Problem:
Following are financial statements for the Genatron Manufacturing
Corporation for 2012 and 2011.
GENATRON MANUFACTURING CORPORATION INCOME STATEMENT 2012 2011
BALANCE SHEET 2012 2011 Net sales $1,500,000 $1,300,000
ASSETS Cost of goods sold 900,000 780,000
Cash $40,000 $50,000 Gross profit 600,000 520,000
Accts. receivable 260,000 200,000 Expenses: general
Inventory 500,000 450,000 and administrative 150,000 150,000
Total current assets 800,000 700,000 Marketing 150,000 130,000
Fixed assets, net 400,000 300,000 Depreciation 53,000 40,000
Total assets $1,200,000 $1,000,000 Interest 57,000 45,000
LIABILITIES AND EQUITY Earnings before taxes 190,000 155,000
Accts. Payable $170,000 $130,000 Income taxes 76,000 62,000
Bank loan 90,000 90,000 Net income $114,000 $93,000
Accruals 70,000 50,000
Total current liabilities 330,000 270,000
Long-term debt, 12% 400,000 300,000
Common stock, $10 par 300,000 300,000
Capital surplus 50,000 50,000
Retained earnings 120,000 80,000
Total liabilities & equity $1,200,000 $1,000,000
a) Apply Du Pont analysis to both the 2012 and 2011 financial statements' data.
b) Explain how financial performance differed between 2012 and 2011.
Genatron Manufacturing expects its sales to increase by 10 percent in 2013. Estimate the firm's external financing needs by using the percent-of-sales method for the 2012 data. Assume that no excess capacity exists and that one-half of the 2012 net income will be retained in the business.