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MUST have THE COMPUTATIONS SUPPORTING FINAL ANSWER 1. Following is the balance sheet for Sullivan Hotels Corporation as of December 31, 2018. In 2018, the corporation generated a net income of $430,000. Answer the following questions using this information and the financial statement below. A. Calculate the earnings per share in 2018. B. Assume that on January 1, 2019, Sullivan Corporation’s only transactions were to issue 300,000 shares of $1 par value common stock for a market price of $10 per share. On the next day, 50 percent of the proceeds were used to immediately pay down the long-term debt, 25 percent of the proceeds were used to immediately buy fixed assets, and the remainder was deposited in the corporation’s cash bank account. Compile the balance sheet after the new stock issue (Note that the value of the sale of stock more than par value is accounted for in “Paid-in-Capital”). C. Assume that Sullivan Corporation generates a net income of $450,000 in 2019 (after the new stock issue). Calculate the new earnings per share. SULLIVAN HOTELS CORPORATION Balance Sheet; January 02,2019 Current Assets Current Liabilities Cash $ 50,000 Wages Payable $ 30,000 Marketable Securities 30,000 Accounts Payable 25,000 Accounts Receivable 40,000 Notes Payable 50,000 Inventory 60,000 Total Current Liabilities $ 105,000 Prepaid Expenses 15,000 Total Current Assets $ 195,000 Long-term Debt Mortgage and LT Loans $2,500,000 Fixed Assets Total Long-term Debt $2,500,000 Net Fixed Assets $7,000,000 Total Fixed Assets $7,000,000 Owners’ Equity Common Stock (3,000,000 shares ($1 par)) $3,000,000 Paid in Capital in excess of par 500,000 Retained Earnings 1,090,000 Total Owners’ Equity $4,590,000 Total Assets $7,195,000 Total Liabilities and Owner’s Equity $7,195,000 2. Financial Statement Analysis of New Venture Fitness Drinks. Use the 2014, 2013, and 2012 consolidated financial statements of New Venture Fitness Drinks, Inc. It is provided as a PDF file on the website. Included are the Consolidated Balance Sheets (for the years ended 2014, 2013 & 2012), Consolidated Income Statements for the years ended 2014, 2013, & 2012), and the Consolidated Statements of Cash Flows (for the years ended 2014 & 2013). A. Vertical Analysis and Horizontal Analyses. Conduct the following and write a summary of findings related to these Analyses. If you notice something of particular interest in the Vertical Analysis, refer to the Horizontal Analysis that supports or explains that finding (and visa-versa). 1. Vertical Analysis of the Balance Sheet using Total Assets as constant for 2014 and 2013 2. Vertical Analysis of the Income Statement using Total Revenues as constant for 2014 and 2013 3. Horizontal Analysis of the Balance Sheet for the change between 2014 & 2013, AND between 2013 & 2012 4. Horizontal Analysis of the Income Statement for the change between 2014 & 2013 AND between 2013 & 2012. B. Ratio Analysis for 2014 and 2013. Compute the following ratios for New Venture for 2014 and 2013 and describe what each ratio says about the business AND discuss what changes, if any, across the two years say about the business. To complete some of the ratios, you will need the following information. For each ratio, include in your answer a brief discussion of each ratio, and also any differences in conclusions the two ratios suggest). a. Assume 65% of “Net Sales” is credit sales for 2014. b. Assume 70% of “Net Sales” is credit sales for 2013. c. Assume 80% of “Net Sales” is credit sales for 2012. d. Assume there is NO preferred stock or dividends. 1. Liquidity Ratios · Current Ratio · Quick Ratio 2. Activity Ratios · Accounts Receivable Turnover Ratio · Average collection period · Total Assets Turnover Ratio 3. Leverage Ratios · Debt-to-Equity Ratio · Debt-to-Total Assets Ratio · Times-Interest-Earned Ratio 4. Profitability Ratios · Operating Profit Margin Ratio · Net Profit Margin Ratio · Operating Return on Assets Ratio · Return on Equity Ratio 5. Market Ratios · Earnings per Common Share Ratio · Operating Cash Flow per Share Ratio · Free Cash Flow per Share Ratio 3. You run a business in Fort Collins, Colorado manufacturing custom replicas of new and old Harley-Davidson, Triumph, BMW, and Indian Motorcycles. These replicas are all approximately 6 inches long and 3 – 4 inches high. You travel to motorcycle rallies around the country throughout the year selling these attractive replicas. Each replica takes 1½ hours to produce, has a sales price of $25.00, raw materials for the replica are $5.00, and production labor is paid $8.00 per hour. Operating expenses are as follow: Salaries $3,000 per week; insurance is $1,500 per quarter; rent is $4,000 per month; and utilities are $1,200 per month. A. How many motorcycle replica units must you sell each month in order to break-even? B. How many dollars in sales does this represent? C. What is the contribution margin for each replica sold? D. If the goal is to make $10,000 profit each month, how many replicas must you sell? 4. Using the abbreviated income statement below for Wiley’s Outdoor Gear Corp. do the following: A. Calculate the earnings per share B. Calculate the degree of operating leverage (DOL) C. Calculate the degree of financial leverage (DFL) D. Calculate the degree of combined leverage (DCL) E. Explain what DOL, DFL, and DCL mean F. Discuss the results of your computations and what you think they say about Wiley’s Corporation Wiley’s Outdoor Gear Corp. Abbreviated Income Statement 12/31/19 12/31/18 Total Sales Revenue $2,386,444 $1,300,933 Cost of Goods Sold 488,091 328,119 Gross Profit $1,898,353 $ 972,814 Operating Expenses 71,855 46,623 Operating Income $1,826,498 $ 926,191 Interest and Taxes 628,422 347,165 Net Income $1,198,076 $ 579,026 Common Shares of stock: 200,000 shares outstanding 5. Using the Balance Sheet for Wanderlust Travel Excursions and Memories business shown below, do the following. A. Create a Pro Forma Balance Sheet for the following year using the percentage of sales method. B. If next year’s sales forecast increases to $425,000, profit margin is 12%, and the owner payout ratio is 85%, what is required in new financing? Wanderlust Travel Excursion and Memories Pro Forma Balance Sheet Total Sales Current Year $275,000 Percentage of Sales (%) Forecast Sales Next Year $350,000 Assets Current Assets Cash $ 5,694 Accounts Receivable 19,662 Inventory 3,381 Total Current Assets $28,737 Fixed Assets Furniture and Fixtures $ 5,595 Transportation Equipment 25,456 Total Fixed Assets $31,051 Total Assets $59,788 Liabilities and Owners’ Equity Current Liabilities Notes Payable $ 15,456 Accrued Taxes Payable 3,598 Total Current Liabilities $ 19,054 Long Term Debt 18,654 Total Liabilities $ 37,708 Owner’s Equity 22,080 Total Liabilities and Owner’s Equity $ 59,788 6. The table below provides a list of sales figures for the previous year (2019) for your mountain resort, which experiences consistent visitation throughout the year. You want to project a forecast for January of the following year (2020). You want to select from 3 models to make your forecast: 1) a 3-month moving average; 2) a weighted moving average (you believe your weights should be 0.2, 0.3, & 0.5); and 3) an exponential smoothing model in which will use an = 0.2. Your forecast for January 2019 was $32,000. A. Construct a table that shows each of these forecasts for the current year and provide the forecast for January of this coming year. B. Using the data given, and your forecasts, which model do you think is the best model for your business? Why? Month Previous Year Sales in $ January 2019 $32,645 February 2019 $31,456 March 2019 $30,270 April 2019 $33,129 May 2019 $34,456 June 2019 $35,256 July 2019 $36,218 August 2019 $35,456 September 2019 $34,250 October 2019 $32,156 November 2019 $30,125 December 2019 $32,275