Serendipity

Serendipity - UNDERSTANDING FINANCIAL STATEMENTS...

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Unformatted text preview: UNDERSTANDING FINANCIAL STATEMENTS Serendipity Manufacturing Company, Inc CONSOLIDATED BALANCE SHEET December 31, 2000 and 1999 (dollars in thousands) ASSETS Current Assets Cash Marketable Securities at market value Accounts Receivable, less allowance for doubtful accounts: 19x9, $2,375 and 19X8, $3,000 Inventories, at lower of first in, first out cost or market Prepaid Expenses and Other Current Total Current Assets Property, Plant, & Equipment Land Buildings Machinery Leasehold Improvements Furniture, Fixtures, etc. _ Total Property, Plant & Equipment Less: Accumulated Depreciation Net Property, Plant & Equipment . Intangible Assets less amortization TOTAL ASSETS http://www.coba.usf.edu/departments/management/faculty/rouse/UNDERSTANDING%2... $ $ $ ' $ $ $ 2000 20,000 40,000 156,000 180,000 4,000 400,000 30,000 125,000 200,000 15,000 15,000 385,000 125,000 260,000 2,000 662,000 Page 1 of 5 1999 $ 15,000 32,000 l45,000 185,000 3,000 $ 380,000 $ 30,000 113,500 171,100 15,000 12,000 $ 346,600 97,000 $ 249,500 $ 2,000 $ 63 1,600 1/12/2005 UNDERSTANDING FINANCIAL STATEMENTS Page 1 of 6 Serendipity Manufacturing Company, Inc December 31, 2000 and 1999 (dollars in thousands) LIABILITIES 2000 1999 Current Liabilities Accounts Payable $ 60,000 S 57,000 Notes payable 51,000 61,000 Accrued Expenses 30,000 36,000 Income Taxes Payable 17,000 15,000 Other Current Liabilities 12,000 12,000 Total Current Liabilities $ 170,000 $ 181,000 Long Term Liabilities Deferred Income Taxes $ 16,000 $ 9,000 12.5% Unsecured Debentures 130,000 130,000 Other LongTerm Debt - 6,000 TOTAL LIABILITIES $ 316,000 $ 326,000 SHAREHOLDERS' EQUITY Preferred Stock, $5.83 cumulative, $100 par value, authorized, issued, and outstanding, 60,000 shares 53 6,000 $ 6,000 Common Stock, $5 par value, authorized 20,000,000 shares, 19X9 issued 15,000,000 shares, 19X8 14,500,000 shares 75,000 72500 Additional Paid in Capital 20,000 13,500 Retained Earnings 250,000 218,600 Less: Treasury Stock at Cost - 19x9, 19X8, 1,000 shares (5,000) (5,000) TOTAL SHAREHOLDERS' EQUITY $ 346,000 $ 305,600 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 662,000 $ 631,600 http://www.coba.us£edu/departments/management/faculty/rouse/UNDERSTANDING%2... 1/12/2005 UNDERSTANDING FINANCIAL STATEMENTS Serendipity Manufacturing Company, Inc CONSOLIDATED INCOME STATEMENT Years ended December 31, 2000 and 1999 (in thousands) Net Sales Cost of Sales Gross Profit Operating Expenses Depreciation and amortization Selling, general, and administrative expenses Operating Income Other Income (Expense) Dividend and Interest Income Interest Expense Foreign Currency gains (losses) Income Before Income Taxes and Extraordinary Loss Income Taxes Income Before Extraordinary Loss Extraordinary Loss (net of tax benefit of $750) Net Income Earnings per Common'Share before Extraordinary Loss Earnings per Common Share, Extraordinary Loss Net Income (per Common Share) http://www.coba.usf.edu/ denartments/management/facultv/rouse/I IN DERSTANDING%2___ $ $ $ $ $ 2000 765,000 535,000 230,000 28,000 100,929 101,071 5,250 (12,125) 2,000 96,196 41,446 54,750 (5,000) 49,750 3.32 (0.33) 2.99 Page; of 6 1999 $ 725,000 517,000 $ 208,000 $ 25,000 109,500 $ 73,500 $ 9,500 (16,250) (1,000) $ 65,750 26,250 $ 39,500 $ 39,500 $ 2.72 $ 2.77 171277.005 UNDERSTANDING FINANCIAL STATEMENTS Pagel-I- of b CONSOLIDATED INCOIVIE STATEMENT (Common Size) Years ended December 31, 2000 and 1999 (in thousands) Net Sales 100.00% 100.00% Cost of Sales 69.93% 71.31% Gross Profit 30.07% 28.69% Operating Expenses Depreciation and amortization 3.66% 3.45% Selling, general, and administrative expenses 13.19% 15.10% Operating Income 13.21% 10.14% Other Income (Expense) Dividend and Interest Income Interest Expense 1 .5 8% 2.24% Foreign Currency gains 0.26% —0.14% (losses) Income Before Income Taxes and Extraordinary Loss 12.57% 9.07% Income Taxes 5.42% 3.48% Income Before Extraordinary Loss 7.16% 5.45% Extraordinary Loss (net of tax benefit of $750) -0.65% 0.00% Net Income 6.50% 5.45% httn://www.coba.usf.edu/denartments/management/facultv/rouse/UNDERSTANDING%2... 1/12/2005 UNDERSTANDING FINANCIAL STATEMENTS Page gofé Serendipity Manufacturing Company, Inc. CONSOLIDATED STATENIENT OF CASH FLOWS Year ended December 31, 2000 (in thousands) Cash Flows from Operating Activities Net Income $ 49,750 Adjustments to Reconcile Net Income to Net Cash fi'om Operating Activities Depreciation and Amortization $ 28,000 Increase in Marketable Securities (8,000) Increase in Accounts Receivable (11,000) Decrease in Inventory 5,000 Increase in Prepaid Expenses (1.000) Increase in Deferred Taxes 7,000 Increase in Accounts Payable 3,000 Decrease in Accrued Expenses (6,000) Increase in Income Taxes Payable ' 2,000 Total Adjustments $ 19,000 Net Cash Provided by Operations $ 68,750 Cash Flows from Investing Activities Purchase of Fixed Assets ' S (3 8,400) Net Cash Used for Investing Activities :5 (3 8,400) Cash Flows from Financing Activities Decrease in Notes Payable $ (10,000) Decrease in Long Term Debt (6,000) Proceeds from Issuance of Common Stock 9,000 Payment of Dividends (18,350) Net Cash Used in Financing Activities 5 (25,350) Increase in Cash 5,000 Cash at Beginning of Year - 15,000 Cash at End of Year 85 20,000 Here’s how we might interpret Serendipity’s cash flow statement: Sources of Cash: httn://www.coba. usf.edu/departments/management/faculty/rouse/UNDERSTANDING%2. .. 1/1 2/2005 UNDERSTANDING FINANCIAL STATEMENTS ‘ Page éofé Operations $68,750,000 Issuance of common stock , 9,000,000 Cash Inflows During the Year $77,750,000 Uses of Cash Purchase of fixed assets $38,400,000 Payment of Dividends 18,350,000 Payments made on notes payable and other iong term debt 16,000,000 Cash Outflows during the Year $72,750,000 httn:f/www-coba.usf.edu/departments/management/faculty/rouse/UNDERSTANDING%2... 1/12/2005 litigate-stir:-widens-f Key Business Ratios SIC: 39 Line of Business: MISC MFG INDUSTRIES Asset Range: Ali Asset Ranges within SIC Group Industry Quartiies Solvency Quick Ratio (times) Current Ratio (times) Current Liabilities 1 Net Worth (%) Current Liabilitiesl Inventory (%) Total Liabilities! Net Worth (%) Fixed Assets I Net Worth (%) fifficiency Collection Period (days) Sales;r Inventory (times) Assets! Sales (%) Sales 1 Net Working Capital (times) Accounts Payable I Sales (%) Profitabiiity Return on Sales (%) Return on Assets (%) Return on Net Worth (%) E3 ppe r 10.3 24 http://proxy.kennesaw.edu:2442/print_perjear.asp 2003 Statement Sampling: 252 Median ‘ 1.2 2.2 56 118.2 89.6 29.1 Median 46 7.5 52.5 4.8 5 Martian 1.7 3.9 8.5 Page 1 of 1 1/ 12/2005 ...
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Serendipity - UNDERSTANDING FINANCIAL STATEMENTS...

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