FINANCIAL ANALYST TEAM (09)

Transcription

1 Contestant Number Time Rank FINANCIAL ANALYST TEAM (09) Regional 2012 PRELIMINARY POINTS (160) Failure to adhere to any of the following rules will result in disqualification: 1. Contestant must hand in this test booklet and all printouts. 2. No equipment, supplies, or materials other than those specified for this event are allowed in the testing area. No previous BPA tests and/or sample tests or facsimile (handwritten, photocopied, or keyed) are allowed in the testing area. 3. Electronic devices will be monitored according to ACT standards. No more than five (5) minutes orientation No more than 90 minutes preparation time Do NOT open test booklet until instructed to do so. Property of Business Professionals of America. May be reproduced only for use in the Business Professionals of America Workplace Skills Assessment Program competition.

2 (09) Financial Analyst Team Regional 2012 Page 2 of 3 CellUSA, INC., a relatively new cellular technology company, is looking to add a service branch in a neighboring suburb with the idea this expansion will help them grab a larger share of the market. You are the leader of a team of analysts. Your team has been selected by the company CEO to analyze the balance sheets and income statements for the past two fiscal years. As you complete your analysis, round ratios and percentages to the tenth place. Using the information below, complete the balance sheets and income statements and then use the completed statements to answer the questions on the following page. CellUSA, Inc. - Comparative Income Statement Net Sales $ 25,150,000 $ 36,006,000 Cost of Goods Sold 17,560,000 25,100,000 Gross Profit?? Operating Expenses 3,100,000 3,340,000 Other expenses 1,410,000 1,414,000 Net Income?? CellUSA, Inc. - Comparative Balance Sheet Cash 2,650,000 2,800,000 Treasury Notes 2,120,000 2,724,000 Account Receivables (net) 9,954,000 8,678,000 Merchandise Inventory 8,003,000 8,370,000 Supplies 125, ,000 Land 2,025,000 3,070,000 Building (net) 2,926,000 4,007,000 Office Equipment (net) 101, ,000 Total Assets 27,904,000 29,959,000 Current Liabilities (accounts payable) 11,173,000 12,092,000 Notes Payable (Long-Term)?? Total Liabilities 18,454,000 19,629,000 Common Stock ($20 par, 400,000 shares)?? Retained Earnings 1,450,000 2,330,000 Total Stockholders Equity 9,450,000 10,330,000 Total Liabilities & Stockholders Equity $ 27,904,000 $ 29,959,000

3 (09) Financial Analyst Team Regional 2012 Page 3 of 3 Print your corrected Income Statement and Balance Sheet. Using the information above to complete the following financial calculations: 1. Current Ratio (for 2009 and 2010) 2. Return on Sales 3. Earnings per share In your report, present your conclusions to the following questions: 1. Looking at the past two years financial progress of the company, inform the CEO whether you feel it is feasible to expand at this time. 2. Do you feel the financial condition of the company at this time is stable enough to handle this expansion? Print two copies of your financial statements and any documentation you will be providing to the judges. One copy will be provided to judges for scoring and the other will be retained for use by presentation judges. No changes should take place to your work after testing time ends. NOTE: Place each team member s contestant number in the footer on each financial statement and any documentation you plan to give to the judges.

4 FINANCIAL ANALYST TEAM (09) KEY Regional 2012 PRELIMINARY POINTS (160) Failure to adhere to any of the following rules will result in disqualification: 1. Contestant must hand in this test booklet and all printouts. 2. No equipment, supplies, or materials other than those specified for this event are allowed in the testing area. No previous BPA tests and/or sample tests or facsimile (handwritten, photocopied, or keyed) are allowed in the testing area. 3. Electronic devices will be monitored according to ACT standards. No more than five (5) minutes orientation No more than 90 minutes preparation time Do NOT open test booklet until instructed to do so. Property of Business Professionals of America. May be reproduced only for use in the Business Professionals of America Workplace Skills Assessment Program competition.

5 (09) Financial Analyst Team-Regional 2012 KEY Page 2 of 4 CellUSA, INC., a relatively new cellular technology company, is looking to add a service branch in a neighboring suburb with the idea this expansion will help them grab a larger share of the market. You are the leader of a team of analysts. Your team has been selected by the company CEO to analyze the balance sheets and income statements for the past two fiscal years. As you complete your analysis, round ratios and percentages to the tenth place. Using the information below, complete the balance sheets and income statements and then use the completed statements to answer the questions listed on the following page. CellUSA, Inc. - Comparative Income Statement Net Sales $ 25,150,000 $ 36,006,000 Cost of Goods Sold 17,560,000 25,100,000 Gross Profit 7,590,000 10,906,000 Operating Expenses 3,100,000 3,340,000 Other Expenses 1,410,000 1,414,000 Net Income 3,080,000 6,152,000 CellUSA, Inc. - Comparative Balance Sheet Cash 2,650,000 2,800,000 Treasury Notes 2,120,000 2,724,000 Account Receivables (net) 9,954,000 8,678,000 Merchandise Inventory 8,003,000 8,370,000 Supplies 125, ,000 Land 2,025,000 3,070,000 Building (net) 2,926,000 4,007,000 Office Equipment (net) 101, ,000 Total Assets 27,904,000 29,959,000 Current Liabilities (accounts payable) 11,173,000 12,092,000 Notes Payable (Long-Term) 7,218,000 7,537,000 Total Liabilities 18,454,000 19,629,000 Common Stock ($20 par, 400,000 shares) 8,000,000 8,000,000 Retained Earnings 1,450,000 2,330,000 Total Stockholders Equity 9,450,000 10,330,000 Total Liabilities & Stockholders Equity $ 27,904,000 $ 29,959,000

6 (09) Financial Analyst Team-Regional 2012 KEY Page 3 of 4 Print your corrected Income Statement and Balance Sheet. Using the information above, complete the following financial calculations: 1. Current Ratio (for 2009 and 2010) Formula: Current Assets/Current Liabilities 2009: 22,852,000/11,173,000 = 2.0:1 2010: 22,773,000/12,092,000 = 1.9:1 1. Return on Sales Formula: Net income (before Interest & Taxes)/Net Sales 2009: 3,080,000/25,150,000 = 12.2% 2010: 6,152,000/36,006,000 = 17.1% 1. Earnings per share Formula: Net Income Dividends on Preferred Stock Average Outstanding Shares 2009: 3,080,000/400,000 = $ : 6,152,000/400,000 = $15.38 In your report, present your conclusions to the following questions: Looking at the past two years financial progress of the company, inform the CEO whether you feel it is feasible to expand at this time. Team answers will vary, but they should back up their decisions with quantitative data. Do you feel the financial condition of the company at this time is stable enough to handle this expansion? Although the company did increase it Cost of Merchandise, this allowed them to generate additional revenue. The company either found suppliers at a lower price or raised their retail price to allow for the additional revenue. The company has a current ratio of 2.1:1 (2009) to 1.9:1 (2010). It did go down slightly but is still able to pay its liabilities and have money left. Also, if students did a quick ratio it would still be over one. The business did take on a little more debt in 2010, but they also increased their fixed assets, which allowed them to generate additional revenue. Students should mentioned that two years of data can give them an idea, but for thorough analysis they would need more years to get a trend.

7 (09) Financial Analyst Team-Regional 2012 KEY Page 4 of 4 Teams should mention that the return on sales ratio is increasing. Whether the actual ratio is high enough it would be necessary to compare it to industry ratios.