Bradford Drug, Inc. Financial Accounting
Only using years 1988, 1989, and 1990 -
- Is the business maintaining an adequate liquidity position?
- Is the management of Bradford Drug Inc. generating a sufficient return on the firms operating assets on a before-tax basis?
- Does the financial mix appear to be appropriate?
- Is an ample return on common being provided to attract future common stockholders? Bradford is particularly interested in knowing the key variables that have an impact upon the return on common.
-EHIBT 1- Bradford Drug, Inc. Income Statements for 19881992 (thousands) 1988 1989 1990 7,05 8 01 754 _ 553,958 5596 33.598 34, 4 ,68 1992 0,046 4,823 ,5928 2,493 ,71 50 71 307 IB8 460 Jg5 355 205 156 17 30 397 4 I08 A0 1 39I 1,014 J # -F 3 | |# | | |: # |- ## *| # #| : 5,120 1,04E 17? 58 Sales Cost of goods sold Gro Profit Operating expensest General and admin- istrative Selling and advertising Depreciation Research and de- velopment Total operating expenses Operating income Other incomet Earnings before in- terest and taxes Interest expense Earnings before taxes Income taxes @ 40% Earnings after taxes Preferred dividends Earnings available for common Common dividends Increase in retained earnings Earnings per share Number of com- mon shares 26 I 1,17 I40 1,08g 16 1,059 4p4 ,155 462 69 5I 6 sp 58 619 65 698 350 688 370 4 s 1 , 11 34,0340,69545I,480 7445 Credit sales normally represent 80 percent of total sales Lease payments included in the operational expenses are $100,000 in 1988 and 1989. $200,000 in 1880 nd I I,n-400,000 in ] Other income is made up of profits from Young Industries, a Bradford subsidiary in the cosmetics industry, and long-term security Investments -EXHIBIT 2- Bradford Drug, Inc. Balance Sheets for December 31, 1988-1992 (thousands) 1988 1989 1990 1991 1992 Assets $ 449 1,206 1,253 198 $ 3,031 $ 484 1,519 1.570 135 $ 3,706 $ 559 1,840 1.419 478 $ 4.296 $ 1.223 2,017 1,670 252 $ 5,162 $ 1,373 2.239 2,218 325 $ 6,155 3,811 1.522 4,790 Current assets Cash and equivalent Accounts receivable Inventories Other current assets Total current assets Fixed assets Gross plant Reserve for depreciation Net plant and equip ment Other assets Investment in subsidiaries Investments, other Miscellaneous assets Total other assets Total assets 4,586 1.675 4,465 1,576 1,694 5,206 1,778 $ 2,289 $ 2,861 $ 2,889 $3,096 $ 3,428 50 42 45 40 565 856 719 510 45 445 18 $ 508 $ 5,828 13 $ 643 $ 7,210 $ 939 $ 8,124 $ 807 $ 9,065 $ 598 $10,181 Liabilities and Net Worth $ 1,687 1.543 $ 1,942 1699 $ 2,326 2.251 Liabilities Current liabilities Long-term debut Deferred taxes Other liabilities Total liabilities $ 1,450 1.196 123 100 $ 1,987 1.992 242 166 240 189 $ 2,869 122 $ 3,499 $ 3,49 $3,949 $ 1,387 $ 4,587 $ 5,006 1,028 1.991 1,95 Net worth Preferred stock Common equity Total net worth Total liabilities and net worth 3.11 3.717 .17 3.678 4.678 5,175 $ 5,175 $ 2,959 $ 3.717 $ 4,175 $ 4,678 $5,828 $7.210 $8,124 $9.065 $10,181 "Beginning accounts receivable and inventory balances for 1988 were $1,000,000 and $11.000.000, respectively Also, with respect to the receivables, the policy of the firm is to extend credit for 60 days on credit sales The indenture of the long-term debe places a 10 percent sinking fund requirement upon the firm -EHIBT 1- Bradford Drug, Inc. Income Statements for 19881992 (thousands) 1988 1989 1990 7,05 8 01 754 _ 553,958 5596 33.598 34, 4 ,68 1992 0,046 4,823 ,5928 2,493 ,71 50 71 307 IB8 460 Jg5 355 205 156 17 30 397 4 I08 A0 1 39I 1,014 J # -F 3 | |# | | |: # |- ## *| # #| : 5,120 1,04E 17? 58 Sales Cost of goods sold Gro Profit Operating expensest General and admin- istrative Selling and advertising Depreciation Research and de- velopment Total operating expenses Operating income Other incomet Earnings before in- terest and taxes Interest expense Earnings before taxes Income taxes @ 40% Earnings after taxes Preferred dividends Earnings available for common Common dividends Increase in retained earnings Earnings per share Number of com- mon shares 26 I 1,17 I40 1,08g 16 1,059 4p4 ,155 462 69 5I 6 sp 58 619 65 698 350 688 370 4 s 1 , 11 34,0340,69545I,480 7445 Credit sales normally represent 80 percent of total sales Lease payments included in the operational expenses are $100,000 in 1988 and 1989. $200,000 in 1880 nd I I,n-400,000 in ] Other income is made up of profits from Young Industries, a Bradford subsidiary in the cosmetics industry, and long-term security Investments -EXHIBIT 2- Bradford Drug, Inc. Balance Sheets for December 31, 1988-1992 (thousands) 1988 1989 1990 1991 1992 Assets $ 449 1,206 1,253 198 $ 3,031 $ 484 1,519 1.570 135 $ 3,706 $ 559 1,840 1.419 478 $ 4.296 $ 1.223 2,017 1,670 252 $ 5,162 $ 1,373 2.239 2,218 325 $ 6,155 3,811 1.522 4,790 Current assets Cash and equivalent Accounts receivable Inventories Other current assets Total current assets Fixed assets Gross plant Reserve for depreciation Net plant and equip ment Other assets Investment in subsidiaries Investments, other Miscellaneous assets Total other assets Total assets 4,586 1.675 4,465 1,576 1,694 5,206 1,778 $ 2,289 $ 2,861 $ 2,889 $3,096 $ 3,428 50 42 45 40 565 856 719 510 45 445 18 $ 508 $ 5,828 13 $ 643 $ 7,210 $ 939 $ 8,124 $ 807 $ 9,065 $ 598 $10,181 Liabilities and Net Worth $ 1,687 1.543 $ 1,942 1699 $ 2,326 2.251 Liabilities Current liabilities Long-term debut Deferred taxes Other liabilities Total liabilities $ 1,450 1.196 123 100 $ 1,987 1.992 242 166 240 189 $ 2,869 122 $ 3,499 $ 3,49 $3,949 $ 1,387 $ 4,587 $ 5,006 1,028 1.991 1,95 Net worth Preferred stock Common equity Total net worth Total liabilities and net worth 3.11 3.717 .17 3.678 4.678 5,175 $ 5,175 $ 2,959 $ 3.717 $ 4,175 $ 4,678 $5,828 $7.210 $8,124 $9.065 $10,181 "Beginning accounts receivable and inventory balances for 1988 were $1,000,000 and $11.000.000, respectively Also, with respect to the receivables, the policy of the firm is to extend credit for 60 days on credit sales The indenture of the long-term debe places a 10 percent sinking fund requirement upon the firm
