Question
write the balance sheet ,income statement , cash flow and answer the four question.Thank you The financial statements and notes of ZETA Corporation are as
write the balance sheet ,income statement , cash flow and answer the four question.Thank you
The financial statements and notes of ZETA Corporation are as follows:
ZETA CORPORATION | |||||
Consolidated Balance Sheet | |||||
As of Decenmber 31, 2011 and 2010 | |||||
($ thousands) | 2011 | 2010 | |||
Assets | |||||
Current assets | |||||
Cash. | $ | 2,000 | 2,000 | ||
Receivables.. | 25,000 | 20,000 | |||
Inventories (notes 1 and 2).. | 56,000 | 38,000 | |||
Prepaid expenses. | 1,000 | 1,000 | |||
Total current assets.. | 84,000 | 61,000 | |||
Investment in associated companies. | 14,000 | 11,000 | |||
Property, plant, and equipment. | 61,000 | 52,000 | |||
Less: Accumulated depreciation | (23,000) | (19,000) | |||
Net property, plant, and equipment.. | 38,000 | 33,000 | |||
Goodwill | 2,000 | 0 | |||
Total assets | 138,000 | 105,000 | |||
Liabilities and Stockholders' Equity | |||||
Current liabilities | |||||
Notes payable to banks. | $ | 16,000 | 14,000 | ||
Accounts payable and accruals. | 29,000 | 23,000 | |||
Income tax payable.. | 7,000 | 2,000 | |||
Current portion of long-term debt (note 6).. | 2,000 | 1,000 | |||
Total current liabilities.. | 54,000 | 40,000 | |||
Long-term debt (note 6).. | 25,000 | 15,200 | |||
Deferred income taxes (note 5). | 3,600 | 2,000 | |||
Minority Interest | 1,400 | 800 | |||
Stockholders' equity (note 7) | |||||
Common stock, $5 par value.. | 5,500 | 5,000 | |||
Paid-in capital.. | 24,500 | 15,000 | |||
Retained earnings. | 24,000 | 27,000 | |||
Total stockholders' equity | 54,000 | 47,000 | |||
Total liabilites and stockholders' equity. | 138,000 | 105,000 | |||
ZETA CORPORATION
Consolidated Income Statement
For Years Ended December 31, 2011 and 2010
($ thousands) | 2011 | 2010 |
Net sales... | $ 186,000 | 155,000 |
Equity in income (loss) of associated companies. | 2,000 | (1,000) |
Expenses | ||
Cost of sales | 120,000 | 99,000 |
Selling and administrative expenses | 37,000 | 33,000 | |||
Interest expenses. | 10,000 | 6,000 | |||
Total costs and expenses.. | 167,000 | 138,000 | |||
Income before taxes and minority interest.. | 21,000 | 16,000 | |||
Income tax expense (note 5) | 10,000 | 7,800 | |||
Income before minority interest | 11,000 | 8,200 | |||
Minority interest | 200 | 0 | |||
Income from continuing operations. | 10,800 | 8,200 | |||
Discontinued operations (note 4) | |||||
Operations, net of tax.. | (1,100) | (1,200) | |||
Loss on disposal, net of tax.. | (700) | 0 | |||
Total gain (loss) from discontinued operations | (1,800) | (1,200) | |||
Income before cumulative effect of accounting change.. | 9,000 | 7,000 | |||
Cumulative effect of change in accounting, net of tax (note 1) | 1,000 | 0 | |||
Net income | 10,000 | 7,000 | |||
ZETA CORPORATION | ||||
Consolicated Statement of Cash Flows | ||||
For Years Ended December 31, 2011 and 2010 | ||||
($ thousands) | 2011 | 2010 | ||
Cash provided from (used for) operations | ||||
Net income. | .... $ | 10,000 | 7,000 | |
Add (deduct) adjustments to cash basis: | ||||
Depreciation. | .... | 6,000 | 4,000 | |
Deferred income taxes. | .... | 1,600 | 1,000 | |
Minority interest.. | .... | 200 | 0 | |
Undistributed income of associated companies.. | .... | (1,400) | 1,300 | |
Loss on discontinued operations. | .... | 700 | 0 | |
Increase in accounts receivable (5,000-2,000).. | .... | (3,000) | (2,400) | |
Increase in inventories (18,000+100*-2,200) | .... | (15,900) | (6,000) | |
Increase in prepaid expenses | .... | 0 | (200) | |
Increase in accounts payable and accruals | ||||
(6,000-300*-3,200) | .... | 2,500 | 2,000 | |
Increase in income taxes payable (5,000+700)*. | .... | 5,700 | 1,000 | |
Net cash provided from (used for) operations. | .... | 6,400 | 7,700 | |
Cash provided from (used for) investing activities | ||||
Additions to property, plant, and equipment. | .... | (6,500) | (5,800) | |
Acquisition of TRO Company (excluding cash of $4,200) | ||||
Property, plant, and equipment.. | (6,000) | |||
Goodwill. | (2,000) | |||
Long-term debt | 4,800 | |||
Minority interest.. | 400 | |||
Current assets (receivables and inventories) | (4,200) | |||
Current liabilities.. | 3,200 | (3,800) | 0 | |
Investment in associated companies. | .... | (1,600) | 0 | |
|
Proceeds from disposal of equipment | .... | 500 | 0 | |
Net cash used for investing activities. | .... | (11,400) | (5,800) | |
Cash provided from (used for) financing activities | ||||
Issuance of long-term debt. | .... | 7,500 | 5,000 | |
Reduction in long-term debt.. | .... | (1,500) | (1,000) | |
Dividends paid | .... | (3,000) | (2,000) | |
Increase (decrease) in notes payable to bank. | .... | 2,000 | (3,500) | |
Net cash provided from (used for) financing activities.. | .... | 5,000 | (1,500) | |
Net increase (decrease) in cash.. | .... | 0 | 400 | |
Adjustments of noncash transactions arising from discontinued operations (see note 4) | ||||
Adjustments relating to acquisition of TRO Co (note 3) | ||||
Supplemental disclosures of cash flow information | 2011 | 2010 | ||
Cash paid for interest | 10,000 | 6,000 | ||
Cash paid for income taxes | 2,600 | 4,800 | ||
Schedule of noncash activities: | ||||
Capital lease of $1,000 incurred on the lease of equipment | ||||
ZETA CORPORATION
Notes to Consolidated Financial Statements ($ thousands)
Note1: Change in accounting principle
During 2011 the company broadened its definition of overhead costs to be included in the determination of inventories to more properly match costs with revenues. The effect of the change in 2011 is to increase income from continuing operations by $400. The adjustment of $1,000 (after reduction for income taxes of $1,000) for the cumulative effect for prior years is shown in the net income for 2011.
Note 2: Inventories
Inventories are priced at cost (principally last-in, first-out [LIFO] method of determination) not in excess of replacement market. If the first-in, first-out (FIFO) method of inventory accounting had been used, inventories would have been $6,000 and $4,500 higher than reported at December 31, 2011 and December 31, 2010 respectively.
Note 3: Acquisition of TRO Company
Effective December 31, 2011, the company purchased most of the outstanding common stock of TRO Company for $8,000 in cash. The excess of the acquisition cost over fair value of the net assets acquired $2,000 will be recorded as goodwill and not amortized. The following unaudited supplemental pro forma information shows the condensed results of operations as though TRO Company had been acquired as of January 1, 2010.
2011 | 2010 | |
Revenues. $ | 205,000 | 172,000 |
Net income.. | 10,700 | 7,400 |
Details of acquisition (resources and obligations assumed):
Cash | $ 4,200 |
Accounts Receivable.. | 2,000 |
Inventories. | 2,200 |
Property,Plant & Equipment.. | 6,000 |
Long-Term Debt | 4,800 |
Accounts Payable & Accruals | 3,200 |
Note 4: Discontinued operations
As of October 31, 2011, the board of directors adopted a plan authorizing the disposition of the assets and business of its wholly owned subsidiary, Zachary Corporation. The Loss on Disposal is $700 (net of income tax credits of $700) and is based upon the estimated realizable value of the assets to be sold plus a provision for costs of $300 for operating the business until its expected disposition in early 2012. Property, plant and equipment is reduced by $1,000 and inventories are reduced by $100 to net realizable value. The provision for costs of $300 is included in Accounts payable and accruals" and is reduced to $200 at year-end. Net sales of the operations to be discontinued are $18,000 in 2011 and $23,000 in 2010.
Note 5: Income taxes
The income tax expense consists of the following
2011 | 2010 | |||
Current. | $ | 8,400 | 6,800 | |
Deferred | 1,600 | 1,000 | ||
Total.. | 10,000 | 7,800 | ||
The effective tax rates of 47.6% and 48 8% for 2011 and 2010, respectively, differ from the statutory federal income tax rate of 50% due to research and development tax credits of $500 in 2011 and $200 in 2010. Deferred taxes result from the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial reporting.
Note 6: Long-term debt
2011 2010
10% promissory notes to institutional investors payable
in annual installments of $900 through $ 13,000 13,900
2015.. | |||
Unsecured notes to banks-interest 1% over prime | 4,000 | 0 | |
Capitalized lease obligations-payable to 2014 with an | |||
average interest rate of 8%......................................... | 1,000 | 0 | |
11% subordinated note payable in annual installments of | |||
$500 from 2012 through | 5,000 | 0 | |
2021 | |||
Other mortages and notes.. | 4,000 | 2,300 | |
27,000 | 16,200 | ||
Less current | 2,000 | 1,000 | |
maturities.. | |||
Total long-term debt.. | 25,000 | 15,200 | |
The various loan agreements place certain restrictions on the corporation including the payment of cash dividends on common stock and require the maintenance of working capital as defined of not less than $18, 000. Approximately $10,000 of retained earnings is available for payment of cash dividends on common stock at December 31, 2011. The corporation entered into several long-term noncancelable leases of equipment during 2011which have been capitalized for financial reporting. There are no other significant lease arrangements.
Note 7: Stockholders' equity
The corporation has 5 million shares of authorized common stock, par value $5. There are 1 million shares outstanding at December 31, 2010 and this is increased by a 10% dividend payable in common stock during 2011. The changes in retained earnings are as follows:
2011 | 2010 | ||||
Beginning | $ | 27,000 | 22,000 | ||
balance. | |||||
Add net income | 10,000 | 7,000 | |||
Less cash dividends.. | (3,000) | (2,000) | |||
Less 10% stock dividend.. | (10,000) | 0 | |||
Ending balance. | 24,000 | 27,000 | |||
Required:
1.Conduct a comprehensive financial analysis for this company (using year-end data for ratio calculation). What are your findings and comments?
2.From the view of investors, how to find growing companies?
3.From your opinion, how to evaluate the profitability of the company?
4.How to judge the companys business strategy through cash flow statement and capital structure?
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