Watson Leisure Time Sporting Goods - Copy

Watson Leisure Time Sporting Goods - Copy - Watson Leisure...

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Watson Leisure Time Sporting Goods 1 Watson Leisure Time Sporting Goods Devry University BUSN 379
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Watson Leisure Time Sporting Goods 2 Exhibit 1 WATSON LEISURE TIME SPORTING GOODS Income Statement 200X 200Z Sales (all on credit). ...................................... $1,500,000 $2,160,000 Cost of goods sold. ....................................... 950,000 1,300,000 Gross profit. .................................................. 550,000 860,000 Selling and administrative expense*. ........... 380,000 590,000 Operating profit. ........................................... 170,000 270,000 Interest expense. ........................................... 30,000 85,000 Net income before taxes. .............................. 140,000 185,000 Taxes. ............................................................ 46,120 64,850 Net income. ................................................... $ 93,880 $ 120,150 Shares. ........................................................... 40,000 47,000 Earnings per share. ....................................... $2.35 $2.56 *Includes $20,000 in lease payments for each year. Exhibit 2 WATSON LEISURE TIME SPORTING GOODS Balance Sheet 200X 200Z Assets Cash. ............................................................. $ 20,000 $ 20,000 Marketable securities. ................................... 30,000 50,000 Accounts receivable. ..................................... 150,000 330,000 Inventory. ...................................................... 250,000 325,000 Total current assets. ................................. 450,000 725,000 Net plant and equipment. .............................. 550,000 1,169,000 Total assets. .................................................. $1,000,000 $1,894,000 Liabilities and Stockholders’ Equity Accounts payable. ......................................... $ 100,000 $ 200,000 Notes payable (bank). ................................... 100,000 300,000 Total current liabilities. ........................... 200,000 500,000 Long-term liabilities. .................................... 250,000 550,740 Total liabilities. ........................................ 450,000 1,050,740 Common stock ($10 par). ............................. 400,000 460,000 Capital paid in excess of par. ........................ 50,000 80,000 Retained earnings. ........................................ 100,000 303,260 Total stockholders’ equity. ...................... 550,000 843,260
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Watson Leisure Time Sporting Goods 3 Total liabilities and stockholders’ equity. ..... $1,000,000 $1,894,000 Exhibit 3 Selected Industry Ratios 200X 200Z Growth in sales. ............................................ 10.02% Profit margin. ................................................ 5.75% 5.81% Return on assets (investment). ...................... 8.22% 8.48% Return on equity. .......................................... 13.26% 14.16% Receivable turnover. ..................................... 10X 10.1X Average collection period. ............................ 36 days 35.6 days Inventory turnover. ....................................... 5.71X
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This note was uploaded on 07/11/2010 for the course BUSINESS BUSN 379 taught by Professor Wright during the Spring '09 term at DeVry San Diego.

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Watson Leisure Time Sporting Goods - Copy - Watson Leisure...

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