This assignment involves a case analysis that will require financial management math equations to be completed. The assignment will require forecasted statements to be completed. They will include the following: Income statement, balance sheet, required external financing needed, and key financial ratios (ROE, interest coverage ratio, etc.). This requires a Microsoft Excel spreadsheet(s) for the analysis to be provided. Documents with additional information will be attached. The assignment will need to be completed on or before the due date (4/8/25). Please have great experience with these equations before bidding and don’t bid if you won’t have time to work solely on this assignment to ensure the deadline is met.
You must show all computations and attach your spreadsheet(s). Your spreadsheet(s) must enable me to follow your work.
| Flash Memory, Inc. | |||||||||||||||||||||||||||||||||||||||||
| Exhibit 1 Income Statements, | 2007 | 2009 | |||||||||||||||||||||||||||||||||||||||
| 2008 | |||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 77 | $80,953 | $ | 89 | ||||||||||||||||||||||||||||||||||||
| Cost of goods sold | $62,519 | $68,382 | $72,424 | ||||||||||||||||||||||||||||||||||||||
| Gross margin | $14,612 | $12,571 | $16,826 | ||||||||||||||||||||||||||||||||||||||
| Research and development | $3,726 | $4,133 | $4,416 | ||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | $6,594 | $7,536 | $7,458 | ||||||||||||||||||||||||||||||||||||||
| Operating income | $4,292 | $9 | $4,952 | ||||||||||||||||||||||||||||||||||||||
| Interest expense | $480 | $652 | $735 | ||||||||||||||||||||||||||||||||||||||
| Other income (expenses) | -$39 | -$27 | -$35 | ||||||||||||||||||||||||||||||||||||||
| Income before income taxes | $3,773 | $223 | $4,182 | ||||||||||||||||||||||||||||||||||||||
| Income taxes (a) | $1,509 | $1,673 | |||||||||||||||||||||||||||||||||||||||
| Net income | $2,264 | $134 | $2,509 | ||||||||||||||||||||||||||||||||||||||
| Earnings per share | $ | 1.52 | $ | 0.09 | $ | 1.68 | |||||||||||||||||||||||||||||||||||
| (a) In years 2007 and after, Flash’s effective combined federal and state income tax rate was | 4 | 0% |
| Flash Memory, Inc. | ||||||
| Exhibit 2 Balance Sheets, 2007 – 2009 ($000s except number of shares outstanding) | ||||||
| December 31, | ||||||
| Cash | $2,536 | $2,218 | $2,934 | |||
| Accounts receivable | $10,988 | $12,864 | $14,671 | |||
| Inventories | $9,592 | $11,072 | $11,509 | |||
| Prepaid expenses | $309 | $324 | $357 | |||
| Total current assets | $23,425 | $26,478 | $29,471 | |||
| Property, plant & equipment at cost | $5,306 | $6,116 | $7,282 | |||
| Less: | Accumulated depreciation | $792 | $1,174 | $1,633 | ||
| Net property, plant & equipment | $4,514 | $4,942 | $5,649 | |||
| Total assets | $27,939 | $31,420 | $35,120 | |||
| Accounts payable | $3,084 | $4,268 | $3,929 | |||
| Notes payable (a) | $6,620 | $8,873 | $10,132 | |||
| Accrued expenses | $563 | $591 | ||||
| Income taxes payable | $15 | $167 | ||||
| Other current liabilities | $478 | $502 | $554 | |||
| Total current liabilities | $10,896 | $14,243 | $15,434 | |||
| Common stock at par value | ||||||
| Paid in capital in excess of par value | $7,980 | |||||
| Retained earnings | $9,048 | $9,182 | $11,691 | |||
| Total shareholders’ equity | $17,043 | $17,177 | $19,686 | |||
| Total liabilities & shareholders’ equity | ||||||
| Number of shares outstanding | 1,491,662 | |||||
| (a) Secured by accounts receivable. | ||||||
| (b) To avoid a penalty for underpayment of income taxes, Flash made equal estimated tax payments quarterly on the 15th of | ||||||
| April, June, September, and December of each year. The total of these four quarterly payments was required to equal at | ||||||
| least the lesser of (a) 90% of the taxes that would actually be incurred in the same year, or (b) | 100% | |||||
| on income of the prior year. | ||||||
| For informational purposes only: | ||||||
| Notes payable / accounts receivable | 60.2% | 69.0% | 69.1% | |||
| Notes payable / shareholders’ equity | 38.8% | 51.7% | 51.5% | |||
| Notes payable / total capital | 28.0% | 34.1% | 34.0% |
| Exhibit 3 Key Forecasting Assumptions and Relationships for 2010 Through 2012 | ||
| Line Item | Assumption or Ratio | |
| 81 | ||
| 5.0% of sales | ||
| 8.36% of sales | ||
| Beginning of year debt balance × interest rate | ||
| $50,000 of expense each year | ||
| 3.3% of sales | ||
| 60 days sales outstanding | ||
| 52 days of cost of good sold | ||
| 0.4% of sales | ||
| Beginning PP&E at cost + capital expenditures | ||
| Beginning A/D + 7.5% of beginning PP&E at cost | ||
| 30 days of purchases | ||
| Purchases | 60% | |
| 0.73% of sales | ||
| 10% of income taxes expense | ||
| 0.62% of sales |
| Exhibit 4 Selected Financial Information for Flash Memory, Inc., and Selected Competitors, 2007 through 2009 | |||||||||||||
| Micron Technology | |||||||||||||
| 30-Apr-10 (a) | |||||||||||||
| Sales ($ millions) | 5,688 | 5,841 | 4,803 | ||||||||||
| EPS ($) | -0.42 | -2.10 | -2.29 | 1.46 | |||||||||
| Dividend per share ($) | — | ||||||||||||
| Closing stock price ($) | n/a | 7.25 | 2.64 | 10.56 | 9.35 | ||||||||
| Shares outstanding (millions) | 1.492 | 769.1 | 772.5 | 800.7 | 847.6 | ||||||||
| Book Value per share ($) | 11.43 | 11.52 | 13.20 | 10.08 | 8.00 | 5.81 | 6.61 | ||||||
| ROE | 13. | 28% | 0. | 78% | 12.75% | -4.13% | -26. | 21% | -39.43% | 2 | 1.00 | ||
| Capitalization (book value) | |||||||||||||
| Debt | 34% | 24% | 31% | 33% | |||||||||
| Equity | 72% | 66% | 76% | 69% | 67% | ||||||||
| Beta coefficient | 1.25 | ||||||||||||
| SanDisk Corporation | STEC, Inc. | ||||||||||||
| 3,986 | 3,351 | 3,567 | 189 | 227 | 354 | ||||||||
| 0.84 | -8.82 | 1.83 | 3.71 | 0.20 | 1.47 | 1.29 | |||||||
| 33.17 | 9.60 | 28.99 | 39.84 | 8.74 | 4.26 | 16.34 | 13.90 | ||||||
| 227.7 | 225.3 | 227.4 | 229.3 | 49.8 | 50.0 | 49.4 | 50.3 | ||||||
| 22.64 | 15.27 | 17.18 | 18.13 | 3.72 | 3.63 | 5.65 | 5.48 | ||||||
| 3.70% | -57.74% | 10.63% | 17.87% | 5.40% | 2.36% | 26.06% | 18.90% | ||||||
| 15% | 22% | 19% | |||||||||||
| 85% | 79% | 81% | |||||||||||
| 1.36 | |||||||||||||
| (a) Security analyst estimates for year-end EPS $ and Return on Equity; actual data on April 30, 2010, for all other items. |
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