 43,462 | 41,129 |
507,912 | 521,743 | |
AP | 67,281 | 61,655 |
Accrued Expenses | 19,854 | 15,954 |
Salaries Payable | 21,015 | 15,752 |
Unearned Revenue | 4,486 | 3,265 |
Total Current Liabilities | 112,636 | 96,626 |
Long Term Liabilities | 6,310 | 7,706 |
Common Stock | 162,016 | 232,400 |
Retained Earnings | 226,950 | 185,011 |
Total Stockholder's Equity | 388,966 | 417,411 |
Total Liab & SE | 507,912 | 521,743 |
Income Statement for iRobot | ||
Sales | 660,604 | 616,778 |
COGS | 341,289 | 327,852 |
Gross Margin | 319,315 | 288,926 |
Operating Expenses: | ||
Research and Development | 79,805 | 76,071 |
Selling & Marketing | 115,125 | 97,772 |
General and Admin | 66,828 | 54,465 |
Total Operating Expenses | 261,758 | 228,308 |
Operating Income | 57,557 | 60,618 |
Other income | 3,804 | 2,353 |
Income Before Taxes | 61,361 | 62,971 |
Income Tax Expense | 19,422 | 18,841 |
Net Income | 41,939 | 44,130 |
Units Shipped (sold) | 2,943 | 2,436 |
One of the risks listed in the iRobot report was as follows: We face intense competition from other providers of robots, including diversified technology providers, as well as competition from providers offering alternative products, which could negatively impact our results of operations and cause our market share to decline. Suppose in 2016 iRobot's competitor came out with a new robotic vacuum that cleans house better and also dusts as well. It also can hold a decent conversation. Sales of the Roomba plummet. Units sold decrease by 25%. Assume that unit sales price for their products is $240 and unit product cost is $121. How much would gross margin change in 2016 if these events had happened? HINT: Analyze this change in gross margin just from the information above, you do not need to go back to the financial statements. The sales and cost data from the financial statements reflect different unit sales price and cost information so that will throw your calculations off. No need to put a negative sign on your answer - it is assumed that whatever number you input will be a decrease.
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