General Companys financial statements for 2009 follow here and on the following pages: Required a. Compute the
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Required
a. Compute the Z score of General Company at the end of 2009.
b. According to the Altman model, does the Z score of General Company indicate a high probability of financialfailure?
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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GENERAL COMPANY Statement of Income Years Ended December 31, 2009, 2008, and 2007 2009 2008 2007 Net sales Cost and expenses: $860,000 $690,000 Cost ofproducts sold 730,000 46,000 630,000 40,000 3.900 673,900 96,100 24.000 S 72,100 $ 4.10 580,000 38,000 Selling, general, and administrative Interest and debt expense 4,000 6,500 Income before income taxes Provision Net income Net income per share 780,000 80,000 33.000 S 47,000 S 2.67 624,500 65,500 21,000 44.500 S 2.54 for income ta xes GENERAL COMPANY Statement of Cash Flows Years Ended December 31, 2009, 2008, and 2007 2009 2008 2007 Operating activities: $ 47,000 S 72,100 S 44,500 Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Deferred taxes Increase in accounts receivable Decrease (increase) in inventories Decrease (increase) in prepaid expenses Increase (decrease) in accounts payable Increase (decrease) in income taxes Increase (decrease) in accrued liabilities 21,000 3,800 (4,000) 3,000) (300) 6,000 100 6,000 76,600 20,000 2,500 (3,000) (2,500) (200) 5,000 300 3,000 97.200 19,000 2,000 (3,000) 1,000 100 (1,000) (100) (1,000) 61.500 Net cash provided by operating activities Investing activities Additions to property, plant, and equipment (66,500) $(84,400) (52,500) 2009 2008 2007 Financing activities (1,000) 9,200 1,000 (10,300) 1,100) 9,000 39,000 $ 48,000 Payment on long-term debt Issuance of other long-ter liabilities Issuance of capital stock Dividend paid (2,000) 1,000 (1,500) (1,000) Net cash used in financing activities Increase (decrease) in cash Cash at beginning of year Cash at end of year 9,800) (10,800) 2,000 37,000 39,000 9,500 (12,000) (3,000) 40,000 $ 37,000 GENERAL COMPANY Balance Sheet December 31, 2009 2009 2008 Assets Current assets: S 48,000 S 39,000 Cash Accounts receivable, less allowance for doubtful accounts of $2,000 in 2009 and $1,400 in 2010 Inventories Prepaid expenses 125,000 71,000 2.500 246,500 121,000 68,000 2. 200 230.200 Total curent assets Property, plant, and equipment: 12,000 98,000 303,000 413,000 65,000 248,000 $494,500 Land and land improvements Buildings Machinery and equipment 10,500 89,000 247,000 346,500 144,000 02500 $432,700 Less: Accumulated depreciation Net property, plant, and equipment Total assets Liabilities and Stockholders Equity Current liabilities: S 50,000 3,600 28,000 81,600 64,000 6,800 24,000 176,400 Accounts payable Income taxes Accrued liabilities S 56,000 3,700 34,000 93,700 63,000 16,000 27,800 200,500 Total current liabilities g-term debt Other long-term liabilities Deferred federal income taxes Total liabilities Stockholders' equity: 46,000 248,000 294,000 45,000 211.300 Capital stock Retained eamings Total stockholders' equity Total liabilities and stockholders' equity $432,700
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Financial Reporting and Analysis Using Financial Accounting Information
ISBN: 978-1439080603
12th Edition
Authors: Charles H Gibson
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