The following accounts balances and other financial information is drawn from the records of the Fenway Company
Question:
The following accounts balances and other financial information is drawn from the records of the Fenway Company for 2022.
Fenway Company 2022
Net sales Revenue | 38,800 | Depreciation Expense | 500 | |||
Unearned Revenue | 2600 | Accumulated Depreciation | 1000 | |||
Accounts Receivable | 8,000 | Operating Expenses | 4500 | |||
Cost of Goods Sold | 26,000 | Cash – Ending | 4400 | |||
Inventory | 5,000 | Land | 20000 | |||
Accounts Payable | 5,800 | Beginning Balance Retained Earnings | 8500 | |||
Notes Payable | 6,000 | Common Stock | 12000 | |||
Supplies | 50 | Cash received from customers | 6400 | |||
Supplies Expense | 750 | Purchased Office Equipment | 2500 | |||
Office Equipment | 3,500 | Received Cash from Issuing Stock | 3000 | |||
Paid Cash for Dividends | 2000 | |||||
Paid Cash for Operating Expenses | 1000 |
Instructions
As the Chief Financial Officer (CFO) of a publicly traded company you are charged with evaluating companies in a similar industry as your own for acquisition. The President of the corporation has requested that you evaluate the overall financial health of the Fenway Company and report to the Board of Directors whether or not you should purchase the Fenway Company. In connection with this endeavor, provide responses to the following short answer and essay questions.
Requirements
1-Calculate the Net Income for the Fenway Company ___________
2-Calculate the Gross Profit for the Fenway Company ___________
3-Calculate the Cash Flow from Operations for the Fenway Company ___________
4-Calculate the Total Assets for the Fenway Company ___________
5-Calculate the Total Liabilities for the Fenway Company ___________
6-Using knowledge from other business courses (e.g., Economics, Management, Marketing and Finance) provide three questions that you would ask the Fenway Company to consider in your acquisition decision in addition to the information computed above.
7-From your analysis of the financial information included in the problem, state whether you would or would not recommend purchasing the Fenway Company and write a short paragraph stating your reasons.
Fundamental financial accounting concepts
ISBN: 978-0078025365
8th edition
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward