Genmo solution
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The balance sheet shows Genmo Corporation had total assets of $7,202 as of December 31, 2010, with current assets of $2,678 and noncurrent assets of $4,524. Total liabilities (current and noncurrent) were $4,170, consisting of current liabilities of $2,285 and noncurrent liabilities of $1,885. Shareholders' equity was $3,032. The income statement shows Genmo Corporation had revenues of $10,281 and net income of $291 for the year ended December 31, 2010.
Genmo solution
- 1. Exhibit A GENMO CORPORATION Balance Sheet as of December 31, 2010 Line Assets 1. Cash and marketable securities.......................................................................................................................... $ 416 2. Accounts receivable.......................................................................................................................................... 1,117 3. Subtotal: quick assets .................................................................................................................................... 1,533 4. Inventories ....................................................................................................................................................... 872 5. Prepaid expenses.............................................................................................................................................. 273 6. Total current assets........................................................................................................................................ 2,678 7. Noncurrent assets............................................................................................................................................. 4,524 8. Total assets................................................................................................................................................ $7,202 Liabilities and Equity 9. Current liabilities............................................................................................................................................... $2,285 10. Noncurrent liabilities ......................................................................................................................................... $1,885 11. Shareholders’ equity ......................................................................................................................................... 3,032 12. Total invested capital........................................................................................................................................ 4,917 13. Total liabilities and shareholders’ equity....................................................................................................... $7,202 Income Statement, 2010 14. Revenues......................................................................................................................................................... $10,281 15. Cost of sales..................................................................................................................................................... 8,727 16. Gross margin.................................................................................................................................................... 1,554 17. Other expense .................................................................................................................................................. 1,263 18. Net Income ...................................................................................................................................................... $ 291
- 2. Notes Line 1. Line 3 - line 2 2. Revenue (10,281) * days’ receivables (39.66) / 365 3. Current liabilities (2,285) * quick ratio (0.671) 4. Cost of sales (line 15) inventory turnover (10.005) 5. Line 6 - (line 3 + line 4) 6. Current liabilities (2,285) * current ratio (1.172) 7. Line 8 - line 6 8. Same as line 13 9. Given 10. Let debt = X; then X (4,917 - X) = 0.6215 (debt/equity). Solving, X = 1,885. (The 4,917 comes from line 12.) 11. Line 12 - line 10 12. Revenues (10,281) / invested capital turnover (2.091) 13. Line 9 + line 12 14. Given 15. Line 14 - line 16 16. Revenues (10,281) * gross margin percentage (0.1512) 17. Line 16- line 18 18. Revenue (10,281)* profit margin percentage (0.02831)