Financial Management Essay Example | Topics and Well Written Essays - 1500 words

Financial Management - Essay Example 2,000 liabilities and stockholders’ equity liabilities: overdraft $ 1392 Interest payable $ 4032 loan payable $ 24,000 Campbell loan payable $ 8,068 retained earnings $ 6,608 Common Stock $ 60,000 Total $ 100,068 Vertical Analysis PROFIT AND LOSS STATEMENT Company A Company B NET SALES 100% 100% COST OF GOODS SOLD 95.2% 78% GROSS PROFIT 4.8% 22% SELLING, GENERAL AND ADMINISTRATION EXPENSE 2.6% - OPERATING INCOME BEFORE IMPAIRMENT RECOVERY 2.2% - IMPAIRMENT RECOVERY 0 - Intangible asset repairment charges - 0.8% OPERATING INCOME 2.2% 3% OTHER INCOME/(EXPENSE) 0.1% CHANGE IN VALUE OF DERIVATIVE LIABILITY 0.2% - INTEREST EXPENSE 0.8% - INCOME BEFORE INCOME TAXES 1.6% 3.1% Income taxes 0.6% 0.9% Net income 1% 2.3% BALANCE SHEET COMPANY A COMPANY B Current Assets: Cash 1.6% 27.1% Trade accounts receivables 20.94% 17.3% Inventories 68.25% 22.9% Prepaid expenses 2.8% Deferred tax assets 1.25% - Other current assets 4.09% - Property plant and equipment 1.49% 14.5% Intangible assets - 0.8% Cash surrender value of life insurance - 10.9% Advance to suppliers, net of imputed interest 1.66% - Preferential supply agreement 0.19% - Long term financing costs, net of amortization 0.50% - Other assets - 3.7% Total assets 100% 100% Liabilities and stockholders equity: Current liabilities: Accrued salaries, wages and benefits - 2.6% Notes payable-banks 57.25% - Current maturities of mortgage payable 0.05% - Trade accounts payable 18.55% 6.2% Income tax payable 1.51% - Accrued expenses and derivative liabilities 1.51% - Dividends payable 0.008% 0.7% other accrued expenses - 0.5% Total current liabilities 78.9% 10% Deferred compensation - 4.8% Mortgage payable, net of current maturities 0.54% - Subordinated convertible debt net of unamortized discount of $2499 3.52% - Derivative liability for embedded conversion option 0.71% - Deferred taxes payable 0.07% - Stock holders equity: Common stock 0.4% 11.6% Additional paid in capital 4.42% - Retained earnings 13.0% 73.6% Accumulat ed other comprehensive loss (0.7%) 0.07% Treasury stock (1.30%) - Total liabilities and shareholder’s equity 100% 100% Cash flow statements Company A 2011 Cash flow from operating activities Net income 116.07% Adjustments to reconcile net income to net cash in operating activities Depreciation and amortization 10.15% Change in value of derivative liability -20.96% Amortization of convertible note discount 7.72% Impairment recovery 0.00% Provision for doubtful debts 4.84% Deferred income taxes -13.20% Foreign exchange loss, and others -0.26% Changes in: Restricted cash 0.00% Trade account receivable -364.62% Inventories -1225.27% Other current ass