BUSN 379 Sunset Boards

$17.00

BUSN 379 Sunset Boards
Sunset Boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder…

 

SKU: BUSN 379 Sunset Boards Categories: , , Tags: , , , ,

Description

BUSN 379 Sunset Boards

BUSN 379 Sunset Boards

A+ Case 1 Week 2

Case I is due at the end of this week. Prepare a memo in Word, which answers the questions in the Chapter 2 Case, Cash Flows and Financial Statements at Sunset Boards, Inc., on page 51 of the textbook. Use Excel to solve any financial calculations. You will be graded on correct financial analysis, proper use of technology, business-like presentation of technology, and business-like presentation.

Sunset Boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the company’s financial records are not well maintained.

The initial investment in Sunset Boards was provided by Tad and his friends and family. Because the initial investment was relatively small, and the company has made surfboards only for its own store, the investors haven’t required detailed financial statements from Tad. But thanks to word of mouth among professional surfers, sales have picked up recently, and Tad is considering a major expansion. His plans include opening another surfboard store in Hawaii, as well as supplying his “sticks” (surfer lingo for boards) to other sellers.

Tad’s expansion plans require a significant investment, which he plans to finance with a combination of additional funds from outsiders plus some money borrowed from banks. Naturally, the new investors and creditors require more organized and detailed financial statements than Tad has previously prepared. At the urging of his investors, Tad has hired financial analyst Paula Wolfe to evaluate the performance of the company over the past year.

After rooting through old bank statements, sales receipts, tax returns, and other records, Paula has assembled the following information:

2013                2014

Cost of goods sold                                                           $169,969         214,607

Cash                                                                                        24,524             26,056

Depreciation                                                                      47,980             54,230

Interest expense                                                                10,442             11,954

Selling & administrative expenses                             33,425             43,626

Accounts payable                                                               43,344             48,090

Net fixed assets                                                                   211,680           264,021

Sales                                                                                        333,426           406,427

Accounts receivable                                                            17,378             22,542

Notes payable                                                                         19,757             21,571

Long-term debt                                                                   106,848           119,976

Inventory                                                                                36,570             50,185

New equity                                                                                0                      20,160

Sunset Boards currently pays out 50 percent of net income as dividends to Tad and the other original investors, and has a 20 percent tax rate. You are Paula’s assistant, and she has asked you to prepare the following:

  1. An income statement for 2013 and 2014.
  2. A balance sheet for 2013 and 2014.
  3. Operating cash flow for each year.
  4. Cash flow from assets for 2014.
  5. Cash flow to creditors for 2014.
  6. Cash flow to stockholders for 2014.
  7. How would you describe Sunset Boards’ cash flows for 2014? Write a brief discussion.
  8. In light of your discussion in the previous question, what do you think about Tad’s expansion plans?

Preview:

As requested, attached are the financial statements of Sunset Boards, Inc. from 2013-2014. It includes:

  1. Income Statement
  2. Balance Sheet
  3. Operating Cash Flow

Highlights of Financial Statements

In analyzing the financial statements, horizontal analysis and vertical analysis were…