Problem:
Look at Superior's balance sheet and analyze it. Be sure to focus on working capital, current ratio, short-term and long-term debt. End with a brief summary addressing the CFO's concerns as related to these areas, in memo format.
Superior Living, Inc. is a private, domestic U.S. manufacturer of home furniture targeted at U.S. consumers ages 21 to 54 (from first-time apartment renters to empty nesters). The company generates $250 million in revenues from six product lines: outdoor patio, luxury, durable rental, children's furniture, rare woods, and space saver. The company sells its products through a number of retailers and has a solid business reputation with distributors and customers. Superior Living has divisions for each of the product lines, and each division includes sales, marketing, and manufacturing personnel. The other functional areas 'human resources, finance, and information technology' support the entire company. You are the vice president of finance, reporting to the chief financial officer (CFO).
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(in thousands SUS) ASSETS
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2001
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2002
|
2003
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Cash and Cash Equivalents
|
6,900
|
7,300
|
7,800
|
|
Accounts Receivable
|
7,000
|
7,400
|
7,900
|
|
Inventories
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47,000
|
51,000
|
54,000
|
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Prepaid Expenses
|
6,500
|
6,800
|
7,000
|
|
Deferred Income Taxes
|
6.300
|
6.700
|
7.200
|
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Total Current Assets
|
73,700
|
79,200
|
83,900
|
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Property, Plant & Equip.
|
69,000
|
72,000
|
77,000
|
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Intangible Assets
|
21.000
|
22.500
|
24.000
|
|
Total Assets
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163,700
|
173,700
|
184,900
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LIABILITIES AND EQUITY
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|
|
|
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Current Portion of Long-term Debt
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1,200
|
1,300
|
1,450
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Accounts Payable
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27,000
|
29,500
|
33,000
|
|
Other Current Liabilities
|
6.000
|
6.300
|
7.500
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Total Current Liabilities
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34,200
|
37,100
|
41,950
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Long-term Debt
|
3,000
|
3,100
|
3,400
|
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Other Long-term Liabilities
|
5.000
|
6.000
|
7.000
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Total Liabilites
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42,200
|
46,200
|
52,350
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Equity
|
121,500
|
127,500
|
132,550
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