No results Options Understanding a Firm's Financial Statements Harper & Reiman, LLC, is a consulting firm that caters to developed financial management software that centers on nonprofit organizations. The company is headquartered liquidity analytics and enables nonprofits to shorten cash in Dallas, Texas, and has recently expanded to include an conversion cycles and strengthen liquidity. They gradu. office in Amarillo, Texas, Harper's home town. ally expanded into other services, including sustainable The business was founded in 2000 by Brett Harper business solutions, infrastructure consulting, risk manage and Anna Reiman, who met in un entrepreneurship class ment, and innovation services in college and discovered that they shared a passion for The company has experienced significant growth, with serving and developing the nonprofit sphere. Following sales approaching 529 million in 2013 - far beyond any graduation, they both were employed by J.P. Morgan. thing the owners could have imagined. For one thing the They frequently worked together on common assign company distinguished itself in the industry by designing a ments. On a number of occusions, they worked with non payment system that allows nonprofits to make payments profit organizations whose innovative processes allowed for Harper & Reiman services in seasons when dons them to "do more with less. The not-for-profits simply tions are the highest. However, it also required Harper & were not able to throw a lot of cash at problems, as many Reiman to diversify its client base so that receivables are large business organizations do, and had to think and act consistently being collected. Essentially, the company has like entrepreneurs if they were to achieve their missions applied the advice it gives to clients to itself. Harper and Reiman soon came to believe that for-profit While the majority of consulting clients are located businesses could learn from the really good nonprofits. near the two regional offices, the firm's software has been After eight years at JP Morgan, Harper and Reiman sold nationwide on a limited basis. Wanting to enter new decided to start their own consulting firm, Harper & Rei geographical markets, Harper and Reiman are consider man, LLC. At first, they limited their work to financial ing a marketing strategy to increase the firm's national advisory services, knowing that many nonprofits needed visibility. However, before beginning a major expansion, help in managing their financial operations. The company they want to evaluate the firm's financial health. Harper & Reiman, LLC Balance Sheets for years ending 2012 and 2013 2012 2013 Changes Assets Current assets: Cash Accounts receivable Inventory Prepaid expenses and deposits Other current assets Total current assets Fler care $ 15,500 3.909,000 4155,000 138,500 105.500 5 8.403.500 5 218.500 442.000 4,678.000 144.000 105.500 $ 9.574,000 $ 200.000 439,000 523,000 5.500 $1.170.500 t 1 13 Download e No results Options 2012 2013 Changes Other assets TOTAL ASSETS 11,500 $ 12.133.500 1,000 $ 13,717,000 (10.50 $ 1.583.500 Debt (Liabilities) and Equity Current liabilities: Notes payable to bank Accounts payable Accrued expenses Total current liabilities Long-term debt Total debt Stockholders' equity: Common stock Additional paid-in capital Retained earnings Total stockholders' equity TOTAL DEBT AND EQUITY Income Statements for Years Ending 2012 and 2013 $ 1,100,000 1.931,000 920,500 $ 3,951,500 3,614,000 $ 7.565.500 $ 1,192,000 2,238,500 884,000 $ 4,314,500 4.257.000 $ 8,571,500 $ 92.000 307,500 (36.500) $363.000 643.000 $ 1.006,000 S 356,000 498.000 3.714,000 $ 4.568.000 $ 12.133.500 5 391.500 649,000 4,105,000 $ 5,145.500 $ 12,717.000 $ 35.500 151,000 391.000 5. 577.500 $ 1.583.500 Net sales Cost of goods sold Gross profits Selling and general and administrative expenses Operating profits Interest expense Interest Income Profits before tax 2012 $ 27,069.000 (18.880.500) $ 8.188.500 16,805,500) $ 1.383.000 1481,500) 5,500 $ 907,000 (385,000) $ 522.000 2013 $ 28,911,500 120.524,5001 $ 8,387,000 16,953,000 $ 1,434.000 (535,500) 10.000 $ 908,500 377.000) $ 531,500 Income taxes Net profits Statement of Retained Earnings for years ending 2012 and 2013 2012 Beginning retained earnings $ 3.298,000 Net profits 522,000 Dividends (106,000 Ending retained earings $ 3.714.000 2013 $ 214.000 531,500 (140.500 $4.105.000 2 13 d21/le/content/53282/viewContent/743406/View No results Options Statement of Cash Flows for years ending 2012 and 2013 2012 2013 $ 522,000 564,500 $ 1,086.500 $ 1464,000 $ 531.500 554_500 $ 1.086.000 $ 139,000) (572.000 6 500 6503.500 (19.000 87.500 $ 187,500 (523.0001 307,500 (215,5001 5.SOO 136,500 389.500 $ 56861,500 $ 1978.000) 10.500 $ 1967.500 Operating activities Net profits Depreciation Profits before depreciation Increase in accounts receivable Payments for Inventory Increase in inventory Increase in accounts payable Total payment for inventory Increase in prepaid expenses Increase idecrease in accrued expenses Cash flows from operations Investing activities Increase in gross feed assets Decrease increase in other assets Cash flows from investing activities Financing activities Increase in roses payable Increase (decrease in long-term debt Issued common stock Cash dividends peld Cashflows from financing activities Net change in cash Beginning cash Ending cash Industry norms: Current ratio Return on assets Operating profit margin Total asset turnover Debratio Resumen common equity $ (861.500 5 5 625.000 [112.5001 77.500 (81.000 $ 500.000 5 (165.000 180.500 $ 15.500 92.000 642.000 186.500 (140 500 781,000 203,000 15.500 218.500 $ $ 5 22 12.6% 2.00 40.0N 15.04 Question L Harperan Reiman are interested in aminina o want to have a good sense of the sources and uses of cash flows in the business. Given the firm's recent t 3 13 Download e w Question 1. Harper and Reiman are interested in examining four specific issues: liquidity, profitability, the risk occur- ring from debt financing, and the rate of return the business is providing to them as owners. They also want to have a good sense of the sources and uses of cash flows in the business. Given the firm's recent financial results, as shown above, evaluate the com- pany's financial situation as it relates to the owners concerns. What advice would you give to Harper and Reiman? No results Options Understanding a Firm's Financial Statements Harper & Reiman, LLC, is a consulting firm that caters to developed financial management software that centers on nonprofit organizations. The company is headquartered liquidity analytics and enables nonprofits to shorten cash in Dallas, Texas, and has recently expanded to include an conversion cycles and strengthen liquidity. They gradu. office in Amarillo, Texas, Harper's home town. ally expanded into other services, including sustainable The business was founded in 2000 by Brett Harper business solutions, infrastructure consulting, risk manage and Anna Reiman, who met in un entrepreneurship class ment, and innovation services in college and discovered that they shared a passion for The company has experienced significant growth, with serving and developing the nonprofit sphere. Following sales approaching 529 million in 2013 - far beyond any graduation, they both were employed by J.P. Morgan. thing the owners could have imagined. For one thing the They frequently worked together on common assign company distinguished itself in the industry by designing a ments. On a number of occusions, they worked with non payment system that allows nonprofits to make payments profit organizations whose innovative processes allowed for Harper & Reiman services in seasons when dons them to "do more with less. The not-for-profits simply tions are the highest. However, it also required Harper & were not able to throw a lot of cash at problems, as many Reiman to diversify its client base so that receivables are large business organizations do, and had to think and act consistently being collected. Essentially, the company has like entrepreneurs if they were to achieve their missions applied the advice it gives to clients to itself. Harper and Reiman soon came to believe that for-profit While the majority of consulting clients are located businesses could learn from the really good nonprofits. near the two regional offices, the firm's software has been After eight years at JP Morgan, Harper and Reiman sold nationwide on a limited basis. Wanting to enter new decided to start their own consulting firm, Harper & Rei geographical markets, Harper and Reiman are consider man, LLC. At first, they limited their work to financial ing a marketing strategy to increase the firm's national advisory services, knowing that many nonprofits needed visibility. However, before beginning a major expansion, help in managing their financial operations. The company they want to evaluate the firm's financial health. Harper & Reiman, LLC Balance Sheets for years ending 2012 and 2013 2012 2013 Changes Assets Current assets: Cash Accounts receivable Inventory Prepaid expenses and deposits Other current assets Total current assets Fler care $ 15,500 3.909,000 4155,000 138,500 105.500 5 8.403.500 5 218.500 442.000 4,678.000 144.000 105.500 $ 9.574,000 $ 200.000 439,000 523,000 5.500 $1.170.500 t 1 13 Download e No results Options 2012 2013 Changes Other assets TOTAL ASSETS 11,500 $ 12.133.500 1,000 $ 13,717,000 (10.50 $ 1.583.500 Debt (Liabilities) and Equity Current liabilities: Notes payable to bank Accounts payable Accrued expenses Total current liabilities Long-term debt Total debt Stockholders' equity: Common stock Additional paid-in capital Retained earnings Total stockholders' equity TOTAL DEBT AND EQUITY Income Statements for Years Ending 2012 and 2013 $ 1,100,000 1.931,000 920,500 $ 3,951,500 3,614,000 $ 7.565.500 $ 1,192,000 2,238,500 884,000 $ 4,314,500 4.257.000 $ 8,571,500 $ 92.000 307,500 (36.500) $363.000 643.000 $ 1.006,000 S 356,000 498.000 3.714,000 $ 4.568.000 $ 12.133.500 5 391.500 649,000 4,105,000 $ 5,145.500 $ 12,717.000 $ 35.500 151,000 391.000 5. 577.500 $ 1.583.500 Net sales Cost of goods sold Gross profits Selling and general and administrative expenses Operating profits Interest expense Interest Income Profits before tax 2012 $ 27,069.000 (18.880.500) $ 8.188.500 16,805,500) $ 1.383.000 1481,500) 5,500 $ 907,000 (385,000) $ 522.000 2013 $ 28,911,500 120.524,5001 $ 8,387,000 16,953,000 $ 1,434.000 (535,500) 10.000 $ 908,500 377.000) $ 531,500 Income taxes Net profits Statement of Retained Earnings for years ending 2012 and 2013 2012 Beginning retained earnings $ 3.298,000 Net profits 522,000 Dividends (106,000 Ending retained earings $ 3.714.000 2013 $ 214.000 531,500 (140.500 $4.105.000 2 13 d21/le/content/53282/viewContent/743406/View No results Options Statement of Cash Flows for years ending 2012 and 2013 2012 2013 $ 522,000 564,500 $ 1,086.500 $ 1464,000 $ 531.500 554_500 $ 1.086.000 $ 139,000) (572.000 6 500 6503.500 (19.000 87.500 $ 187,500 (523.0001 307,500 (215,5001 5.SOO 136,500 389.500 $ 56861,500 $ 1978.000) 10.500 $ 1967.500 Operating activities Net profits Depreciation Profits before depreciation Increase in accounts receivable Payments for Inventory Increase in inventory Increase in accounts payable Total payment for inventory Increase in prepaid expenses Increase idecrease in accrued expenses Cash flows from operations Investing activities Increase in gross feed assets Decrease increase in other assets Cash flows from investing activities Financing activities Increase in roses payable Increase (decrease in long-term debt Issued common stock Cash dividends peld Cashflows from financing activities Net change in cash Beginning cash Ending cash Industry norms: Current ratio Return on assets Operating profit margin Total asset turnover Debratio Resumen common equity $ (861.500 5 5 625.000 [112.5001 77.500 (81.000 $ 500.000 5 (165.000 180.500 $ 15.500 92.000 642.000 186.500 (140 500 781,000 203,000 15.500 218.500 $ $ 5 22 12.6% 2.00 40.0N 15.04 Question L Harperan Reiman are interested in aminina o want to have a good sense of the sources and uses of cash flows in the business. Given the firm's recent t 3 13 Download e w Question 1. Harper and Reiman are interested in examining four specific issues: liquidity, profitability, the risk occur- ring from debt financing, and the rate of return the business is providing to them as owners. They also want to have a good sense of the sources and uses of cash flows in the business. Given the firm's recent financial results, as shown above, evaluate the com- pany's financial situation as it relates to the owners concerns. What advice would you give to Harper and Reiman