On the night of February 27th, 2012, certain records of the Genome Corp were accidentally destroyed by fire. Two days after that, the principal owner had an appointment with an investor to discuss the possible sale of the company. The owner needed as much information as could be gathered for this purpose, recognizing that over a longer period of time a more complete reconstruction would possible.

On the morning of February 28th, the following were available: (1) a balance sheet as of December 31, 2010, and an income statement for 2010 (Exhibit 1) and (2) certain fragmentary data and ratios that had been calculated from the current financial statements (Exhibit 2) The statements themselves had beeb destroyed in the fire. (In ratios involving balance sheet amounts, Genmo used year end amounts rather than an average.) And (3) the following data (in thousands):

2011 Revenues. $10,281

Current Liabilities, December 31, 2011 2,285

389 Chapter 13 Financial Statement Analysis EXHIBIT 7 Game Corporation Balance Sheet As of December 31, 2010 Assets thousands of $ 18 Current assets: Cash Marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Investments Real estate, plant, and equipment Less: Accumulated depreciation Special tools Goodwill Total assets 494 728 972 214 2,426 898 $4,727 2,433 2,294 171 594 $6,383 $ 732 266 1,232 2,230 250 951 3,431 54 Liabilities and Shareholders' Equity Current liabilities: Accounts payable Loans payable Accrued liabilities Total current liabilities Long-term debt Other noncurrent liabilities Total liabilities Shareholders' equity: Preferred stock Common stock Additional paid-in capital Retained earnings Total shareholders' equity Total liabilities and shareholders' equity Income Statement, 2010 Total revenues Cost of sales (excluding depreciation and amortization) Gross margin Other expenses Depreciation Amortization of goodwill and special tools Selling, general, and administrative expenses Provision for income taxes Total costs and expenses Net income 667 2,206 2,952 $6,383 $9,779 $8,165 1,614 278 343 430 163 9,379 5 400 389 Chapter 13 Financial Statement Analysis EXHIBIT 7 Game Corporation Balance Sheet As of December 31, 2010 Assets thousands of $ 18 Current assets: Cash Marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Investments Real estate, plant, and equipment Less: Accumulated depreciation Special tools Goodwill Total assets 494 728 972 214 2,426 898 $4,727 2,433 2,294 171 594 $6,383 $ 732 266 1,232 2,230 250 951 3,431 54 Liabilities and Shareholders' Equity Current liabilities: Accounts payable Loans payable Accrued liabilities Total current liabilities Long-term debt Other noncurrent liabilities Total liabilities Shareholders' equity: Preferred stock Common stock Additional paid-in capital Retained earnings Total shareholders' equity Total liabilities and shareholders' equity Income Statement, 2010 Total revenues Cost of sales (excluding depreciation and amortization) Gross margin Other expenses Depreciation Amortization of goodwill and special tools Selling, general, and administrative expenses Provision for income taxes Total costs and expenses Net income 667 2,206 2,952 $6,383 $9,779 $8,165 1,614 278 343 430 163 9,379 5 400