Financial Management
Problem 1- Jigsaw Corporation
Jigsaw Corporation is a small firm that specializes in the manufacture of jig saw puzzles for children and adults. Jigsaw management has been impressed by the recent success (especially in the children puzzle market) of their major competitor, Melissa and Doug Corporation.
Jigsaw is considering an expansion in the market for children’s puzzles. That requires significant investment, and the management plans to finance the investment by a combination of short-term borrowing, intermediate-term notes, and new stock issue.
They have identified a potential group of new investors, and the new investors would require organized financial statements. Your job is to provide such statements. You have gone thru old records and gathered the following information.
For Year 2019 For Year 2020
Cost of Goods Sold $199,000 $180,300
Cash $29,200 as of 12/31 $35,300 as of 12/31
Interest Paid $14,100 $18,900
Selling & Gen Admin Expenses $33,200 $30,600
Fixed Assets net of Depreciation $166,100 as of 12/31 $224,800 as of 12/31
(i.e., Net Fixed Assets)
Annual Net Sales $550,400 $503,800
Annual Depreciation $42,000 $39,500
Accounts Receivable $17,300 as of 12/31 $44,600 as of 12/31
Accounts Payable $31,800 as of 12/31 $11,700 as of 12/31
Notes Payable $16,400 as of 12/31 $12,800 as of 12/31
Inventory $32,000 as of 12/31 $37,300 as of 12/31
Long term Debt $98,400 as of 12/31 $82,000 as of 12/31
New Equity $0 for this year $14,388 for this year
Dividend Payout Percentage 25% 25%
(% of Earnings Available to Common Shareholders)
Tax Rate 40% 30%
Number of days in the year 365 365
Prepare the following Statements for Jigsaw Management.
Income Statement for both the years (in Excel)
Balance sheet as of 12/31 for both the years (in Excel)
Statement of Financial Cash Flows for 2019 (in Excel)
Commentary on Financial Cash Flow as it applies to Jigsaw (in word Document)
Problem 1- Roman Gardens
Roman Gardens is a famous Italian restaurant in Gotham City. Use the financial information given below to answer questions. All figures indicated are in thousands of dollars.
As of 12/31/2019 As of 12/31/2020
Cash $530 $700
Marketable Securities $180 $240
Accounts Receivable $380 $430
Inventory $830 $680
Net Fixed Assets $4,700 $5,200
Accounts Payable $530 $570
Notes Payable $340 $290
Long Term Debt $2,300 $2,560
Sales Revenue $7,200
Cost of Goods Sold $4,900
GSA Expenses $400
Depreciation $710
Interest $90
Taxes $370
Dividends $350
Answer the following questions as they apply to the year 2020. (in Excel)
Provide a very brief commentary for each question (< 3 sentences). (in word Document)
1) Quick Ratio _________
2) Total Debt Ratio _________
3) Equity Multiplier _________
4) Inventory Turnover _________
5) Average Collection Period _________
6) Net Profit Margin _________
7) Capital Intensity Ratio _________
8) Return on Assets (ROA) _________
9) Return on Equity (ROE) _________
10) Illustrate the DuPont Identity as a function of three terms. Make sure your illustration verifies that the answer to ROE using Dupont Identity is same as what you got for question 9. (in word Document)
