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FM I Example

The Dire Company balance sheet as of December 31, 2010, shows total assets of $2,000,000, an increase from $1,680,000 in 2009, with total liabilities rising to $1,064,000. The income statement for the year ended December 31, 2010, reports net income available for common stockholders of $113,480, a decrease from $117,800 in 2009. The company experienced growth in sales but faced increased costs, impacting overall profitability.

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4 views3 pages

FM I Example

The Dire Company balance sheet as of December 31, 2010, shows total assets of $2,000,000, an increase from $1,680,000 in 2009, with total liabilities rising to $1,064,000. The income statement for the year ended December 31, 2010, reports net income available for common stockholders of $113,480, a decrease from $117,800 in 2009. The company experienced growth in sales but faced increased costs, impacting overall profitability.

Uploaded by

ibrahimmehdi991
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd

Example

Dire Company

Balance Sheet

As at December 31 2010 2009

Assets

Cash and marketable securities 60,000 80,000

Accounts Receivable 300,000 295,000

Prepaid Insurance 25,000 20,000

Inventories 615,000 415,000

Total current assets 1,000,000 810,000

Net plan and equipment 1,000,000 870,000

Total Assets 2,000,000 1,680,000

Liabilities and stockholders' equity

Liabilities

Accounts payable 200,000 90,000

Accruals 50,000 70,000

Notes Payable-Short term 60,000 60,000

Total Current liability 310,000 220,000

Long term bonds payable 754,000 580,000

Total liabilities 1,064,000 800,000

Stockholders' equity

Preferred stock (2,000 shares outstanding) 40,000 40,000

Common stock (10,000 shares outstanding) 130,000 130,000

Retained earnings 766,000 710,000


Dire Company

Total stockholders Equity 936,000 880,000

Total liabilities and stockholders' equity 2,000,000 1,680,000

Dire Company

Income Statement

For the year ended December 31 2010 2009

Sales 3,125,000 2,955,000

Sales returns and allowances 125,000 105,000

Net sales 3,000,000 2,850,000

Costs of goods sold 2,150,000 1,950,000

Gross profit 850,000 900,000

Operating expenses excluding depreciation 466,200 547,000

Earnings before interest, taxes and depreciation 383,800 353,000

Depreciation 100,000 90,000

Earnings before interest and taxes (EBIT, or operating income) 283,800 263,000

Less interest 88,000 60,000

Earnings before taxes (EBT) 195,800 203,000

Taxes (40%) 78,320 81,200

Net income before preferred dividends 117,480 121,800

Preferred dividends 4,000 4,000

Net income available for common stockholders 113,480 117,800

Common dividends 57,500 53,000

Addition to retained earnings 55,980 64,800


Additional Data:

Bonds (long-term debt) are settled with annual payment of Br 50,000.

Annual lease payment of Br 40,000 was included in the operating expenses during each period.

Net purchases for the 2009 were Br 1,095,000.

Common stock price per share was Br 180.00 during 2010 and Br 190 during 2009.

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