MINI CASE Cochran, a recent graduate of the University of Tennessee with four years of banking experience, was recently brought in as assistant to the chairman of the board of Computron Industries, a manufacturer of computer components. The company doubled its plant capacity, opened new sales offices outside its home territory, and launched an expensive advertising campaign. Computron’s results were not satisfactory, to put it mildly. Its board of directors, which consisted of its president and vice-president plus its major stockholders (who were all local business people), was most upset when directors learned how the expansion was going. Suppliers were being paid late and were unhappy, and the bank was complaining about the deteriorating situation and threatening to cut off credit. As a result, Chuck Edwards, Computron’s president, was informed that changes would have to be made, and quickly, or he would be fired. Also, at the board’s insistence Jenny Cochran was brought in and given the job of assistant to Gary Meissner, a retired banker who was Computron’s chairman and largest stockholder. Meissner agreed to give up a few of his golfing days and to help nurse the company back to health, with Cochran’s help. Cochran by gathering financial statements and other data. Assume that you are Cochran’s assistant, and you must help her answer the following questions for Meissner. Balance Sheets 2012 2013 Assets Cash $ 9,000 $ 7,282 Short-term 48,600 20,000 investments. Accounts receivable 351,200 632,160 Inventories 715,200 1,287,360 total current assets $ 1,124,000 $ 1,946,802 Gross fixed assets 491,000 1,202,950 Less: accumulated 146,200 263,160 depreciation net fixed assets $ 344,800 $ 939,790 Total assets $ 1,468,800 $ 2,886,592 2010 2011 Liabilities and equity Accounts payable $ 145,600 $ 324,000 Notes payable 200,000 720,000 Accruals 136,000 284,960 total current $ 481,600 $ 1,328,960 liabilities Long-term debt 323,432 1,000,000
MINI CASE Cochran, a recent graduate of the University of Tennessee with four years of banking experience, was recently brought in as assistant to the chairman of the board of Computron Industries, a manufacturer of computer components. The company doubled its plant capacity, opened new sales offices outside its home territory, and launched an expensive advertising campaign. Computron’s results were not satisfactory, to put it mildly. Its board of directors, which consisted of its president and vice-president plus its major stockholders (who were all local business people), was most upset when directors learned how the expansion was going. Suppliers were being paid late and were unhappy, and the bank was complaining about the deteriorating situation and threatening to cut off credit. As a result, Chuck Edwards, Computron’s president, was informed that changes would have to be made, and quickly, or he would be fired. Also, at the board’s insistence Jenny Cochran was brought in and given the job of assistant to Gary Meissner, a retired banker who was Computron’s chairman and largest stockholder. Meissner agreed to give up a few of his golfing days and to help nurse the company back to health, with Cochran’s help. Cochran by gathering financial statements and other data. Assume that you are Cochran’s assistant, and you must help her answer the following questions for Meissner. Balance Sheets Assets 2012 2013 Cash $ 9,000 $ 7,282 Short-term investments. 48,600 20,000 Accounts receivable 351,200 632,160 Inventories 715,200 1,287,360 total current assets $ 1,124,000 $ 1,946,802 Gross fixed assets 491,000 1,202,950 Less: accumulated depreciation 146,200 263,160 net fixed assets $ 344,800 $ 939,790 Total assets $ 1,468,800 $ 2,886,592 Liabilities and equity 2010 2011 Accounts payable $ 145,600 $ 324,000 Notes payable 200,000 720,000 Accruals 136,000 284,960 total current liabilities $ 481,600 $ 1,328,960 Long-term debt 323,432 1,000,000