Applied Managerial Finance - 1

Anonymous
timer Asked: Jan 7th, 2015
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Question Description

Financial Statements 

BACKGROUND INFO

Apix Printing, Inc.

Apix Printing, Inc. is a private, domestic United States printer of periodicals, newspaper inserts, and advertising materials that accompany distributions of Sunday and weekday circulations of large metropolitan newspapers. The company, headed by chief executive officer (CEO) John Matthews, generates $450 million in revenues from three product lines (periodicals, inserts, and advertising) and has long-term contracts with several large U.S. retailers to produce weekly sales flyer inserts as well as metropolitan newspapers to produce Sunday magazine inserts and coupons. Its printing presses are characterized by offset print technology and are capable of high-capacity output; in addition, the company recently migrated to water-soluble inks, which considerably reduces manufacturing emissions.

The company’s executive team, employees, and above all, its vice president (VP) of Production, Luke Stewart, are committed to environmentally-sustainable manufacturing practices. Presently, the only substrate Apix uses is paper, specifically newsprint of various weights. Trim and waste are recycled in accordance with the company’s sustainability commitment. Manufacturing divisions are geographically aligned with customers’ locations to minimize logistics costs and response time to customer requirements; however, a centralized corporate entity administers functions such as human resources, information technology, and financial reporting. The VP of sales and administration, James Simeon, oversees administration and quality compliance among the various divisions. There are presently five manufacturing divisions: Northwest, Southwest, Northeast, Southeast, and Midwest.

Currently, Apix is only marginally profitable, and as such, the chief financial officer (CFO), Mary Francis, has indicated that external financing will be required to support a company expansion into a new segment of the printing sector: food packaging. This endeavor will require new investments in equipment as well as substrate inventory; promotional costs will also increase. In addition, Timothy Russell, the new Audit Committee Chair, has pointed out that the company’s compliance with the requirements of the Sarbanes-Oxley Act (SOX) will also cause administrative costs to increase. Following the requirements is paramount to successfully file a registration statement and to issue equity to shareholders in an initial public offering (IPO).

As the newly hired VP of finance, you report to the CFO. In this capacity, your responsibilities include preparation of financial statements, comparative analysis and benchmarking to sector performance, and the assessment of new business investment opportunities to grow Apix’s expansion endeavors in a challenging market.

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ASSIGNMENT

Length: 10 - 15 power point slides with 150 – 200 words in the speaker notes page, grammatically correct and plagiarism free. 

Respond to the following scenario with your thoughts, ideas, and comments. Be substantive and clear.

Mary Francis comes into your office later that morning.

“Good news! I think we’ve got strong potential investors!” Mary announces.

“That’s great!” you reply.

“And now, they are asking for financial information” Mary states.

“Ok, I could provide a 50-page analysis for them!” you say.

“That’s exactly what they don’t want. I’m beginning to notice that some of the investors don’t have a strong finance background, and the last thing we want to do is scare them off with too many financial figures” Mary explains. I would like for you to complete a presentation. However, I want you to keep it simple and clear. Using all 3 Financial Statements, please provide an analysis on Apix’s assets, liabilities, cash, and profit. As well, choose 2 additional components on each of the sheets, and provide your initial impression on the company financial situation. Do you think you could handle this?”

“Of course! I’ll get started on this right away.”

Mary also indicates that she would like between 10–15 slides with 150–200 words in the notes page.


Unformatted Attachment Preview

Apex Printing Balance Sheets As of December 31, 2013 and 2012 Assets Cash Accounts Receivable Inventory Total Current Assets Land Building & Equipment Less: Accumulated Depreciation - Building & Equipment Total Long Term Assets Total Assets 000$ 000$ 2013 6,000 2,350 12,100 20,450 2012 5,700 2,300 6,500 14,500 25,000 20,000 300,000 300,000 (187,850) (160,000) 137,150 160,000 157,600 174,500 Liabilities and Stockholders' Equity Accounts Payable Salaries Payable Interest Payable Short Term Notes Payable Taxes Payable Total Current Liabilities 4,600 0 1,500 12,000 0 18,100 3,500 2,100 0 0 5,600 11,200 Mortgate Payable Total Long Term Liabilities 54,950 54,950 100,000 100,000 60,000 24,550 84,550 157,600 60,000 3,300 63,300 174,500 Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity Apex Printing Income Statements For the Periods Ended December 31, 2013 and 2012 Revenue: Less: Cost of Goods Sold Less: Depreciation Expense Gross Margin Selling, General & Administrative Expenses Income Before Interest & Taxes Interest Expense Income Before Taxes Income Taxes Net Income 000$ 000$ 2013 2012 450,000 475,000 (324,300) (374,500) (27,850) (26,000) 97,850 74,500 (29,100) (32,000) 68,750 42,500 (7,500) (6,000) 61,250 36,500 (35,000) (30,000) 26,250 6,500 Apex Printing Statement of Cash Flows For the Period Ended December 31, 2013 000$ Cash Flows from Operating Activities: Net Income Adjustments to reconcile net income to net cash provided by operating activities Depreciation Expense Increase in accounts receivable Increase in inventory Decrease in salaries payable Increase in interest payable Decrease in taxes payable Increase in Short Term notes Payable Increase in accounts payable Net Cash Flow from Operating Activities Cash Flows from Investing Activities: Cash paid to purchase land Net Cash Flow from Investing Activities 26,250 27,850 (50) (5,600) (2,100) 1,500 (5,600) 12,000 1,100 55,350 (5,000) (5,000) Cash Flows From Financing Activities: Cash paid for mortgage Cash paid for dividends Net Cash Flow from Financing Activities Net Increase in Cash Plus: Cash Balance at December 31, 2012 Cash Balance at December 31, 2013 (45,050) (5,000) (50,050) 300 5,700 6,000 ...
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School: Boston College

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